Patent Reform Returns: Venue Reform Bill to be introduced in Senate

Senator Jeff Flake by Gage Skidmore on April 25, 2014.

Senator Jeff Flake is expected to introduce a venue reform bill this week. Photo by Gage Skidmore. CC BY 2.0.

Silicon Valley hates trial lawyers and employment litigation and has for a long time. Despite the left leaning politics of many in Silicon Valley on social issues and general support for Democrats, there is a long-standing alliance with Republicans and corporations generally to curb litigation and the power of trial lawyers, persistent and effective supporters of Democrats. This is one of the reasons why patents have proven to be a durable bi-partisan affair with Republicans and Democrats working together to both create and stop reforms. Technology related issues are neither purely the domain of Democrats, nor are they purely the domain of Republicans.

The bi-partisan nature of patent reform legislation is simultaneously inspiring and extraordinarily terrifying. Politics rarely plays into patent reform matters, which means even in election years Congress can actually attain legislative accomplishments. Congress working in a bi-partisan way is how many wish it could be on all issues, but for the innovation community that means that legislation is never more than right around the corner. It also means that the threat of potentially awful, crippling legislation is omnipresent for innovators.

Republicans in Congress, such as Senate Judiciary Committee Chairman Chuck Grassley (R-IA) and House Judiciary Committee Chairman Bob Goodlatte (R-VA), have openly embraced the support of President Obama and many other Democrats for their patent reform bills, The PATENT Act (S.1137), and The Innovation Act (H.R.9). Republicans control both the Senate and the House and their leadership continues to not make patent reform legislation a priority for floor time this election year. This is a familiar tune. Last year then Speaker John Boehner (R-OH) and Majority Leader Kevin McCarthy (R-CA) removed H.R.9 from the published floor calendar, punting it into 2016 at a minimum. It is not clear what Speaker Paul Ryan (R-WI) may do, although Tom Still, President of the Wisconsin Technology Council, recently wrote that in this election cycle Ryan intends on only bringing up consensus legislation.


While patent reform is apolitical, it is contentious. If Ryan is looking only for legislation that an overwhelming majority of the Republican Conference can support that should mean that sweeping patent reform remains off the menu for the remainder of the 114th Congress. That patent reform cannot move in the House is ironic given the large bi-partisan votes in favor of the Innovation Act in the previous Congress. Of course, changes in the law due to court decisions are inevitable while legislation meanders through Congress, which may make patent reform even less likely. Indeed, if the Supreme Court were to grant district court judges discretion on enhanced damages that likely would put sweeping patent reform into a tail spin; damage issues has a way of stalling even inevitable reform.

But how does this synch with what Still wrote? Patent reform is a priority for the Wisconsin Technology Council. Is Still signaling that pro-reform voices from the tech community are telling Speaker Ryan that he need not move on patent reform legislation this year, or are pro-reform voices that know Ryan best just resigned to the fact that if reform happens it will look nothing like the Innovation Act?

The Innovation Act in the House and the PATENT Act in the Senate have been stalled now for some time. There have been whispers behind the scenes that supporters are continuing to look for opportunities to jumpstart the patent reform discussion again, but no real movement has been witnessed out in the open, and certainly no momentum. The best evidence of the failing prospects of widespread reform embodied in the Innovation Act and the PATENT Act is that yet another patent reform proposal seems close to being unveiled, which would specifically target venue reforms.

While widespread patent reform seems unlikely during the remainder of the 114th Congress, targeted patent reform is another matter entirely. Indeed, the Senate Committee on Small Business & Entrepreneurship recently held a hearing largely attacking the America Invents Act (AIA) and the current reform bills and in a bi-partisan manner. And this week we may see a bi-partisan push in the Senate for a bill that focuses only on venue reform, which will be co-sponsored by Senator Jeff Flake (R-AZ) and Senator Cory Gardner (R-CO). The bill, available in draft form, is titled the Venue Equity and Non-Uniformity Elimination Act of 2016.

It is unclear at the moment whether the Gardner-Flake venue reform bill will start in the Small Business Committee or in the Judiciary Committee or both.  Flake and Gardner have promised supporters that they have lined up Democratic co-sponsorship for introduction.

