WASHINGTON (Legal Newsline) - One of the more aggressive pieces of patent reform legislation, the Innovation Act, is scheduled for markup Thursday.
The U.S. House Judiciary Committee had planned to mark up H.R. 9 at a meeting last month; however, Chairman Bob Goodlatte -- also the legislation’s lead sponsor -- decided to hold off after some concerns were raised about the bill.
A committee manager’s amendment has since been prepared and currently is available here. Additional proposed amendments by judiciary committee members are expected to be submitted.
On Wednesday, Brian Pomper, executive director of Innovation Alliance, a group made up of research and development-focused companies, sent a letter to Goodlatte, R-Va., and ranking committee member John Conyers, D-Mich., expressing his continued concerns with the bill.
The legislation, Pomper argues, remains “problematic,” even with the addition of the manager’s amendment.
“We welcome changes in the H.R. 9 Manager’s Amendment that address innovators’ concerns over the critical issues of customer stay, heightened pleadings, and the post-grant and inter partes review procedures,” he wrote. “While the Manager’s Amendment makes improvements to these areas over the previous version of H.R. 9, even as amended, these provisions place an undue burden on the enforcement rights of legitimate patent owners.
“The Innovation Alliance believes that some additional edits that would marginally diminish the benefits of the legislation to its supporters, but significantly address the needs of the bill’s critics, are within reach. Improvements to customer stay, pleading and (inter partes review) will result in a bill that will make significant changes to patent litigation without incurring the broad opposition that has existed to date.”
The bill, reintroduced by Goodlatte in February, 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 U.S. Patent and Trademark Office 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.
Pomper contends the customer stay provision, as drafted, is so broad that it invites abuse.
“This provision has the laudable goal of protecting innocent customers from litigation for their use of infringing products,” he wrote. “The Committee’s summary expressly states that the stay should be ‘available only to those at the end of the supply chain.’
“The language of the Manager’s Amendment, however, would make a stay of litigation available to many more entities than just innocent end users, including companies in the Fortune 10 and beyond, shielding from suit the entities who often profit most from the infringement.”
The group also takes issue with the bill’s pleadings section, which, Pomper contends, remains “overly broad and burdensome” for small startups and individual inventors.
“This provision will have the unintended consequence of imposing massive costs and delays in patent cases, for the defendants it is intended to help as well as for the plaintiffs it targets,” he wrote in his letter to Goodlatte and Conyers. “Not only will inventors and startups be forced to plead a highly onerous amount of facts, once a complaint meets the standards -- most likely after several iterations of amended pleadings -- a defendant will be forced to answer each and every paragraph of that complaint.
“This will be especially difficult where a small business is defending a patent lawsuit by a sophisticated plaintiff with a long and detailed complaint.”
The bill’s markup is scheduled to start at 10 a.m.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.