Posts in Government

A recurring theme that can be traced through the patent reforms of the AIA to the current debate over patent litigation abuse is the issue of patent quality. A key component of the reported abuses is the assertion of allegedly invalid or overbroad patents, the very abuse for which AIA post-grant procedures were created, in order to improve patent quality. These matters of patent quality are being addressed by the changes made to the law by the Judiciary and by Congress in the AIA, which are only now beginning to be felt. It may well be premature to conclude that they are not doing the job. Take one major example, as a former Director of the USPTO in particular, I would support, as former Director Kappos did, giving the post-grant processes in the USPTO a chance to work.

Time and time again in reciprocal discipline proceedings we see the USPTO handing down identical discipline to what was handed out at the State level. This is no doubt because State discipline creates a presumption that the imposition of reciprocal discipline is proper. See Selling v. Radford, 243 U.S. 46 (1917). Thus, seeking the identical penalty as already handed out at the State level is relatively easy and straight forward, and puts the responding practitioner at a significant disadvantage, requiring the Respondent to demonstrate lack of due process, severe lack of proof in the State proceeding or that a grave injustice would occur as the result of imposition of reciprocal discipline.

On December 12, 2013, Members of the House and Senate introduced bipartisan legislation that would allow the United States or any state or local government to register official insignia for federal trademark protection. This bill would amend the Trademark Act of 1946, also known as the Lanham Act, to allow the Federal government as well as all State and local governments to register with the U.S. Patent and Trademark Office (PTO) marks consisting of their flag, coat of arms and other official seals.

U.S. Secretary of Commerce Penny Pritzker today announced the appointment of Michelle K. Lee as the next Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the U.S. Patent and Trademark Office (USPTO). Lee currently serves as the Director of the USPTO’s Silicon Valley satellite office and will begin her new role at USPTO headquarters in Alexandria, VA, on January 13, 2014.

A brake-down of the major provisions, the Amendments that passed and some key Amendments that failed… On Thursday, December 5, 2013, the United States House of Representatives passed the Innovation Act by a vote of 325-91. Surprisingly, the Innovation Act (HR 3309) had only been introduced on October 23, 2013, and was marked-up on November 20, 2013. “This schedule suggests the fix was in,” said Congressman Dana Rohrabacher (R-CA) on December 3, 2013, “The clear message to little inventors: give thanks for your intellectual property rights, because you may not have them by this time next year.”

One of the things specifically alleged as demonstrating lack of control over his practice was his antiquated docketing system. Until 2005 Tachner used a “white board” system that was updated monthly and only included three months of data. It only had 3 columns, which were the client docket number, the type of action and the due date. If action were taken a handwritten line entry was placed after the due date. If action was not taken by the due date it would remain not the white board for a few months, but then ultimately removed without any action ever being taken. In 2005, this system was updated to a Word document that did not use tables, but instead included single line strings of data. There was no back-up docketing system, nor was any inventory of files ever done to ensure the integrity of the Word document docket. As you might imagine, this type of “docketing system” created problems.

Crowell & Moring LLP announces Teresa (Terry) Stanek Rea, former acting and deputy director of the USPTO and acting and deputy under secretary of commerce for intellectual property returns as a partner in the firm’s Intellectual Property Group.

As evidenced by the numbers above, the Board takes as many cases as they reasonably can within the statute. If there’s a good case to be made that a case could be litigated in PTAB, it’s usually accepted. As of last month, the office has instituted 192 trials and denied 32 trials for an overall institution rate of 85.7 percent, according to a statistics report compiled by the PTO. One example of this is Intellectual Venture Management, LLC v. XILINX, Inc., IPR2012-00018, Paper 12 (P.T.A.B. Jan. 24, 2013). Here, XILINX argued that IVM’s petition should be denied, because IVM failed to identify all the real parties in interest as required by 37 C.F.R. § 42.8(b)(1). XILINX pointed to another case in California where IVM was listed with 5 other defendants in a suit that had 63 entities as evidence of IVM’s failure. The Board ruled in IVM’s favor, saying that XINLINX had not given any argument for why the civil local rules of the Northern District of California are analogous to the Board’s rule on real parties in interest or for specifically why any of the 63 entities were real parties of interest.