How successful a venue reform only bill will be is uncertain, although it is clear that venue continues to be a lightening rod issue thanks to the high-volume of patent cases brought by patent owners in the Eastern District of Texas (EDTX). In June 2015, the House Judiciary Committee voted to add strict venue provisions to the Innovation Act, which would make it exceptionally difficult for patent owners could continue to bring patent infringement lawsuits in Marshall or Tyler, the most well known EDTX court locations. Having said that, there have been other attempts over the last several years to reign in the Lone Star State as the forum of choice, which have all failed to greater or lesser extents.

The Intel Corporation will be sending a letter along with other companies and trade associations in support of the venue reform focused bill. Intel is a major employer in Arizona, Flake’s home state, so it seems likely they have been to some extent a driving force behind the scenes. Flake is, however, not entirely new to patent matters; he was active on patent reform in the US House of Representatives before moving on up to the Senate where he now serves on the Judiciary Committee.

Venue reform resembles demand letters, another issue of controversy that has been marketed as a rifle shot, one issue legislative vehicle and spanning the House and Senate Commerce Committees, trying to avoid the briar patch of the Judiciary Committees and competing patent reform legislation.   Those working hard on comprehensive patent litigation abuse reform legislation in the Judiciary Committees are loathe to see rifle shot legislation succeed, especially in other committees, as they likely would drain away any remaining interest in completing the broader reform bills.

It may also be interesting to note that last year Senator Flake worked with Senator Orrin Hatch (R-UT), a senior member of the Judiciary Committee and a thought leader on both IP issues, on an immigration reform bill relating to high tech workers. Flake focused on how inventive immigrants are and in a press release pointed out: “Supply-side economists have reported that a 10% growth in H-1B population would correspond to a 6%-12% growth in invention (measured as patents) among immigrant groups and a 0.5%-1% growth in patents by U.S. natives.”

Thus, it seems that Flake is supportive of increasing H-1B visas, which would increase the number of patents and overall innovation, but is simultaneously working to make it harder for certain patent owners to truly enjoy the freedom to choose the venue where a patent litigation will take place. That seems to a large extent like Flake is picking winners and losers in the innovation game, siding with large entities that want more H-1B visas and who detest having to litigate patent disputes in Eastern Texas, which increasingly viewed as one of the few courts where the little guy has at least a fair opportunity to prevail.

There is little doubt that the venue reform bill will be welcomed with open arms by Silicon Valley, at least if it is eventually determined that is the best they can do. But given how often Donald Trump talks about immigration and his border bona fides by citing the support of Sheriff Joe Arpaio of Maricopa County, Arizona, one can’t help but notice that Flake’s interest in patents, which seem supportive of the infringer lobby, and his support of immigration reform to increase H-1B visas, are at odds with Trump, who is back to opposing H-1B visa expansion and who should be a natural supporter of independent inventors for a variety of reasons.


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7 comments so far.

  • [Avatar for Edward Heller]
    Edward Heller
    March 10, 2016 02:34 pm

    VC, thanks for that. Food for thought.

    Regarding the AIA, it largely was an effort to harmonize US patent law with the patent law of the rest of the world. That effort was not entirely successful – but that is a different topic. But I do agree with you that the creation of IPRs has been a disaster for the patent system.

    On damages, I am not quite following you 100%, but I do know that it is hard to prove damages and has always been hard to prove damages in patent cases. That is why injunctions have always been preferable so that the parties themselves can negotiate. The reasonable likelihood of an injunction actually heads off lawsuits because of that risk. The reasonable likelihood of an injunction also causes people to avoid infringing patents in the 1st place. Therefore I would think that the greatest harm to the patent system in the last several years was not screwing up the law of damages, but eBay.



    We need to fix/eliminate both.

  • [Avatar for ValuationGuy]
    March 10, 2016 10:42 am

    My opinion is that Sharon Prost leads a faction of judges on the CAFC that is/was alarmed at the size of awards being given to patent owners in the various infringement cases. This was a trend which was accelerating under Rader (who was generally more pro-patent) until 2011 primarily due to the increased and widespread infringement of wireless technology patents by the manufacturers of mobile phones using “standards” as a shield for their infringement.

    The Nortel deal…which represented a HUGE step jump in valuation of wireless patents…was going to led other patent owners to compare their portfolios and licensing rates to Nortel’s and damages and # of cases filed were going to rise as a result.

