This is one of those stories that will make you scratch your head in utter disbelief.

On November 20, 2012, ALM, which is an integrated media company with brands that include The American Lawyer, Corporate Counsel, Law.com and The National Law Journal, issued a press release titled: Patent Reform Fails to Prevent Litigation Spike, Says Corporate Counsel Law Firm Survey.  Interested, I took the bait.

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.

Yesterday Congressman Peter DeFazio (D-OR) and Congressman Jason Chaffetz (R-UT) introduced the Saving High-tech Innovators from Egregious Legal Disputes Act, or SHIELD Act for short.  If ever passed into law the SHIELD Act would ostensibly adopt a variation on the English Rule, where the losing patent owner pays the legal fees of the victorious patent defendant when there was no “reasonable likelihood” that the patentee would prevail in the litigation.

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.

The 111th Congress once again left patent reform efforts on the table without any resolution or even a vote. That might be just as well given that in the minds of most the patent reform efforts were not truly “reform,” but rather were merely changes that would not have made for a stronger Patent Office or otherwise addressed some of the pressing issues that require Congressional attention.

At some point during 2011, however, I suspect that Congress will become engaged and interested as innovators find themselves on the short end of the Supreme Court sick in the Microsoft v. i4i case. We all know that the Supreme Court only takes patent cases to overrule or at least modify the law of the Federal Circuit. That only makes sense since there is but one Circuit responsible for patent law, thus no splits among the Circuits to resolve. So in taking the Microsoft-i4i case that asks whether there should be as broad a presumption of validity as required under the well-established law of the Federal Circuit, it doesn’t take a rocket scientist to figure out that the presumption of validity will be eroded by the Supreme Court, perhaps in this term. That being the case, it is at least plausible that Congress could be persuaded to become involved, perhaps even undertaking sensible reforms that protect innovators.  Yes, I realize how naive that sounds, but please keep reading!

Talk about turn of events.  Earlier today I posted an article regarding how patent reform legislation is not certain because it is conceivable that there will not be enough votes for the bill on the floor of the Senate.  As I was writing that post the House Judiciary Committee was holding hearings on patent reform, and the hearing did not bode well for those hoping for reform.  But wait, the House held a patent reform hearing today?  Yes, and they did not give much notice, announcing the hearing only yesterday.  So on a day Chrysler will declare bankruptcy, and the day after reports of a 6.1% contraction of the US economy, the House held a patent reform hearing with less than 24 hours notice?  Something is not right here!  What is going on?  In any event, Congressman John Conyers (D-MI), Chairman of the House Judiciary Committee, reportedly started the hearing this morning by saying: “we are not a rubber stamp for the Senate.”  This was then echoed by Ranking Member Lamar Smith (R-TX) and others on the Committee.

As of today, legislative patent reform efforts are working their way through Congress. We are further along the road to legislative reform than at any point in time over the last 4 years, but the ultimate outcome is still not certain. The Senate Judiciary Committee has reported out a version of patent reform, so there is a real expectation that legislative reform will happen at some point during 2009, perhaps soon. It is expected that if Senator Harry Reid (D-NV) brings the legislation to a vote it will be because he has the votes to pass the legislation. If the Senate passes patent reform there will be patent reform. The House of Representatives has consistently passed patent reform, and there is every expectation that President Barack Obama will sign the bill, thus the Senate is, as is typically the case, in charge.

I recently received an e-mail from Ron Katznelson, who is the Founder and President of Bi-Level Technologies in Encinitas, CA.  Dr. Katznelson is a named inventor in more than 25 U.S. patents and his research and development interests include optimal signal design, digital RF signal processing, digital television, signal representation & sampling theory, intellectual property management and patent law.  Over the past several years Dr. Katznelson has been heavily engaged in the patent reform debate, both with respect to reforms the Patent Office has attempted to implement and with respect to reforms that Congress has been considering.  Dr. Katznelson is now attempting to gain support within the inventor and start-up community to request Congress to reconsider the First-to-File provisions that are currently within the current patent reform legislation, which is now pending and widely believed to be a done deal. 

Patent reform will once again take center stage this week when Senators on the Judiciary Committee discuss the Leahy-Hatch patent bill in an Executive Business Meeting scheduled for Thursday, March 26, 2009, at 10:00 a.m., in the Dirksen Senate Office Building, Room 226. With patent reform in the air and seemingly rushing through the Congress, it was believed that the bill would be voted on by the Judiciary Committee last week and sent on to the full Senate this week, but a group of Senators led by Arlen Specter (R-PA) delayed the vote in Committee. Specter said: “We need to do more to improve the language on damages which we know has been very vexing.” Specter also said that unless the damages language is improved he does not anticipate that Senate Majority Leader Harry Reid (D-NV) would call the bill up for a vote.

According to Reuters, Senator Orrin Hatch (R-UT) says that the House and Senate are close to agreeing on language for a patent reform bill that would virtually ensure its passage. According to Hatch, patent reform will happen this year, saying that he would be shocked if patent reform was not enacted in 2009. Hatch says “[th]is is the closest we’ve come to really doing this job.” So what is the good news? Hatch also says that the Senate is going to agree to language that would make it much more difficult for courts to find inequitable conduct. According to Reuters, the language would mean that inequitable conduct could be found only if there were real fraud during the patent acquisition process, rather than allowing a defendant to point to an error made in a “complicated process.” What this actually means time will only tell, but if this means that patent reform would adopt the Patent Office view of inequitable conduct and enact Rule 56 that would be an enormous step in the right direction. This is what I have been suggesting for months, it would force certain Federal Circuit judges to abandon their myopic view of inequitable conduct and it would open the door to make Patent Office reform possible. By limiting inequitable conduct to real fraud it would be possible for patent attorneys and agents to have real conversations with patent examiners and lead to a more open and less adversarial process, perhaps even allowing for the cooperative approach to patent examination I recently discussed when I suggested a change in Patent Office philosophy.

The Chairman of the Coalition for 21st Century Patent Reform, Gary Griswold, released the following statement after the introduction of The Patent Reform Act of 2009, in the U.S. Senate and U.S. House of Representatives. The bills introduced in the House and Senate today contain several provisions that did not have sufficient support to become law because of the potential negative impact on innovation and job growth.

Our coalition is committed to achieving reforms that will enhance the patent system so that valid patents are issued promptly and cost efficiently thereby encouraging innovation that will create jobs and promote America’s economic recovery. Legislation that makes these kinds of changes will permit Congress to reach useful and effective reforms to the patent system, and should be passed in the 111th Congress.

U.S. Reps. Don Manzullo (R-IL) and Mike Michaud (D-ME) today said the latest patent reform bill introduced in the House and Senate this afternoon would actually weaken intellectual property protections for American manufacturers and put hundreds of thousands more Americans on the unemployment lines.

PRESS RELEASE:

Suffern, N.Y., March 4, 2009 – General Patent Corporation (GPC), a leading patent licensing and enforcement company providing assistance to small inventors and entrepreneurs throughout the United States, announced its disappointment with the latest Congressional initiatives to reform America’s patent laws. With the nation expecting more from the new Congress and the newly-elected Obama administration, it was hoped that the latest initiatives would have strengthened the nation’s commitment to sustain America’s traditional leadership in technology innovation.

The IPO is reporting that momentum for patent reform has been lost in the Senate and that Senate Majority Leader Harry Reid will not bring S. 1145 to the floor for action until at least after the Senate returns from recess at the end of March. Notwithstanding, my sources tell me that if patent reform does not happen by the time the Senate recesses in March then it simply will not happen at all this time around, which would mean that to some extent we have all been making much ado about nothing.