Forty years ago, nearly no one cared about patents or patent law. Now, almost everyone does. The reason for the revisionism: the evolution of the economy. Splicing DNA became possible in the late 1970s. It started to become profitable in the Reagan-era 1980s. Personal computers were nearly unheard of when Ronald Reagan was elected President. By the end of his term, Apple Computer was one of the world’s most important corporations. A combination of neo-liberal politics and economics shifted society’s relationship with science. Biotechnology, and computing, and capitalism formed a lucrative, new relationship with America that lasts to this day.
The rate of patenting new inventions in the U.S. has been increasing in recent decades and stands at “historically high levels,” according to research by the Brookings Institution. While the growth in patent applications slowed a bit after the IT bubble and the Great Recession, the rate of patenting by U.S. inventors is at its highest point since the Industrial Revolution.
Still, there are problems that weren’t perceived when this great wave of American innovation began decades ago. Many unscrupulous speculators seek to exploit inventors by “trolling,” or making false patent infringement claims against new products. Or by demanding huge settlements to drop dodgy patent litigation.
After overhauling the Patent Act for the first time since 1954 with the America Invents Act in 2011, Congress introduced fourteen “patent reform” bills in its 2013-14 session and six so far in the 114th Congress.
H.R. 9 Most Favorable To Tech
House Resolution 9 (H.R. 9) seems today most favorable to technology industries, including Silicon Valley and biotech and pharma, among the current batch of laws being considered by the Congress.
One can discern that Congress sees a strong need not only to strengthen patents’ integrity, improve their quality, and protect innovation, but also to protect trade, not trolls; make demand letters more transparent; and stop the offensive use of patents, particularly anonymously, while still protecting the integrity of patent fees.
The current Congress has proposed the Innovation Act (H.R. 9); its Senate Version, the “Protecting American Talent and Entrepreneurship” (“PATENT”) Act (S. 1137); the STRONG Patents Act of 2015 (S. 632); the “Targeting Rogue and Opaque Letters” (“TROL”) Act of 2015 (H.R. 2045); the Demand Letter Transparency Act of 2015 (H.R. 1896); and the Innovation Protection Act Bill (H.R. 1832).
H.R. 9, currently given the strongest likelihood of passing, would require complaints in patent infringement suits to identify specifically the claims asserted, the manner of accused infringement, the principal business of the plaintiff, and the real parties of interest. The legislation also attempts to incentivize cost reduction by limiting the producing party’s discovery costs to “core documentary evidence,” making the requesting party pay for any additional discovery, and putting most discovery on hold until claim construction is complete.
Both bills would shift legal fees to the prevailing party (not just prevailing defendants), and unlike under the Patent Litigation Integrity Act, no bond would be required. Exceptions exist if the loser’s positions were “objectively reasonable and substantially justified” or the award of fees would otherwise be “unjust.”
H.R. 9 and S. 1137 would also protect end users by allowing manufacturers of accused infringing products to step in and essentially take over the case. A venue provision has also been added to make it more difficult for patent “trolls” to file cases wherever they like. A floor vote on H. R. 9 is likely in the next six weeks, sources tell The American Spectator.
Big pharma and Silicon Valley have been working Capitol Hill for these changes.
Fending Off ‘Trolls’
Tech giants like Google and Microsoft employ so many interactive technologies that change so quickly they are constantly at risk of infringement accusations from garage inventors, non-practicing entities like universities, and the dreaded patent “trolls” whose business model is to buy up patents and threaten infringement suits.
Pharmaceutical companies, on the other hand, often spend billions over a decade developing and testing a new drug, millions more trying to clear a new trademark, and still more millions on marketing before they see so much as a farthing or pfennig in international revenue. They need and want strong patents that keep the field of their discoveries to themselves long enough to recoup their investment.
The Innovation Act, as initially introduced in 2013, passed the House by a large margin, in a 325 to 91 vote. But it was yanked from the Senate agenda at the behest of President Obama’s bestie, the bespectacled Sen. Harry Reid (D-NV), even before making it out of the Judiciary Committee.
But things are moving forward again in the GOP-controlled Congress. Seventy-nine members of the House on July 24 wrote a letter to the leadership, including Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.), saying they support passage of the Innovation Act with the minor modifications mentioned above to keep computing and biotech intact as economic engines, and make it harder for trolls and shady IP claim jumpers. “Any patent litigation legislation must represent the views of the full spectrum of different industries and sectors reliant on a well-functioning U.S. patent system,” said the letter, a copy of which was obtained by The American Spectator.
House Majority Leader Kevin McCarthy — upon receiving the letter — decided to address many of the concerns raised, including a request to exempt FDA-approved drugs from part of the lengthy patent approval process at the patent office of the U.S. Department of Commerce. This process is said to have been exploited by trolls in the past to litigate against new drugs just as they are poised to come to market. Compromise language is apparently in the works. Representative McCarthy said, during a recent press gaggle on Capitol Hill, “I think there’s more work to be done on it.”