Jessica M. Karmasek Feb. 17, 2015, 7:30am



WASHINGTON (Legal Newsline) - Last week, members of a U.S. House panel held a review of recent U.S. Supreme Court patent cases.




 




The hearing, held Thursday by the Subcommittee on Courts, Intellectual Property and the Internet, came exactly one week after members of the House, led by House Judiciary Chairman Bob Goodlatte, re-introduced the Innovation Act.




 




The bill, H.R. 9, like the one introduced in 2013, builds on the reforms that were made in the America Invents Act and addresses certain abusive practices.




 




“I welcome today’s hearing to review the recent Supreme Court patent cases,” said Goodlatte, R-Va. “And as we examine these cases, we must remember that our patent system is a unitary one. That means that the rules that we lay out in statute apply to all areas of technology, all types of businesses, large and small, and generally to all users of the patent system equally.




“Thomas Jefferson could not have envisioned the innovations and inventions that were to unfold over the last two centuries, and in particular over the last twenty years, but when he and our founding fathers crafted our patent system they wrote these laws in a way so that they applied equally to all.”




 




Goodlatte said in crafting the Innovation Act, lawmakers worked to ensure that its many provisions generally applied “fairly and equally” to all stakeholders.




 




“That means that we view ‘patent trolling’ as an adjective that can apply to either party in a case, if they engage in unreasonable or abusive tactics,” he said during his opening remarks.




 




“That is also why good legislative practice should caution us against creating excessive carve-outs to cabin in provisions of the bill or other parts of patent law toward certain types of stakeholders, and we should make sure that the ideas that we put forth are well supported and not just by those who happen to exempt themselves from its reach.




 




“We have a unitary patent system for a reason, and our system works best when the rules of the road apply to all.”




 




Goodlatte said he “strongly” believes that the U.S. Patent and Trademark Office should not simply be in the business of granting patents and “leaving the mess” created for the courts and Congress to fix.




 




Instead, the office needs to focus on strengthening the requirements for patent eligibility to reduce the overall number of weak or overly broad patents from entering the system.




 




“I am encouraged by the PTO’s recent announcements in this space,” he said.




 




Among those witnesses who testified at the hearing:




 




- Herbert C. Wamsley, executive director of the Intellectual Property Owners Association;




- Krish Gupta, senior vice president and deputy general counsel for EMC Corporation;




- Andrew J. Pincus, partner at Mayer Brown LLP; and




- Robert P. Taylor, counsel for the National Venture Capital Association.




 




Taylor, who also is the founder and owner of RPT Legal Strategies PC, an intellectual consulting firm in San Francisco and Silicon Valley, walked federal lawmakers through the role that venture capital plays in fueling the innovation economy.




 




Venture capitalists, he explained, are vital to the patent system because they fund many of the country’s top innovators.




 




“[M]aking it more costly to enforce patents in order to combat abusive litigation will have the unintended consequence of diminishing -- if not extinguishing -- the only true incentive that thousands of innovators presently have to invest the necessary time, money and other resources needed to create a new company from scratch,” he said.




 




“Put differently, the patent-backed right to own and profit from innovative ideas has been a major driving force for the American economy for 200 years, and that right requires that valid patents be fully enforceable in court at reasonable expense and without undue risk to the patent owner or its investors.”




 




Taylor made clear that the venture industry has several concerns with the Innovation Act.




 




“Let me say frankly at the outset, we are concerned that H.R. 9, if enacted as written, will have a chilling effect on investment in patent intensive companies, which in turn will have a depressing effect on innovation in general,” he said. “At the very least, the legislation will make it far more difficult, risky and expensive for emerging companies to enforce their patents, which is an essential part of the patent right.




 




“Equally important, H.R. 9 also will raise the cost and risk confronting smaller companies trying to defend against patent litigation brought by their larger, incumbent competitors.”




 




Though not testifying at the hearing, the Internet Association also weighed in by submitting a letter for the record.




 




The group’s letter highlighted what it calls the “debilitating impact” so-called patent trolls continue to have on businesses.




 




Generally speaking, a non-practicing entity, patent assertion entity or patent monetization entity purchases groups of patents without an intent to market or develop a product.




 




In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as “patent trolls.”




 




The association also impressed upon lawmakers that recent Supreme Court rulings do not solve the problem of trolls.




 




“While each of these cases, and some other developments outside of Congress, brought about incremental changes to patent litigation, none of them can or should be considered a silver bullet -- or even a lead bullet, for that matter -- when it comes to stopping abuse of the patent litigation system,” the group wrote.




 




In its letter, the association urged Congress to pass legislation that provides the comprehensive and meaningful reform necessary to protect start-ups from patent trolls’ meritless lawsuits.




 




“Patent litigation reform remains as much a problem in need of a practical solution in 2015, as it was in 2013 when the Innovation Act passed in the House with overwhelming bipartisan support,” according to the letter. “The changes to the law brought about by the Supreme Court (which could be reversed or diluted in future cases) cannot be compared to the comprehensive and meaningful reform only Congress can implement.”




 




The association represents the interests of leading Internet companies, including Amazon, AOL, eBay, Etsy, Expedia, Facebook, Google, Groupon, LinkedIn, Netflix, Pandora, Twitter, Yelp and Yahoo!, among others.




 




To watch the complete hearing, click here.




 




From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.


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