STRONGER Patents Act Introduced in House, Seeks to Strengthen a Crippled Patent System

By Steve Brachmann
March 26, 2018

STRONGER Patents Act Introduced in House, Seeks to Strengthen a Crippled Patent SystemOn Tuesday, March 22nd, Rep. Steve Stivers (R-OH) and Rep. Bill Foster (D-IL) introduced the Support Technology & Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act into the U.S. House of Representatives. This bill is a companion to the legislation of the same name pending in the Senate, and co-sponsored Sen. Chris Coons (D-DE), Sen. Tom Cotton (R-AR), Sen. Dick Durbin (D-IL) and Sen. Mazie Hirono (D-HI).

The STRONGER Patents Act was designed to “strengthen the United States’ crippled patent system” by restoring patents as property rights, making court standards uniform and giving startups a better chance to protect their property from entities with much greater resources while also stemming abusive demand letters sent in bad faith.

The STRONGER Patents Act, in its current draft, finds that the most recent comprehensive reforms to the U.S. patent system, the America Invents Act (AIA) enacted in 2011, resulted in unintended consequences which have damaged the ability of patent owners to protect their patents from infringement. These consequences include the filing of post-grant review proceedings at the Patent Trial and Appeal Board (PTAB) to depress stock prices and extort settlements, the filing of repetitive petitions for PTAB trials which are harassing to patent owners and the unnecessary duplication of work by U.S. district courts and the PTAB. Additionally, changes made by the Judicial Conference of the United States in the Federal Rules of Civil Procedure regarding pleading and discovery, as well as recent case decisions by the U.S. Supreme Court involving fee shifting and the recovery of attorney’s fees in patent cases, have further weakened the property rights of legitimate patent owners.

In a telephone interview, Rep. Stivers noted that, while the AIA was intended as legislation that would make the patent system more efficient, the resulting differences in standards between the PTAB and the district courts have led to a large number of appeals from the PTAB. “Instead of living up to its billing as being more efficient and quicker, the PTAB has become just another stop which is more complicated, more expensive and exactly the opposite of what it was intended to do,” Stivers said. Although he noted that he was not an advocate of getting rid of the IPR process entirely, Stivers felt that the PTAB had to use the same standards of evidence used by district courts. “If that happens, then the PTAB can live up to the potential that it was sold on and you can get the same ruling no matter where you go,” Stivers said. He also added that the bill would restore injunctive relief to patent owners which should help curb “efficient infringement” and encourage infringers to properly license technologies.

Most of the STRONGER Patents Act deals with both inter partes review (IPR) and post-grant review (PGR) proceedings used to challenge patent validity at the PTAB. The bill would alter claim construction for both IPRs and PGRs, requiring claims to be construed by their ordinary and customary meaning as they would be in a 35 U.S.C. § 282(b) action to argue invalidity in district court. The Patent Office would also be ordered to consider previous claim constructions issued by a district court as well as the patent’s prosecution history. The bill also heightens standing requirements for PTAB petitions, prohibiting parties from filing petitions to initiate trials unless they show a reasonable likelihood of sued for infringement of the challenged patent or if they can demonstrate a competitive harm related to the patent’s validity. Decisions to deny institution of either IPRs or PGRs would not be appealable to the Court of Appeals for the Federal Circuit. IPR or PGR trials may not be instituted if validity of the challenged claims has already been decided by district courts or in a U.S. International Trade Commission (ITC) proceeding on either 35 U.S.C. § 102 grounds for novelty or 35 U.S.C. § 103 grounds for obviousness. The bill would also introduce new language on amendment practice for both IPRs and PGRs which would allow patent owners to propose a reasonable number of substitute claims which would then be subject to an expedited patentability report from a patent examiner.

Title I of the STRONGER Patents Act continues with a provision on the composition of administrative patent judge (APJ) panels in IPR and PGR proceedings, which would prohibit APJs deciding to institute a review from actually hearing the review on the merits. Other Title I provisions increase opportunities to request patent reexamination while barring requests for ex parte reexams filed more than one year after the petitioner has been served with a patent infringement complaint; improve the ability of district courts to issue injunctions after findings of patent infringement; eliminate the diversion of U.S. Patent and Trademark Office fees; extends micro-entity status to institutions of higher education; and directs the Small Business Administration to produce a report on the impact of both patent ownership and patent infringement allegations on small businesses.

