EDITOR’S NOTE: What follows is a summary of the Goodlatte patent bill created by American Continental Group, which is a government affairs and strategic consulting firm in Washington, DC. Manus Cooney, a former Chief Counsel of the Senate Judiciary Committee is one of the partners at ACG, and is also frequent guest contributor on IPWatchdog.com. Cooney and his partners and associates worked to prepare this summary, which was described as a team effort. It is republished here with permission.
Sec. 3. Patent Infringement Actions
Pleading Requirements (p.2)
Amends Title 35 to establish heightened pleading requirements for patent infringement actions. A party alleging infringement must include in the pleading, unless the information is not reasonably accessible, the following:
- Each patent allegedly infringed and each claim of each patent that is allegedly infringed
- For each claim, which product, feature, method or process are allegedly infringed, including the name or model number; where each element of the claim is fount within the accused product/method; and how the terms of the asserted claim correspond to the functionality of the accused product/method.
- Whether each element is infringed literally or under the doctrine of equivalents
- A description of the direct infringement, the acts of the alleged indirect infringement that contribute to or are inducing direct infringement
- A description of the right of the party alleging infringement to assert each patent identified and patent claim identified
- A description of the principal business of the party alleging infringement
- A list of each complaint filed, of which the party alleging infringement has knowledge, that asserts or asserted any of the patents identified
- Whether each patent is subject to any licensing term or pricing commitments through any agency or standard-setting body
Attorney Fees (p.5)
Requires the awarding to a prevailing party his/her reasonable fees incurred by the party absent a finding by the Court that: 1. the position of the non-prevailing party was substantially justified or; 2. Specials circumstances make the award unjust. If a non-prevailing party is unable to pay court awarded fees, the court may allow recovery against any interested parties that have been joined pursuant to new section 299(d) (see below).
Joinder of Interested Parties (p.7)
Adds a new subsection (d) to 35 USC 299 which provides that if a party defending infringement shows the party alleging infringement has no substantial interest in the patents at issue other than asserting such patent claim in litigation, the party defending infringement may involuntarily join assignees, anyone with a “direct financial interest in the outcome of the action”, or anyone with a right to enforce or sublicense the patents at issue.
Discovery Limitations (p.9)
Initial discovery pre-Markman is limited to information necessary for a court to conduct a Markman hearing and resolve related claim construction issues.
Sec. 4. Transparency of Patent Ownership
Initial Disclosures (p.11)
The party alleging infringement must disclose to the court and the USPTO: (1) any assignees of the patent; (2) any entities with the right to enforce or sublicense the patent; (3) any entity with a financial interest (of 5% or more) in either the patent or the plaintiff; (4) the ultimate parent entity of any of the entities named. Said patents are forever encumbered with an ongoing duty to update the required information within 90 days of any change. In the event of non-compliance, the party may not be awarded enhanced damages for patent infringement, or attorneys’ fees, unless the denial thereof would be manifestly unjust.
Sec. 5. Customer-Suit Exception
Stay of the Action (p.16)
Requires that courts stay actions against “covered customers” pending resolution of any separate action involving the same patent(s) involving a manufacturer (or supplier); provided, the customer and manufacturer consent in writing, and the covered customer agrees to be bound by any judgment against the manufacturer to the same extent that the manufacturer may be bound with respect to issues that both the customer and manufacturer have in common. A “covered customer” is any party accused of infringing patent(s) based on a product, process, system, service, component, material, apparatus, or relevant part thereof. Courts may lift the stay upon a showing that the related action will not resolve a major issue in the customer case or the stay is unreasonably prejudicial and would be manifestly unjust.
Sec. 6. Procedures and Practices to Implement and Recommendations to the Judicial Conference
Judicial Conference Recommendations on Discover Burden and Costs (p.20)
The Judicial Conference shall develop specific rules (and District Courts will be required to implement them) to address the asymmetries in patent discovery burdens and costs. Prohibits electronic discovery unless the “parties determine” said discovery is necessary, and – in such cases – it will be limited to 5 custodians. This calls for the initial discovery of a core set of documents, and then provides that any party may request additional discovery if that party pays the costs and attorneys’ fees in advance or posts a bond sufficient to cover the estimated costs.
Judicial Conference Recommendations on Case Management (p.26)
Invites the Judicial Conference to recommend case management procedures for district courts to implement for patent litigation.
Revision of Form for Patent Infringement (p.27)
The Draft eliminates Form 18 from the FRCP for pleading patent infringement and invites the Supreme Court to prescribe a new form. Any new form should “at a minimum, notify accused infringers of the asserted claim or claims, the products or services accused of infringement, and the plaintiff’s theory for how each accused product or service meets each limitation of each asserted claim.”
In an attempt to reverse the Fourth Circuit’s decision in In re Qimonda AG, the bill retroactively provides that an IP owner’s foreign bankruptcy cannot be used to unilaterally cancel one of its licensee’s US IP rights.
Sec. 7. Small Business Education, Outreach, and Information Access (p.28)
Additional resources for small businesses shall be developed to address concerns arising from patent infringement. To improve transparency for small businesses and other PTO users, a user-friendly section of the website will be created to notify the public when a patent case is brought in Federal Court.
