Senate panel schedules hearing on patent reform

Grassley

According to the committee’s website, the hearing, “The Impact of Abusive Patent Litigation Practices on the American Economy,” will be held at 10 a.m. Wednesday.
Sen. Chuck Grassley, R-Iowa and chairman of the committee, will preside over the hearing.

A witness list was not provided as of Thursday morning.

The hearing comes as the Senate this week confirmed Michelle K. Lee to head the U.S. Patent and Trademark Office and Daniel Marti to be the intellectual property enforcement coordinator for the White House.

So far, two pieces of patent reform legislation have been introduced by federal lawmakers.

Last month, U.S. House Judiciary Chairman Bob Goodlatte, R-Va., re-introduced the Innovation Act — the same patent reform legislation that passed in 2013.

H.R. 9 requires:

– Plaintiffs to disclose who the owner of a patent is before litigation, so that it is clear who the real parties behind the litigation are. Goodlatte says this will ensure that patent trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation;

– Plaintiffs to actually explain why they are suing a company in their court pleadings;

– Courts to make decisions about whether a patent is valid or invalid early in the litigation process so that patent trolls cannot drag patent cases on for years based on invalid claims.  This prevents invalid patents from being used to extort money from retailers and end users;

– The U.S. Judicial Conference to make rules to reduce the costs of discovery in patent litigation so that patent trolls cannot use the high costs of discovery to extort money from small businesses and entrepreneurs; and

– The PTO to provide educational resources for those facing abusive patent litigation claims.

Also, when parties bring lawsuits or claims that have no reasonable basis in law and fact, the Innovation Act requires judges to award attorneys’ fees to the victims of the frivolous lawsuit.

The bill allows judges to waive the award of attorneys’ fees in special circumstances. This provision applies to both plaintiffs and defendants who file frivolous claims.

The measure also creates a voluntary process for small businesses to postpone expensive patent lawsuits while their larger sellers complete similar patent lawsuits against the same plaintiffs, to protect customers who simply bought the product off-the-shelf.

Last week, Sens. Chris Coons of Delaware, Dick Durbin of Illinois and Mazie Hirono of Hawaii introduced the STRONG, or Support Technology and Research for Our Nation’s Growth, Patents Act.

STRONG would:

– Crack down on abusive demand letters by empowering the Federal Trade Commission to target firms that abuse startups rather than invent anything;

– Ensure that pleading standards for patent-infringement cases match the standards used for all other forms of civil actions, creating a barrier to frivolous lawsuits before any funds are spent on discovery;

– Eliminate fee diversion from the PTO to ensure that those who examine patents have adequate training and dependable funding;

– Ensure balance in post-grant proceedings at the PTO, so that this expedited form of patent litigation is both fast and fair; and

– Analyze the impact that the patent system has on small businesses, both from the perspective of startups reliant on patents and those small businesses facing allegations of infringement.

Unlike the Innovation Act, STRONG does not include a provision that would require the loser to pay the winner’s legal fees.

Companies like Google and Apple favor Goodlatte’s Innovation Act, arguing legislation needs to be more robust.

However, those in the academic community favor STRONG. They contend the bill is a better balance, taking steps to protect businesses harmed by so-called “patent trolls” without unnecessarily burdening innovative start-ups and inventors.

On Tuesday, a group of 40 economists and law professors from around the country sent a letter to members of Congress, expressing serious concerns with the many “flawed, unreliable or incomplete” patent litigation studies that have become the basis for another possible restructuring of the nation’s patent system.

From Legal Newsline: Reach Jessica Karmasek by email at [email protected].