Title II of the bill is titled Targeting Rogue and Opaque Letters and closely follows the language of the TROL Act of 2015. Provisions of this part of the bill define demand letters which are sent by patent owners in bad faith, including when the letter sender has no right to pursue civil action or otherwise makes misleading statements about the infringement allegations; empower the Federal Trade Commission (FTC) to enforce against bad faith demand letters as an unfair or deceptive act violation; and preempts any state law which expressly governs the transmission or contents of communications related to the assertion of patent rights

“This is gaining steam among colleagues,” Rep. Stivers said. “Even people who have been on the other side of this understand that they’ve let the patent system slip in an unintended way.” Stivers cited the recent rankings handed out by the U.S. Chamber of Commerce in its annual IP Index which show how, after being the top-ranked patent system in the world for generations, the United States’ patent system has quickly fallen to 12th, tied with Italy, over the course of two years. “Historically, since Edison and even before, we have had the best ideas and intellectual property system in the world,” Stivers said. “Those things together created the world’s greatest economy. If we don’t have a strong IP system, it will hurt our economy.” While Stivers doesn’t serve on the House Judiciary Committee, which will likely have a hand in crafting the final bill, he has met with members of that committee regarding the STRONGER Patents Act.

In response to the introduction of the STRONGER Patents Act, Brian Pomper, Executive Director of the Innovation Alliance, a coalition of research and development-based tech companies, issued the following statement:

“The Innovation Alliance commends Representatives Stivers and Foster for introducing the bipartisan STRONGER Patents Act in the House of Representatives. This comprehensive legislation is the smart policy we need to reverse the alarming decline of the U.S. patent system and innovation economy we have seen in recent years.

A decade of harmful congressional actions and court decisions have weakened American patent rights, abandoned small inventors and undermined U.S. innovation. And as the U.S. has curtailed patent protections, foreign competitors, including China, have strengthened theirs.

The warning signs are everywhere. In 2018, the U.S. fell to 12th place in the U.S. Chamber of Commerce’s international ranking of patent system strength, falling behind countries such as South Korea and Spain. The U.S. also fell out of the top 10 of Bloomberg’s international innovation index for the first time ever. Meanwhile, startup activity in the U.S. has slumped and venture capital investment has increasingly moved overseas.

The STRONGER Patents Act says ‘enough is enough’ and ensures that patent rights are protected as a fundamental underpinning of our innovation economy. Like its companion bill in the Senate, the STRONGER Patents Act treats patents like any other property and permits injunctions to protect patent owners against infringement during and after court cases. It ensures fairness in Patent Office administrative proceedings, limiting repetitive and harassing challenges against inventors. And it ends the diversion of patent application fees to other government spending, ensuring the Patent Office has the funding it needs to grant high-quality patents without harmful delay.

This legislation will help ensure that our patent system continues to serve as an engine for U.S. economic growth and job creation. The Innovation Alliance urges the House and the Senate to pass the STRONGER Patents Act and restore the U.S. to its position as the global leader in innovation.”

Support of the STRONGER Patents Act was also proffered by William J. Merritt, president and CEO of the mobile tech R&D company InterDigital:

The bipartisan effort to introduce the STRONGER Patents Act marks an important step forward for technological innovation in the U.S. Just a few weeks ago, the U.S. Chamber of Commerce released a new study finding that the U.S. patent system continues to lag, falling to 12th, whereas a few years ago the U.S. routinely ranked first. This new legislation will help reverse the downward trend by offering strong protections for the research and intellectual investments of U.S. scientists and engineers. Both Congressmen Stivers and Foster recognize the importance of U.S. innovation, and they are proof that Washington can still work together on common sense policy that boosts our economy.”

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 20 Comments comments. Join the discussion.