Sec. 8. Studies on Patent Transactions, Quality, and Examination (p.30)
A number of studies must be conduct and sent to Congress by the UPSTO:
- Secondary Market-To be completed within 7 months of enactment – and conducted in concert with the SEC, Treasury Department, and other agencies – the PTO must examine the economic impact of the secondary market and propose legislation to ensure greater accountability and transparency in the secondary market.
- US Govt. Patents – Within 6 months, the PTO must complete a study on patents owned by the US Government and report on the extent to which they are licensed and litigated.
- Patent Quality – Within 6 months, the PTO must produce a study of patent examination and the technologies being used or available to improve patent quality.
Sec. 9. Improvements and Technical Corrections to The Leahy-Smith America Invents Act
Repeal of Civil Action to Obtain a Patent (p.34)
Repeals §145 of Title 35, a rarely used mechanism which permits patent applicants to pursue a civil action to order the PTO to grant a patent covering a claimed invention if the PTO refuses a patent. The civil action approach allows for extensive presentation of evidence, live witness testimony, and an ultimate decision by a district court judge. Since the civil action is not an “appeal” per se, substantial deference is not given to prior factual findings by the PTO. The civil action approach is not widely used because of the expense of pursuing a district court claim. By repealing section 145, the only avenue for challenge an adverse PTO decision on the merits of an application would be through appeal to the Court of Appeals for the Federal Circuit.
Post-Grant Review Amendment (p.36)
Eliminates the “reasonably could have raised” estoppel standard from §325(e)(2) of the AIA’s new post-grant review (PGR) procedure. This is intended to correct the so-called “scrivener’s error”. Under the existing AIA, someone who makes use of the AIA’s new PGR proceeding to challenge the claim of a patent is estopped , in any subsequent civil action, from seeking to invalidate a patent claim on any ground was raised or reasonably could have been raised during the PGR proceeding. By deleting the phrase “reasonably could have raised,” the amendment permits a person to petition the PTO to invalidate a patent claim via PGR and to later seek to invalidate the same patent claim in subsequent litigation even on the basis of grounds that he/she could have raised during the PGR proceeding.
Use of District-Court Claim Construction in Post-Grant and Inter Partes (p.36)
The Draft mandates that the claim interpretations applied in USPTO Inter Partes and Post-Grant Reviews be the same as those used in federal district courts and in the International Trade Commission. In inter partes and post grant reviews, each claim of a patent shall be construed as it has been or would be in a civil action to invalidate a patent under §282, including construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent. If a court has previously construed a claim or claim term in a civil action in which the patent owner was a part, the USPTO shall consider such claim construction. This provision will overrule the USPTO’s current practice in these post-grant proceedings of construing claims using the “broadest reasonable interpretation” (“BRI”) approach that it uses in its initial examination of patent applications, and at certain other times when applicants have the unfettered freedom to amend claims in response to rejections by a patent examiner.
Codification of the Double-Patenting Doctrine for First-Inventor-to-File Patents (p.39)
Statutory codification of the judge-made law of “double-patenting” for patents that will be subject to the AIA’s new first-inventor-to-file standard for patentability. Creates a new statutory provision that is intended to codify the obviousness-type double patenting doctrine.
Covered Business Method Patent Reviews (p.41)
Strikes the sunset provision and applies the covered business method patent program to all first-to-invent patents through a direct reference to AIA Sec. 3(n)(1). Section 18 of the AIA authorizes certain business method patents related to financial services to be challenged through a unique “transitional” program. The draft bill provides that the definition of a covered business method patent pursuant to section 18(d) of the AIA will be construed consistent with the decision of the PTAB in SAP America, Inc. v. Versata Dev. Group, Inc. CBM2012–00001, Paper 36 (January 9, 2013). The term ‘‘covered business method patent’’ as noted in SAP will mean “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”
Clarification of Limits on Patent Term Adjustment (p.43)
The Draft codifies the USPTO’s current practice of excluding any time consumed by a Request for Continued Examination (RCE) from the calculation of patent term adjustment under 35 USC §154(b)(1)(B). If enacted, no PTA can be awarded for any delays that occur following the filing of a RCE. This would reduce the patent term for a substantial portion of patents and the bill indicates that the recalculation would be retroactive against any patent application still pending at the time of enactment.
Clarification of Jurisdiction (p.44)
Provides that Congress finds that the Federal interest in preventing inconsistent final judicial determinations as to the legal force or effect of the claims in a patent presents a substantial Federal issue that is important to the Federal system as a whole. This provision has the potential of bringing patent malpractice claims back under Federal Court jurisprudence. And, to the extent that patent licenses depend upon the scope of a patent claim, licensee disputes would also be heard in Federal Courts.
Sec. 10 Effective Date
Unless otherwise provided, the bill applies the changes in law to any patent issued or action filed after the date of enactment.
* Document is product of independent ACG research and information drawn from various public sources including documents circulated or posted by: 21C; IA; IP WatchDog; Patently-O; and others.