There is a battle cry against abusive litigants in the patent industry. Among the tactics suggested is a “loser pays” system to try to mirror Europe, where this type of abuse is minimal. The Congressional Research Service presents that 92% of companies who assert but do not make products (over broadly and derisively called “trolls”) lose litigation that reaches judgment on the merits… Defendants can call upon the PTO to trigger up front fee shifting for the patent owner and an accelerated PTO determination on the validity, even potentially before the court analyzes it. But there’s more. IPRs and CBMs can be used to drive settlement, either before or after filing. Pre-filing, a drafted petition can be shown to the patent owner as a basis to settle.

Selling v. Radford, 243 U.S. 46 (1917), sets the standards for imposing reciprocal discipline on the basis of a State’s disciplinary adjudication. Under Selling, State disciplinary action creates a federal-level presumption that imposition of reciprocal discipline is proper unless an independent review of the record reveals: (1) lack of due process, (2) an infirmity of proof of the misconduct, or (3) that grave injustice would result from the imposition of reciprocal discipline. The standard the responding attorney must meet is one of clear of convincing evidence that the Selling factors preclude reciprocal discipline.

“Notably, the concerns of key inventor stakeholders like us – principally small companies that create the fundamental inventions that drive our innovation economy – have not yet been evaluated in depth. Historically, the vast majority of legitimate patent holders have honorably sought the fruits of their labor through patent rights promoted by the Constitution and secured by Congress, by licensing when possible and litigating when necessary. Our nation and, indeed, our planet have benefitted enormously as a result of the identification and disclosure of these discoveries through the U.S. patent system. Legitimate inventors and patent holders should not be confused with, or punished as a result of, a small minority of bad actors who create shell entities that send mass demand letters for the purpose of seeking money under the threat of unjustifiable litigation.”

The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) announced that the San Jose City Hall building, located at 200 East Santa Clara Street, has been selected as the permanent location for the USPTO’s Silicon Valley satellite office. The search for permanent office space was put on hold in July due to sequestration. Generous support and assistance from the City of San Jose, the California State Assembly’s Speaker’s Office, along with the collective support for the satellite office championed by members of the California congressional delegation, will enable the USPTO to move forward with occupying permanent space in Silicon Valley by the end of 2014.

Congressman Bob Goodlatte (R-VA), is continuing to fast track the Innovation Act (HR 3309) despite growing concerns from both Republican and Democrat members of the House Judiciary Committee… One major question is whether we really want to go to a loser pay system with respect to patent infringement litigation? That sounds nice, but it will no doubt have a chilling effect, perhaps most chilling on the entities that are not abusers of the litigation system. It will undoubtedly make it harder for small businesses and start-ups to obtain the critical funding they need because investors will rightfully worry about whether the company may ultimately become embroiled in patent litigation, lose and then have to foot the bill for the entirety of the litigation. Even more problematic is the loser pay provisions coupled with the joinder provisions, which the University community believes could lead to entities being pulled into patent litigation against their will. If that happens and they lose they would be on the hook for paying the fees of the other side despite not willingly participating in the litigation. How is that fair? That would have a significant chilling effect without a doubt.

Calling the Innovation Act fast-tracked doesn’t do justice to what is really happening. The Innovation Act was only officially introduced on October 23, 2013, and the Committee has not heard from any independent inventors or small businesses. Even the innovator community that stands to lose big is just warming up, this past week with a substantial coalition of University groups and the Biotechnology Industry Organization (BIO) weighing in for the first time, with BIO concluding that the “proposals are not supportable without significant amendment.” The University groups weighing in against the Innovation Act are the Association of American Universities, American Council on Education, Association for American Medical Colleges, Association of Public and Land-grant Universities, Association of University Technology Managers and Council on Government Relations, collectively referred to in their position statement as “the Higher Education Community.”