The US patent system has a storied history: written into the Constitution by Madison; the Patent Act itself written by Jefferson; and, requested to be passed in Washington’s first State of the Union speech. As a former speech writer for the Commissioner back in 1985, I had the fun task of finding little interesting factotums about the US patent system to add some flavor to whatever audience the Commissioner was addressing. Such facts might include: local inventors, known statewide innovative companies, or just interesting moments in the course of the system and its contribution to the development of the then brand new United States.
Some fun stuff: Abraham Lincoln reckoned that, along with the invention of the printing press and Columbus discovery of America, the US patent system was among the three most important events in the history of the world. Of the 4 faces on Mt. Rushmore, 3 are inventors (Roosevelt is the exception); but, only Lincoln got a patent. The British burned pretty much everything in Washington that mattered in 1812; except, the Patent Office, around which they placed a guard. And so it goes.
Why am I resorting to the emotional heart strings; because the current round of patent reform is an existential threat to the US patent system. If these proposals pass, we will be left with a very, very expensive registration system in which the Fortune 50, and no one else, will be able to participate. In case no one has noticed, the Fortune 50 do not innovate (with few exceptions, it is those who will become the Fortune 50 that do the innovating) and so, the system ceases to exist. Let me explain.
On Thursday, March 27, 2014, the Senate Judiciary Committee held another meeting on patent reform legislation. A markup of Senator Leahy’s bill (S. 1720, “Patent Transparency and Improvements Act”) may happen as early as this week. During Thursday’s meeting Senator Leahy, who Chairs the Committee, indicated a willingness to incorporate in his bill other provisions from Senator Cornyn’s and Senator Hatch’s bills.
Momentum is clearly building for more patent legislation, but the myriad bills and provisions make it difficult even for folks close to Capitol Hill to keep track of them all. To fill that need, today’s post is part of a series of articles based on the white paper, Patent Reform 2014. IPWatchdog.com has already published articles on Joinder of Interested Parties and Loser-Pays Fee-Shifting. Today’s focus is on the proposed FTC enforcement provisions found in several pending bills.
In September 2013, Senator Klobuchar’s staff circulated draft language that would require the FTC to initiate a rulemaking proceeding, in accordance with 5 U.S.C. §553, to prohibit the assertion or enforcement of patents in a manner that is an unfair method of competition, or unfair or deceptive act or practice, under section 5 of the Federal Trade Commission Act (15 U.S.C. 45).
Editorial Note: This article is a portion of a larger work by Andrew Baluch titled Patent Reform 2014, modified here for purposes of publication on IPWatchdog.com. Baluch’s article is a comprehensive review of pending legislation developments in Congress, the Executive Branch, the Courts and the States. For more specifically on fee-shifting please also see Will Fee Shifting Solve the Patent Troll Problem?
U.S. patent litigation has followed the centuries-old “American Rule” under which each party to a litigation pays its own legal fees and costs, regardless whether it wins or loses the litigation. A narrow exception exists in patent cases, but only in “exceptional cases” under 35 U.S.C. § 285, such as where the losing party engaged in litigation misconduct, or if the patent was fraudulently procured, or if the losing party raised arguments that were both objectively baseless and made in bad faith.
Despite the long tradition of litigants paying their own legal fees and costs, Congress has shown interest in changing the playing field and deviating from the American Rule in patent cases. This comes at a time when the U.S. Supreme Court is already considering two cases that relate to the definition of “exceptional cases” in § 285 that may well alter how this existing exception to the American Rule is applied in practice.
What follows is discussion of various legislative proposals relative to fee-shifting, as well as a brief discussion of the two cases currently pending before the Supreme Court.
The United States Patent and Trademark Office has recently released the latest information about the number of post grant trial proceedings that have been initiated. The clear, resounding verdict is that post grant administrative trials are extraordinarily popular. In fact, they are far more popular than Congress anticipated they would be at the time the America Invents Act (AIA) was passed.
Scott McKeown, a partner with Oblon Spivak who co-chairs the firm’s Post Grant practice group and is the primary author of the Patents Post Grant Blog, recently posted his analysis of the latest post grant trial statistics announced by the Patent Trial and Appeals Board (PTAB). See March 2014 Update to PTAB Trial Statistics. Here is what the chart looks like:
According to McKeown these numbers are significant because they are significantly higher than the numbers originally anticipated by Congress, showing that the industry finds these administrative trials to be extremely useful, even more so than predicted. His article explains: “These numbers are well beyond the 281 filing limit per year Congress envisioned…”
EDITORIAL NOTE: The following article has been posted as an online petition you may sign by visiting IndependentInventorsofAmerica.org. On Friday the United States Senate held additional hearings and seem poised to act relatively quickly on the Senate version of patent reform. For information about how to directly contact your U.S. Senators please see Senators of the 113th Congress.