  1. Valuationguy March 26, 2018 9:38 am

    Until Goodlatte and Issa depart Congress in January….this bill is going nowhere…slowly.

    Let us hope the new Committee Chair and Subcommittee Chair are more reasonable in the new Congress so we can see movement in this Bill next year (since I anticipate it will be reintroduced again then…with possible changes reflecting whatever the Supreme Court does with Oil States decision…)

  2. angry dude March 26, 2018 10:04 am

    Valuationguy@1

    January 2019 ???

    R u kidding?
    Its March 2018 now
    So much for recommending filingh provisional patent app from ipwatchdog regulars
    I’d rather have my dinner for two

  3. Valuationguy March 26, 2018 11:19 am

    angry dude,
    What is your issue with what I said? (“R u kidding?”)

    Fact is that while Goodlatte and Issa control the key chairs in the House (i.e. until Jan 2019)….this bill is going nowhere. They are avowed puppets/go-to men of the efficient infringement lobby. Once a new Congress sits in January…the Stronger Patents Act (bill) will have to be reintroduced in the House which will refer it to the appropriate Committee (which will farm it to the appropriate subcommittee). ALL PREVIOUS WORK on the bill doesn’t matter legislatively…as it goes back to Step 1 of the process. It is normal operating procedure that unpassed bills are dropped after the second session of a Congress….and have to be fully reintroduced.

    The bill’s sponsors can continue to add additional sponsors and gather support in the various committees or the House itself (hoping that none of the sponsors lose in the Sep 2018 general election)….but its pretty axiomatic that neither Goodlatte or Issa will willing allow the STRONGER PATENT ACT to get voted on to even get out of committee.

  4. Mark Martens (@MarkMartens42) March 26, 2018 11:32 am

    For the last few years, Apple, Google, & Tech co have been busy shaking as much of the truly innovative IP out of the hands of small inventors as possible.

    As soon as they’ve done enough of that, they will want that STRONGER bill to kick in. To protect their newly acquired patents, and boost (return) their economic value .

  5. Tesia Thomas March 26, 2018 12:14 pm

    @Mark Martens,

    You’re correct.
    Nobody thinks the IP that they created and paid for is weak and invalid.

    But, I believe in the abilities of small inventors to outdo Apple, Google, and Big Tech once again and make them pay once the strong IP laws return.

  6. Michael March 26, 2018 12:27 pm

    No section 101 reform?

  7. Bemused March 26, 2018 12:40 pm

    A step in the right direction but not close to all that we need in order to get the patent system and American innovation back on track. And as an aside, I agree with Valuationguy that this bill has no chance of getting passed until 2019.

    Hopefully, during the amendment process, we’ll see changes to this bill to at least: (1) Eradicate (not put a band-aid) the PTAB; (2) Address venue reform; and (3) Fix the 101 debacle.

  8. angry dude March 26, 2018 12:41 pm

    Tesia,

    Make them pay for IP they stole 10-15 years ago??
    Good luck with that
    That would mean complete collapse of their stock…
    Won’t happen

  9. Tesia Thomas March 26, 2018 12:50 pm

    angry dude,

    No. I mean out-innovate what they stole.

  10. Equitable March 26, 2018 1:46 pm

    Is it even possible to overturn, so to speak, Ebay, via statute? They’re still wanting an equitable remedy (injunction) to be put in place, without consideration of the equitable factors. Seems like the supremes would likely block that even if written into law explicitly.

  11. Anon March 26, 2018 4:39 pm

    Without addressing any of the factors that led to the crippling, I do not see the legislation to have more than a mere Band-Aid effect.

    Factors to be addressed include a Supreme Court that insists on interfering with statutory law with their fingers in the nose of wax of 101.

    Equitable @ 10,

    I hear you. To the extent that equitable factors are misapplied based on a mistaken notion that “injunction” is “too severe” of an equitable remedy – when it is in truth the single best approximation to making the transgressed whole (as to the type of injury suffered by the transgressed, and in accord with the first rule of equity), then this too is just another sign that Congress needs to remove the Supreme Court from hearing patent appeals under the Constitutional power of jurisdiction stripping. Being that patent appeals are NOT a matter of original jurisdiction of the Supreme Court, as long as Congress sets up a (new – because the existing CAFC has been brow beaten into mindlessness) proper Article III court (to preserve Marbury, which only requires Article III review and not Supreme Court review), Congress could do a more powerful directive than the Act of 1952 (“we really mean it this time”).

