This paper proposes amending 35 U.S.C. 271 Infringement of Patent with elements drawn from § 2-403 of UCC Article 2, Sale of Goods, and with elements of the Patent Exhaustion Doctrine. This amendment, if enacted, would prevent patent trolls from proceeding against Bona Fide Purchasers for Value with respect to certain specific infringements, in order to strengthen consumer confidence in the marketplace, by ensuring that vendors can deliver the products that they sell, free of threats of patent infringement litigation against such innocent buyers.
Left to Right: DePaul Law Professor Josh Sarnoff, Chief Judge James Holderman (N.D. Ill.), Ray Niro, Chief judge Michel (CAFC, ret.), DePaul Law Professor Roberta Kwall.
Former Federal Circuit Chief Judge Paul Michel gave an invigorating speech at the DePaul University College of Law Center for Intellectual Property Law & Information Technology (CIPLIT®) on October 15, 2013 at the 15th Annual Niro Distinguished Intellectual Property Lecture on the topic “How to Retain Patent Enforcement While Reforming It – Judges and Counsel Should Manage Infringement Suits, not Congress.”
To an evenly divided room of practitioners and law students, Judge Michel urged practitioners to take action against Congress’ incorrect understanding of the patent system. Judge Michel explained legislators are proposing bills because they are being heavily lobbied by a small (but powerful and well-funded) coalition of companies. He highlighted the common problem with the nine active bills currently before Congress. If passed, the bills separately and together would weaken the patent system; not strengthen it. None of these current bills would address the problems with the current patent system: litigation is slow, complicated and unpredictable. The bills, however, would make litigation slower, more complicated and less predictable. In short, congress’ solution would add to the problem.
Just when Congress is gearing up to consider a package of patent reform initiatives aimed at dealing with abusive patent litigation, the U.S. General Accountability Office has released a much anticipated study of the “consequences of litigation” by non-practicing entities as mandated by Section 34 of The America Invents Act (AIA). Given that Section 34’s language and directives could best be described as unenthusiastic towards licensing and the enforcement of patents, an objective reader of the GAO study cannot help but conclude that the GAO did not conduct or produce the sort of scornful report on the state of our patent system that large IT companies and patent-skeptics had hoped for. While the report is not a vindication for NPEs (far from it), it did not give patent critics what they hoped to get (i.e. an independent agency’s finding that patent litigation is exploding and that this increase in litigation is having a negative impact on innovation). Quite the contrary.
The GAO interviewed officials from the PTO, FTC, ITC, and 44 stakeholders including judges, academics, venture capitalists, technology companies, and inventors, surveying existing economic and IP academic research; examined data from the AIPLA and RPX; and purchased litigation-related data from third party sources like Lex Machina; and conducted a year-long PTO performance audit. In the end, the GAO produced a measured report which summarizes the views of the various stakeholders and suggests that — to the extent there is a problem in the patent system, it is not a patent litigation problem but rather a legacy patent quality problem.
According to mythological accounts, ancient Mediterranean voyagers confronted a subtle danger embodied in alluring form: the Sirens. The Sirens compelled all who heard their sound to draw near their reef-surrounded isle. “Their song though irresistibly sweet was no less sad than sweet and lapped both body and soul in a fatal lethargy the forerunner of death and corruption.”  Those succumbing to the Sirens’ song perished as their boats were wrecked on the submerged reefs surrounding the island. Others escaped this fate, however, by blocking off the sound itself.
The Sirens are now singing a seductive song about how to stop patent “trolls” and their “abusive litigation.” It appears that several large corporations who cultivated the patent “troll” narrative trill forth their song, promising efficiency and fairness with concomitant benefits for all. Those giving heed to this modern Siren song are lulled into abandoning or subordinating to concerns of “litigation abuse” other fundamental long-held values and principles of equity, separation of powers, judicial independence and prudent judgment.
The America Invents Act (AIA) is one of the most sweeping patent legislation in over a century, the effects of which are yet to be fully understood. Even before the full implementation of the AIA, legislators in both chambers of Congress have heard the Siren muses and called for yet additional changes in our patent law, ostensibly to curb purported “abusive patent litigation.” The majority of the proposed provisions in these bills appear to focus on the patent litigation process, ironically by stripping the Federal Judiciary of their procedural and discretionary case-management tools.
The first line of the press release says: “Although the America Invents Act (AIA) that took effect September 15, 2011…”
Now I am not one who normally quibbles about what could be a harmless typographical error — from time to time I make my fair share (and then some) of mistakes. But the AIA took effect on September 16, 2011, not September 15. A minor point no doubt, but once I read the rest of the story I wondered whether that was really a mistake, typographical error or more indicative of ALM writing about something that they just don’t understand.
The SHIELD Act is very short and is only directed at computer and software patents, which makes absolutely no sense if you ask me. The seminal provision of the Act states:
Notwithstanding section 285, in an action disputing the validity or alleging the infringement of a computer hardware or software patent, upon making a determination that the party alleging the infringement of the patent did not have a reasonable likelihood of succeeding, the court may award the recovery of full costs to the prevailing party, including reasonable attorney’s fees, other than the United States.
Now that the dust is settling from the passage of H.R. 1249/S.23 (aka the oxymoronic America Invents Act) and those (like me) have stopped “moaning and groaning” about how the America Invents Act or AIA (I feel like washing my mouth out with Ivory soap every I say it) is an utter “sham” to be called reform, it’s time to deal with the reality. The AIA will definitely affect how innovative American small businesses and individuals (the “Davids”) approach patenting their technology in the U.S., especially the change from “first to invent” to “first to file” which has now slanted the playing field in favor of large multinational corporations such as Microsoft (the “Goliaths”). But there are still patenting strategies for the American Davids of Innovation to cope with the AIA (and still compete with the Goliaths) if the primary market to protect is the domestic market.
First, let’s define what I mean by the domestic market. By domestic market, we’re talking about the United States. Not Asia. Not Europe. Not even NAFTA. Just good ol’ America which, for many American Davids is all they care about, and can usually deal with.
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