Senate Judiciary Committee to Markup PATENT Act

Senator Chuck Grassley (R-IA), Chair of Senate Judiciary Committee.

On Thursday morning, June 4, 2015, at 9:30am, the United States Senate will apparently take the next steps with respect to patent reform in the 114th Congress. The Senate Judiciary Committee will hold an Executive Business Meeting at which it is believed the Committee will markup the PATENT Act. The PATENT Act is the Senate alternative to the highly controversial Innovation Act (H.R. 9), which seems stalled in the House Judiciary Committee. This Executive Business Meeting can be viewed online at www.judiciary.senate.gov.

Time will tell whether this expected markup goes through as planned. Both the House and the Senate have previously planned on marking up their respective patent legislation only to postpone such meetings at the last minute. This time it does, however, seem as if the Senate will actually consider the PATENT Act. Of course, as we have seen lately thanks to Senator Rand Paul (R-KY), a single Senator can cause the entire chamber to come to a screeching halt. So if Senator Paul can single handedly throw a monkey wrench into national security, surely a Senator could single handedly stall patent reform if they so desire. Will that happen? Time will tell.

Rumors I am hearing say that the authors of the PATENT Act are going to oppose amendments tomorrow, which could make for a particularly volatile committee meeting. Senators Chris Coons (D-DE), Dick Durbin (D-IL) and David Vitter (R-LA), who are all members of the Senate Judiciary Committee, are on record opposing the PATENT Act. Indeed, Senators Coons and Durbin submitted alternative, pro-patentee legislation in the form of the STRONG Patents Act in March 2015, which offers a very different vision for the future of the patent system and substantive patent law.

“Our patent system has to be the vigorously defended as the absolute bedrock of our economy and one of the critical ways in which we distinguish ourselves from other competing economies around the world,” said Coons earlier today at a patent reform event at the Duke Law Center for Innovation Policy. “As we move toward the next phase in congressional action on patent rights, I am urging my colleagues to be mindful of unintended consequences and their compounding impact on our country and our role in the world.” These comments do not sound like someone who is ready to relent.

Ahead of the Senate Judiciary Committee’s consideration of the PATENT Act tomorrow, Chairman Chuck Grassley (R-IA), Ranking Member Patrick Leahy (D-VT), and Judiciary Committee members John Cornyn (R-TX), Chuck Schumer (R-NY), Orrin Hatch (R-UT), Mike Lee (R-UT) and Amy Klobuchar (D-MN) released a managers’ amendment that includes technical changes to certain provisions, which primarily address concerns regarding post-grant review proceedings at the Patent and Trademark Office.

According to Grassley’s office, the amended PATENT Act will provide important reforms for the way that the Patent Trial and Appeals Board (PTAB) of the United States Patent and Trademark Office (USPTO) operates. For instance, the managers amendment would: (1) Require the PTAB to apply the claim construction standard used in federal district court (i.e., the Phillips standard) and further requires the PTAB to consider if claims have previously been construed in district court. (2) Makes explicit that for purposes of PTAB adjudications patents are presumed to be valid, although does so retaining the current law providing that the petitioner has the burden to prove a proposition of unpatentability by a preponderance of the evidence. (3) Makes clear that the Director has discretion not to institute an IPR or PGR if doing so would not serve the interests of justice. (4) Allows patent owners to submit evidence in response to a petition to institute an IPR or PGR, and petitioners to file a reply to respond to new issues.  (5) Directs the PTO to modify the institution process so that the same panels do not make institution and merits decisions. (6) Directs the PTO to engage in rulemaking in order to institute a Rule 11-type obligation in IPR and PGR proceedings.

[Patent-Reform]

These proposed changes to the PATENT Act to address problems with the PTAB process should be well received, but will not be deemed to be enough by those who are most adamant about the need for change. For example, in federal district courts challengers must demonstrate that a claim is invalid by clear and convincing evidence, so the PTAB standard of proof would be substantially lower even though the law requires patents to be presumed valid, presumably by only the slimmest of margins. Further, there is no standing requirement created for inter partes review, which means that the PATENT Act provides no relief for the so-called Kyle Bass problem. Bass has been shorting stocks and then filing IPRs in order to negatively influence stock prices.

Upon releasing the managers’ amendment, the cosponsors noted that language addressing the amendment of patent claims in post-grant proceedings is a work in progress and the Senators will continue to work on and refine this intermediate language as the bill moves forward in the Senate, assuming of course it passes in the Judiciary Committee, which does seem virtually assured.

It seems rather premature to vote the PATENT Act out of Committee if the sponsors themselves recognize that at least some language of the bill is nothing more than “placeholder language,” as they describe it. There seems something fundamentally wrong with a Committee voting out something that they know will change. Will this lead to a bait and switch? Perhaps. Voting on language that is referred to as “placeholder language” may also be out of fear that the bill would not otherwise get out of Committee otherwise.

There are obviously strong headwinds against patent reform, and we may be approaching the now or never point for patent reform during the 114th Congress, or at least major reform in this Congress. Top Congressional Republicans promised that patent reform would be taken up early during the 114th Congress and was a top priority. But here we are in June, more than 5 months after the start of the new Congressional term, and the mainstream patent reform legislation has yet to be voted out of Committee in either the House or the Senate. This has to be concerning to those who support patent reform given that the exact same bill passed in the House of Representatives in December 2013 by a vote of 325-91.

It wasn’t so long ago when President Obama signed the America Invents Act (AIA) into law. At that time casual observers thought that would be the end to patent reform for another generation, at least. Instead patent reform is becoming an annual event in Washington, DC, and regardless of what happens this week, next week, or during this Congress will change the incessant appetite for additional patent reforms.

Against this backdrop I will be co-hosting a live program in Washington, DC, on Friday, June 12, 2015, that will take a look at the major patent reform bills pending in Congress. The program will take place at the Washington, DC, offices of DrinkerBiddle. Bob Stoll, former Commissioner for Patents and current DrinkerBiddle partner will co-host the event. Former Federal Circuit Chief Judge Paul Michel will deliver a keynote speech, and will also participate on the first panel, which I will moderate. Other participants will include Brad Olson (Barnes Thornburg), Michael Remington (Drinker Biddle), Dean John Whealan (George Washington University Law School),  Vince Garlock (AIPLA),  Hans Sauer (Biotechnology Industry Organization) and Adam Mossoff (George Mason University School of Law). Stoll will moderate the second panel and provide opening remarks. The event is free and Virginia CLE is being requested. To Register CLICK HERE.

This live event will discuss patent reform in a way that most programs have not, at least so far. Patent reform has been focused on a variety of provisions that may well be helpful to a select number of tech companies, but which likely will not create a better patent system or streamline processes overall. We will explore what should be in patent reform proposals, but which is missing. We will also explore the underlying realities for innovators and how certain proposals would negatively impact the business of innovation.

While there are a number of pending bills relating to various aspects of patent law and procedure, currently there are four serious proposals for patent reform in various stages of consideration in Congress. They are: (1) The Innovation Act; (2) The TROL Act; (3) the STRONG Patents Act; and (4) the PATENT Act. We will focus our commentary on these four pending bills.

For more the latest information on Patent Reform please see: