By Andrew Williams --
Yesterday, Sen. Christopher Coons (D-DE), Sen. Richard Durbin (D-IL), and Sen. Mazie Hirono (D-HI) introduced the "Support Technology and Research for Our Nation's Growth (STRONG) Patents Act of 2015." What is unique about this bill (as opposed to the flurry of patent reform bills we have been seeing) is that the STRONG Patents Act appears to have the best interests of patent owners at heart, while also including provisions that appear to be somewhat narrowly tailored to the address the so-called "patent troll" problem.
Needless to say, it is unlikely that this Senate bill will get any traction. The bill barely matches up to the House's Innovation Act, and does not include several of the hot-button legislative fixes such as attorney-fee shifting and heighted-pleading standards (beyond the elimination of Form 18). It is also likely that other members of the Senate will introduce their version of the Innovation Act any day now. And the chance of such a bill being passed in the now Republican-controlled Senate has increased dramatically since the midterm elections.
This may have been the purpose behind the introduction of the STRONG Patents Act. The opponents of sweeping patent litigation reform appeared to have been caught off guard in 2013 when the version of the Innovation Act introduced in that Congress sailed through the House. Senate Democrats had more time to respond, but were able to do little more than ask pointed questions in committee meetings and Senate hearings. In contrast, the STRONG Patents Act is a concrete piece of legislation they can point to that serves as an alternative to Rep. Goodlatte's vision for patent reform. And even if it is unlikely to pass, it can serve as a counterbalance to the anti-patent troll, anti-patent owner legislation being proffered elsewhere. Perhaps this bill will help bring everybody to the center to address the patent troll problem (to the extent it still exists) without having the consequence (hopefully unintended) of hobbling the rest of the patent system along with it. We will have to wait and see.
The STRONG Patents Act begins with several observations that are lacking in the patent reform bills. Instead of beginning with the axiomatic pronouncement that the patent system is broken, the authors highlight the importance of a strong patent system to the "exceptional innovation environment in the United States," and noting that it "is an essential part of the country's economic success." It continues by listing some of the non-legislative changes that have already or soon will have an impact on the "patent troll" problem, such as changes to the rules governing pleadings and discovery being discussed by the Judicial Conference of the United States, and the recent Supreme Court cases that significantly reduced the burden to recover attorney fees. Finally, these "Findings" highlight the goal of avoiding any unintended consequences that may have stemmed from past legislative efforts. Specifically, the bill finds that "efforts by Congress to reform the patent system without careful scrutiny create a serious risk of making it more costly and difficult for legitimate innovators to protect their patents from infringement, thereby weakening United States companies and the United States economy."
Anti-Patent Troll Provisions
What is noticeably lacking from the STRONG Patents Act is the kitchen-sink approach to patent litigation reform to address the so-called patent troll problem. In fact, the only provision directly related to patent litigation that is not pro-patent is the call for the elimination of Form 18, to the extent it has not already been eliminated. Instead, this bill focuses on bad faith demand letters, in a section entitled "Targeting Rogue and Opaque Letters." And, instead of the draconian penalty of patent invalidation found in some other bills, this version provides that bad faith demand letters "shall be an unfair or deceptive act or practice" under that Federal Trade Commission Act. Correspondingly, enforcement power is conferred on the Federal Trade Commission. At the same time, the bill preempts the various state laws that have recently sprung up, and the enforcement of these state laws by the various state attorneys general. Instead, the state attorneys general are authorized to bring a civil action in Federal court pursuant to this provision.
Nevertheless, the bill seeks to avoid a "chilling effect" on the assertion of all patent rights. Instead, it appears narrowly tailored to address bad-faith demands. For example, it will be a violation of this section if a demand-letter sender states or represents "in bad faith" that it has enforcement rights in the patent when it does not, or that legal action already has or will be taken. Of course, "good-faith" demand letters can also contain threats of legal action to protect legitimate patent rights. Correspondingly, the bill provides for an affirmative defense "if the sender can demonstrate that such statements, representations, or omissions were misstates made in good faith." Examples of this include evidence of written communication in the usual course of business that do not violate this statute.
A significant portion of the STRONG Patent Act is directed to reform of proceedings before the PTAB, such as inter partes review ("IPR") and post-grant review ("PGR"). Some of these new provisions will not be controversial. For example, like the Innovation Act, this bill calls for the elimination of the broadest reasonable interpretation ("BRI") standard for claim construction in IPRs and PGRs. Instead, the PTAB would be required to use the same standard as is used in Federal court. However, this bill also appears to strengthen the rights of patent holders, which may be more controversial. For example, this bill applies the presumption of validity to challenged patents, thereby requiring clear and convincing evidence to establish the unpatentability of previously issued claims. Also, the patent owner would be entitled to substitute a reasonable numbers of claims as a matter of course, likely in response to the dearth of granted motions to amend by the Board thus far. Under this scheme, it would apparently fall to the petitioner to challenge the validity of any proposed claims, albeit with a "preponderance of the evidence" standard. However, the original intent behind these new IPR and PGR proceedings as outlined in the America Invents Act was to provide a mechanism to challenge "bad patents" that should not have issued in the first place. Because many of these new provisions appear to be at cross-purposes with this goal, it is unlikely that they all will be adopted.
We will continue to monitor the progress of this bill and others like it as they progress through Congress.