Reaction to Manager's Amendment to House Patent Reform Bill

By Donald Zuhn --

On Tuesday, House Judiciary Committee Chairman Lamar Smith (R-TX) offered a Manager's Amendment to H.R. 1249, the House version of the America Invents Act (see "House Judiciary Chairman Releases Manager's Amendment to H.R. 1249").  While response to the amended version of H.R. 1249 appears to be more muted than that for the Senate's passage of S. 23 or the introduction of H.R. 1249, a few groups have issued statements or letters since the Manager's Amendment was released.

In a press release issu ed on Wednesday, the Generic Pharmaceutical Association (GPhA) called on the House Judiciary Committee "to fix what is a fatal flaw" in the bill -- a provision that the generic industry group says "will hurt consumer access to affordable medicines and undermine the integrity of the patent system."  According to the GPhA, "[t]he current bill allows patent holders that knowingly falsify information in their original patent application with the U.S. Patent and Trademark Office (PTO) or intentionally omit material information in such filings, a mechanism to retroactively correct their filing without any consequences."  The GPhA argues that "[t]he only way to correct this so called 'supplemental examination' process is to strike it entirely from the bill or amend it to prevent those that knowingly lie to the PTO from using it," adding that "[a]nything other than those changes endorses deception and falls far short of guaranteeing a fair and honest process."  Until the provision is struck or corrected via amendment, the GPhA says it will oppose the House bill.

Rep. Mike Michaud (D-ME) (at left) who issued a statement opposing the House bill when it was introduced on March 30 (see "Reaction to House Patent Reform Bill"), issued a press release with Rep. Tom Reed (R-NY) on Monday noting that the two members of Congress had sent a letter to Chairman Smith and Ranking Member John Conyers (D-MI) requesting that "important provisions be inserted into the patent reform legislation scheduled to be marked up in committee."  Reps. Michaud and Reed are seeking two changes that they assert will "protect patent holders against abusive challenges by infringers":  (1) an increase in the threshold requirement for initiating an inter partes reexamination, and (2) removal of provisions that would encourage stays of infringement lawsuits or International Trade Commission (ITC) proceedings following initiation of a post-grant review or inter partes reexamination.  Contending that "reexaminations are already subject to abuse," Reps. Michaud and Reed state that "[i]t is critical that the good intent of H.R. 1249 not be undermined by giving . . . malicious organizations additional opportunities to misuse the patent system and discourage American innovators."  To remedy the situation, the Congressmen urge the Judiciary Committee to adopt the higher "reasonable likelihood that the challenge will succeed" standard.  Reps. Michaud and Reed also believe the stay provisions of H.R. 1249 could be abused, and therefore, urge the Committee to remove these provisions from the bill.

On Tuesday, the AFL-CIO also sent a letter to Chairman Smith and Rep. Conyers, stating that the Senate's passage of S. 23 was the result of "a fragile compromise, balancing a variety of different interests," and that the organization was "concerned that H.R. 1249 upsets that delicate balance and puts at risk a real opportunity to enact a law that would improve the operation of the U.S. patent system and, as a result, promote innovation, production and job creation here in America."  According to the AFL-CIO letter, "the House bill weakens important safeguards concerning time limits and standards for initiating administrative proceedings to review a granted patent," and asserts that "these safeguards must be maintained."

Finally, the Innovation Alliance responded to the Manager's Amendment by sending its own letter to Chairman Smith and Rep. Conyers on Tuesday.  Stating that the group "continues to believe the best course for policymakers is to continue to focus their efforts on providing the U.S. Patent and Trademark Office ('USPTO') with the funding and resources it needs to reduce its backlog of over 700,000 patents," the letter argues that "the potential for creating hundreds of thousands if not millions of jobs" is "[t]rapped in that backlog."  As a result, the group supports provisions in the legislation that would put an end to fee diversion.

While the Innovation Alliance also supports language in the House bill that "provides some critical safeguards against abuse of the new post-grant administrative review system, including 'could have raised' estoppel, meaningful threshold for filing post-grant reviews and inter partes reviews, and a presumption of validity for patents," the group is "very concerned" about language added via the Manager's Amendment that would "codify[] unprecedented and overly rigid rules on joinder and stays of patent litigation that would constrain a court's discretion to address such issues in a fair and flexible manner and unduly prejudice the ability of patent owners, especially small innovators, to enforce all patent rights against all infringers."  The Innovation Alliance also believes that the House bill "expands prior user rights in such a fashion as to deter investment in innovation by creating considerable uncertainty about whether an invention might be subject to a manufacturer's prior user rights," and therefore seeks the removal of the prior user rights section.  The group concludes its letter by arguing that the post-grant and inter partes review windows of one year from issuance and nine months from commencement of infringement litigation are "unnecessarily long for what ultimately amounts to a decision only about the forum in which to challenge a patent's validity."

On Thursday morning, House Judiciary Committee will meet to mark up H.R. 1249.  Patent Docs intends to provide coverage of the results of this meeting.

For additional information regarding this and other related topics, please see:
• "Reaction to House Patent Reform Bill," March 31, 2011
• "Patent Reform Discussion Moves to House," March 29, 2011
• "Reaction to Senate Passage of S. 23," March 08, 2011
• "More Reaction to Senate Patent Reform Legislation," February 24, 2011
• "Reaction to Senate Patent Reform Bill (S. 23)," February 09, 2011

Comments

[Michael R. Thomas]

The innovation alliance is certantly mistaken in its perception that reducing backlogs will ignite job creation. All but 100 or so of these patents per year are worthless and there not concentrating legislation to promote these top inventions with special provisions.

[Dale B. Halling]

The Generic Pharmaceutical Association (GPhA) is just interested in preserving the overly formalistic rules on inequitable conduct that allow them to steal other people’s invention.