    Alas, I simply doubt that Congress could get its act together to take back its Constitutionally appointed law superiority in the realm of patent law.

  12. Ternary March 27, 2018 12:06 am

    Meanwhile, in a committee room in the same Capitol building, Representative Issa during a Judiciary subcommittee hearing on the GAO report on CBM (https://www.youtube.com/watch?v=8iXuZbgzLL0):
    1) keeps on complimenting the US patent system as the gold standard in the world for promoting innovation, even after in a previous hearing retired Chief Judge Michel explained how bad the situation has become;
    2) pushes for extending CBM to help “innovation”; and
    3) promotes to extend the CBM into other technology fields (basically to get 101 into IPR).

    These guys will not rest until our patent system is completely and utterly gutted, dead and buried. If possible before they retire.

  13. Night Writer March 27, 2018 8:05 am

    @12 Ternary >These guys will not rest until our patent system is completely and utterly gutted, dead and buried. If possible before they retire.

    The why is the money to burn down the patent system keeps coming. One problem with allowing monopolies to develop is that they have enormous amounts of free cash.

  14. Night Writer March 27, 2018 8:07 am

    @11 Anon

    I think too that few people in Congress have even the remotest idea of how patents interact with the economy and innovation.

    I note again that during the height of the Obama troll talk that the Office of Budget and Management did a study that concluded there was no troll problem.

  15. Anon March 27, 2018 8:28 am

    Night Writer,

    I remember that study (as well as Ron Katzneleson’s challenge of the White House screed).

    As to your “free cash” problem, the problem there is that “voice” has been left uncoupled with that “free cash” and other attributes of a juristic person, that no real live person can match. An outgrowth of imbalance (only made worse with the likes of the Citizens United case), which imbalance only too eagerly is “pocketed” by the political machines (sadly of both parties) for the Legislative Branch that has largely been asleep at the switch, not only to its own actions (and misdeeds), but to the taking of power over statutory law by the executive and judicial branches.

  16. Curious March 27, 2018 8:31 am

    On a side note, what has happened to Commissioner Iancu?

    It was reported that he was seen at SXSW in Austin on March 11th in the unveiling of the new Cover Design for Patents. However, that is the only news I could find about him from the last 2 months. He’s been in office for nearly 8 weeks and it has been business as usual at the USPTO: TC 3600 doesn’t think any patent classified to their group is patent eligible under 35 USC 101; the PTAB will bend over backward to affirm/invalidate any application/patent that has the misfortune of coming through their doors; and 75% of all software-related application — no matter how technical — seem to be facing 101 rejections.

    It is like Michelle Lee and the rest of the Google cronies never left the building.

    Rome wasn’t built in a day, but I haven’t even seen a glimmer of change as the USPTO. Anybody noticed anything different about the USPTO since Iancu was sworn in?

  17. Night Writer March 27, 2018 8:36 am

    @16 Curious

    Good point. I haven’t seen any glimmer of change either.

  18. Valuationguy March 27, 2018 9:43 am

    @Curious

    While Lee is gone….the fact is that NONE of her lieutenants are gone yet and MOST of the rank-and-file personnel in the PTO SUPPORT the IPR process as it guarantees them additional job security. Iancu hasn’t moved with any rapidity to change much that WE can see….but my guess is that he is getting up to speed on the bureaucracy before making any changes.

    It is NOT going to be an easy or quick job. He has to install his own people….replacing the ENTIRE TOP echelon of the PTO….which means losing A LOT of institutional knowledge in the process…and possibly making key enemies in Congress to whom his agency ultimately responds to (as Congress controls the MONEY). Remember that the PTO budget will need to be defended at all costs.