We represent independent inventors and small patent-based businesses across the country and we are against any patent legislation that includes provisions of the Innovation Act (H.R. 3309) and the many variations and additions under consideration in the Senate. This legislation will levy grave harm upon independent inventors and small patent-based businesses, as well as the investors we need to help commercialize new technologies and to protect our inventions.
The American patent system is a trade between an inventor and society. An inventor discloses an invention for all to see and build upon, and the government grants and protects for the inventor an exclusive right to the invention for a short period. The American patent system was intended to enable anyone, regardless of economic status, race or gender, to profit from the invention of something new and valuable. This system has worked as intended for over 200 years, fueling the creation of the greatest economy in the world.
Marla Grossmanis an attorney and partner with the American Continental Group,where she represents clients before the White House, US federal agencies and the US Congress. In other words, Grossman is a lobbyist, but not just any lobbyist. Her clients are a whose-who among the elite in the entertainment industry.
In part 1 of our interview we discussed the prospects of patent litigation reform, the likelihood that Congress will open up the Copyright Act and pursue legislative reforms, and how to get a message heard on Capitol Hill. In part 2 of our interview, which appears below, we pick up where we left off discussing how to take a message to Congress, and then we transition into discussing how quickly legislation can be derailed, as was the case with SOPA, and the unfortunate need to continue to fight the same policy battles time after time. We end generally discussing the political climate in Washington, DC, and how it has changed over the years.
Without further ado, here is the finale of my interview with Marla Grossman.
QUINN: I also think that there is a fundamental misunderstanding on the part of many. I wonder whether it’s an intentional misunderstanding or whether it’s just that they don’t know any better, but there are a lot of people who seem to think that putting out a product is innovation. While it may be a new product to them, that’s not what innovation is about. What that is in many cases is about something you said earlier – many seem to want to be able to take the intellectual property of other people without consequence. How do we combat that kind of growing definition of innovation or growing understanding of innovation
There is a new entry into the patent reform debate. The Main Street Patent Coalition is a national coalition of organizations that says they are dedicated to stopping patent abuse by so-called patent trolls. The Main Street Patent Coalition is encouraging Congress to pass what they call “common sense patent reform legislation.”
The Main Street Patent Coalition members include: the National Restaurant Association, the National Retail Federation, the American Hotel and Lodging Association, the National Grocers Association, the International Franchiser Association, the Application Developers Alliance, the National Association of Realtors, the Retail Industry Leaders Association, the National Council of Chain Restaurants, the American Association of Advertising Agencies and the American Gaming Association. These trade associations say they want Congress to give small businesses a fighting chance against the growing threat of patent trolls.
The Main Street Patent Coalition claims they represent the small business community at large, which has to make you wonder. On their homepage they talk about an innovative, family owned and privately held company named White Castle. According to the LA Time, White Castle has 9,600 employees. How exactly is that a small business? Answer: White Castle is not a small business, at least if you concern yourself with the way the Small Business Administration defines small business. To be a “small business” you have to have no more than 500 employees. Clearly the Main Street Patent Coalition recent press release Small Main Street Businesses Launch Patent Reform Coalitioncarries a misleading, if not false, title.
Brian Pomper, Executive Director of the Innovation Alliance.
WASHINGTON – As the Senate debate on patents and their role in innovation and job creation continues in 2014, the Innovation Alliance today renewed its call for a thoughtful, inclusive legislative process that takes into account the impacts of any changes to the current system on all stakeholders and successfully targets abusive behavior without harming innovators, job creators and the economy as a whole.
“The Innovation Alliance supports efforts by Congress to address behavior abusive of the patent system, but we must do so in a way that safeguards the strength of that system, which is at the very heart of our nation’s economic power. We continue to have concerns with many of the proposals under consideration in the Senate and firmly believe that we need to take the time to get this right. That’s why we stand ready to work with leaders in the Senate to develop a consensus product that will be a force for progress for the full range of American innovation,” said Brian Pomper, Executive Director of the Innovation Alliance.
Last month, following a Senate Judiciary Committee hearing on patent issues, a wide spectrum of stakeholders – from inventors, judges, and universities to companies and organizations representing America’s innovators – voiced their concerns with the proposals being considered by the Senate. While measures to target abusive behavior would be worthwhile, they should not be adopted at the expense of a patent system that has created the greatest economy in the world.
How to Write a Patent Application is a must own for patent attorneys, patent agents and law students alike. A crucial hands-on resource that walks you through every aspect of preparing and filing a patent application, from working with an inventor to patent searches, preparing the patent application, drafting claims and more.
Without hesitation I recommend One Simple Idea and think it should be required reading for any motivated inventor. There is so much to like about the book and so much that I think author Stephen Key nails dead on accurate. The book is educational, information and inspirational. For the $14 cover price it is essential reading.
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