Posts Tagged: "fee shifting"

Goodlatte was incredulous, explaining that he sees no substantive difference between the language in the Innovation Act and the language in the PATENT Act. The difference between the House bill and the Senate bill boils down to the presumptions made and who will wind up bearing the burden of proof. Congressman Goodlatte is sophisticated and knowledgeable. Surely he has to understand both that there is a difference and that the difference is meaningful.

The House Judiciary Committee will hold a hearing on Thursday morning, June 11, 2015, at 10am ET in order to markup the Innovation Act. The Manager’s Amendment is currently available on the hearing webpage. Additional proposed amendments by Judiciary Committee members are excepted to come in and be posted sometime later today. While a markup of this legislation has been rumored numerous times only to be postponed, it seems that this hearing will go forward. It is widely expected that the Innovation Act will easily clear the House Judiciary Committee. The resulting bill with whatever amendments may be approved may move quickly to the full House of Representatives for a vote.

Strong patent protection is almost universally considered critical to robust innovation. Venture capital and private investment in new technology-based businesses heavily depend upon it. Yet, the Innovation Act is positioned to significantly reduce the value of patents by making the risk of enforcement prohibitively high.

Patent reform is the new normal and we can expect that it will continually be raised in every new Congress for the foreseeable future. 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. There is also another bill – the Innovation Protection Act – that likely has no chance of passing but which is eminently reasonable. A summary of each of these five bills follows, along with one thing to watch for which could completely upset all predictions.

A clique of multinational corporations is pushing legislation that will be a disaster for the rest of us, especially our universities with research components. Small inventors and their patrons in academia are being asked to swallow large dosages of poison encapsulated in the bill. Two features are especially concerning: mandatory fee shifting and involuntary joinder. Together and separately, they seriously weaken and put at risk the university technology transfer process, so necessary to America’s innovative and entrepreneurial way of life.

Many of the provisions of H.R. 9 would unnecessarily undermine the enforceability of all U.S. patent rights, even when clearly valid patents are being enforced in good faith against clearly infringing actors. While a consensus on measures to target abusive behavior in patent litigation is achievable, the sweeping provisions of the Innovation Act cannot be supported.

There were statements recognizing the need to keep open legitimate avenues to for innovators to protect themselves against infringement, and a strong desire to make sure that legislation focus on bad actions and actors. Not surprisingly, the Committee seems to largely think that the Innovation Act does strike the proper balance, although there was also recognition that changes could be made to make the bill better. USPTO Director Michelle Lee was wholeheartedly in support of fee shifting, justifying the position by saying that fault based fee-shifting will raise the costs for those who engage in abusive actions.

The data establishes that motions for attorney’s fees under section 285 after Octane were granted at a rate almost three times as high as in the year preceding Octane. In addition, the data establishes — contrary to the witness’s testimony — that 50% of motions for fees under section 285 filed by accused infringers were granted between January 1, 2015, and March 31, 2015. In contrast, in the 12 months preceding Octane, only 13% of such motions were granted.

Significant consensus was reached between representatives of small business and universities at a hearing of the U.S. Senate Committee on Small Business and Entrepreneurship on March 19, 2015. The hearing was held to take testimony relating to proposed reforms to the U.S. patent system. The day’s discussion prompted Sen. Chris Coons (D-DE) to make the comment that the argument over…

The company that just forcefully promised to fight the troll at all costs now can’t write the check fast enough. The case settles, the corporation feels vindicated because they didn’t have to pay their high priced attorneys for more than a couple hours, and they have mitigated the risk. This story is repeated constantly, but one thing never changes. Because the case was settled there is no prevailing party. Therefore, there will never be an award of attorneys fees against the nefarious actors that are rightly called patent trolls.

This bill has elements that can be part of an ultimate solution, however it cannot escape being a rubber stamp for a viewpoint that sees intellectual property rights as nuisance rather than a principal cog in the American invention machine. Unfortunately, if the Congress moves forward and ratifies this bill in the form proposed, it will create more problems than the one it is solving.

The most recent patent reform bill to pass the House, which is now expected to receive Senate backing as well, is the Goodlatte Innovation Act (H.R. 3309). Included within the various provisions of H.R. 3309 is the presumption of fee shifting for the losing party in a patent case. Put simply, this means the loser in a patent case pays the winning side’s attorney fees. In the context of a patent case, such costs often total in the millions. But as someone who operates at the center of the patent market, and is certainly sympathetic to the dangers of frivolous patent litigation, I can only hope that if additional patent reform does pass, the presumptive fee shifting provisions are nowhere to be seen. Although seen by those unfamiliar with the nuances of patents as a way to curtail abuses in the patent system, a presumptive fee shifting provision is not only unnecessary, but also likely to cause of host of unintended consequences.