    Equitable@10

    Yes…Congress could overturn the craptasticly misleading Ebay decision….but it won’t…at least not yet. The troll narrative is still too strong and like I have been harping on…the efficient infringement lobby still has a lock on the key House Committees where the legislation would need to come out of.

    In my view…the key problem with the Ebay decision was that CAFC is unwilling to take the Court’s language that
    “some patent holders, such as university
    researchers or self-made inventors, might reasonably
    prefer to license their patents, rather than undertake
    efforts to secure the financing necessary to bring their
    works to market themselves. Such patent holders may be
    able to satisfy the traditional four-factor test, and we see
    no basis for categorically denying them the opportunity to
    do so”
    revealing patent owner PREFERENCE as one acknowledged key basis for supporting irreparable harm.

    Unfortunately….the CAFC (with Prost and Dyk in agreement with the efficient infringement lobby) continue to deny this owner preference as supporting an injunction….instead requiring A LOT more hoops to limit the case injunctions can be applied to. All NPE’s who engage in their own research and development should EASILY qualify for injunctions (especially after infringement is proven)…but CAFC decisions have severely limited the cases this applies in its zeal to weaken enforcement of patent infringement.

  19. Night Writer March 28, 2018 8:45 am

    @15 Anon

    The free cash problem is a lot like MM over at the other blog. He isn’t going to stop posting anti-patent rhetoric unless someone stops him. Google isn’t going to stop paying K Street to push anti-patent legislation (and all the other vast complex of things they do) unless someone stops them. It is good for Google and frankly if I were an executive at Google I would probably do it too.

  20. Anon March 28, 2018 10:45 am

    It does not take anyone stopping anyone to be able to set up an engaging forum in which the merits of the different positions can be made evident and discerning people can be elucidated.

    What it does take (and I am thinking specifically about that other blog), is that there be a set of rules that gear towards meaningful interactions and that the non-thinking and purely propagandist posts be edited out with some type (really, any type) of objectively applied rules.

    If that other site wants to provide a forum where outright lies and deception are tolerated, well, that is the choice of that site. If that other site wants to provide a forum where engagement on the merits is not promoted, well, that is the choice of that site.

    My biggest beef is that not only does that other site provide such a forum, but that the editorial controls actually inhibit a countering of the “desired narrative” with a purely subjective application of “rules” that are nowhere near evenly applied.

    On top of that, that other site then has the gall to turn around and (every 12-18 months or so) post things like “let’s have a better ecosystem.”

    MM – aka Malcolm, aka Malcolm Mooney, aka an army of sockpuppets when posting at PatentDocs (even though he wined incessantly when others used multiple monikers) – has created an entirely untenable situation as far as credibility goes at that other site.

    Some will advocate non-interaction.

    But that does not work. That only provides the “air” that the propaganda has some merit, and lesser thinkers (for example, posters over at the other site like Ben and Mr. Snyder and even to some extent Mr. Heller) lap up the propaganda and treat it as “truth.”

    We have in the past discussed how ethics should apply to those that not only teach law to emerging attorneys, but that are also active in attempting to shape law through their scholarly efforts. I would posit that the same heightened aspects of (should be) applicable ethics apply to those that provide forums that are aimed at shaping the mindset and “evolution” of law. One should not proclaim “America’s leading patent law source” and then turn around and through uneven editorial application help create a source of biased propaganda, acting as if “gee, I have no control.”

    Contrast the editorial controls here: there is plenty of leeway for all types of opinions. But those that refuse to engage and insist on opinions when an informed opinion would dictate correction of clear errors are given short leash. Those that refuse to engage on the merits are also given short leash – and not allowed to run amuck (more or less). Those that purposefully mislead and dissemble lose their forum.

    Yes, K Street will be paid. Yes, K Street will have an immense number of “visits” with those visits being off the record. Yes, the USPTO has an immense problem with lack of sunshine. And yes, the “free cash” problem exacerbates these problems. But that is not to say that other voices cannot call for more sunshine, for more reasonable constraints to jurisitic speech such that the nature of the jurisitic person does not overwhelm the reality of the real person.

    (by the way, I do appreciate your continued advocacy, even as I may not agree with all of your positions or nuances of your positions)

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