    Both Congress and the CAFC promptly acted to head off this. Congress passed “reform” (the infamous AIA) which damaged the value of patents by making them much easier to break. Concurrently (but not really in concert), the CAFC started
    1) issuing bizzaro rulings which make infringement extremely harder to prove,
    2) eviscerated standard methods of determining damages in “theoretical” negotiations by dumping the Nash Bargaining Solution,
    3) carving out exceptions in general principals which looking at patents when compared to other areas of the law..
    4) forcing “apportionment” of value to specific patents to be proven when settled law makes it clear that determining value is general in a multi-function device.

    The combination created a harmonic resonance which built on each other but had the result of creating vast systematic damage to the patent system as a whole by trashing most enforcement….making “efficient infringement” a bono fide profitable strategy.


  • [Avatar for Edward Heller]
    Edward Heller
    March 9, 2016 07:18 pm

    VG@4, what do you mean when you say “anti-patent faction of the CAFC (led by Chief Judge Sharon Prost) on several of its poorly thought out decisions made in reaction to the extreme valuation that the Nortel patent sale had….”

    Do you believe the court, or at least some of the judges are reacting to the Nortel patent sale in some fashion? I cannot connect the dots. Please help.

  • [Avatar for valuationguy]
    March 9, 2016 01:23 pm

    Rather than have a knee-jerk reaction that there is something ‘wrong’ with having EDTX as a judicial forum…the bigger issue is really what is the EDTX doing ‘right’ which is making it MORE attractive than other forums…because it isn’t primarily due to the make-up of its juries.

    It is the local rules in EDTX which attracts patent owners to that venue most of all. These local rules speed trials there (which favors owners…who want to get paid….over potential infringers…who want to put off paying anything for as long as possible.)

    Are the local rules ‘fair’…certainly. ESTX local rules are probably the most closely scrutinized in the country by the entire legal system due to the attention it has received as the statistics which show patent owners prefer to file their cases there. Its rules now set the standard…and very slowly migrate out to other court jurisdictions as other districts visit and learn. If this migration wasn’t so slow (because the judiciary is so conservative)…then your would see more cases filed elsewhere.

    Due to its willingness to listen to the users, the EDTX created an ‘innovation’ in the extremely staid judiciary system….more timely justice…but many in the legal profession (as well as those who benefit from use of patents without compensating the owners) would rather just drag things out further….because then more fees are involved.

    In my opinion…the real reason that more targeted legislation is being pushed at this moment is because the “moment” is actually slipping away.

    1) The changes to the federal pleading requirements that went into effect last year are quickly going to take away a major argument for reform….the “boogieman” of demand letters. Statistics will show a major drop in new filings….taking the wind from the reform movement’s sales.

    2) The SCOTUS is tee’d up to school the anti-patent faction of the CAFC (led by Chief Judge Sharon Prost) on several of its poorly thought out decisions made in reaction to the extreme valuation that the Nortel patent sale had…ALL of which led to destroying much of the value of patents for owners. (This includes several decisions related to how the PTAB relates to the federal courts… BRI standard, standards of proof, de novo review, etc..)

  • [Avatar for staff]
    March 8, 2016 08:12 pm

    ‘Technology related issues are neither purely the domain of Democrats, nor are they purely the domain of Republicans.’

    But it’s not about technology. It’s about property. Show us a country with weak or ineffective property rights and we’ll show you a country with a weak economy and high unemployment. Sound familiar?

    For our position and the changes we advocate, or to join our effort, please visit us at
    or, contact us at

  • [Avatar for Antonis Aggelopoulos]
    Antonis Aggelopoulos
    March 8, 2016 06:43 pm

    Venue reform is a small step but at least it’s a step most of us can agree is needed. Whether that’s decided by the Supreme Court or by legislation, I can’t imagine us maintaining the status quo for much longer.

    Half of all US patent lawsuits being filed in just a handful of cities and handled by a couple of judges sounds insane to me.

  • [Avatar for Edward Heller]
    Edward Heller
    March 7, 2016 05:44 pm

    It is increasingly likely that either Hillary, Trump or Cruz will be the next president. I am not sure any of these would support weakening the patent system further especially because patents are so linked to jobs in America. Thus, I can see the so-called reformers/infringer lobby being almost panicked as the reign of Obama draws to a close. Now or never.

    Also, we really need a new president democrat or republican so that we can stop the Federal Circuit from becoming even more anti-patent. It would be nice to appoint someone to the court who has actually represented patent owners in litigation.