Representative Danny K. Davis Introduces ''Inventor Rights Act"

By Kevin E. Noonan --

Last year, Judge Illston gifted patentees with a proverbial lump of coal with her decision in Illumina, Inc. v. Ariosa Diagnostics, Inc. by invalidating on summary judgment claims directed to methods for isolating cell-free fetal DNA from maternal DNA on the grounds that they are not patent-eligible under 35 U.S.C. § 101.  On December 19, Rep. Danny K. Davis (IL-7), joined by Congressman Paul A. Gosar (AZ-04), introduced a bill that is more like a Christmas gift for inventors, entitled the Inventor Rights Act (H.R. 5478).

After preliminary sections extolling the contribution of inventors to American innovation and economic advancement, and noting the negative effects on inventor rights by Supreme Court cases including eBay Inc. v. MercExchange, LLC, TC Heartland LLC v. Kraft Foods Group Brands LLC, and PTAB proceedings under the provisions of the Leahy-Smith America Invents Act (AIA), and calling out the practice of "efficient infringement," the bill proposes amending Section 100 of the Patent Act to include a new section (k):

(k) The term 'inventor-owned patent' means a patent with respect to which the inventor of the invention claimed by the patent or an entity controlled by that inventor—
    (1) is the patentee; and
    (2) holds all substantial rights.

For such "inventor-owned patents," the bill proposes a new Section 330, entitled Inventor protections, which include:

(a) Not subjecting such patents to reexamination or review [presumably including post-grant review, inter partes review, or covered business method patent review], or [more broadly], to otherwise make a determination about the validity of an inventor-owned patent" without consent of the inventor-owner;
(b) permitting venue either:
    (1) in accordance with section 1400(b) of title 28;
    (2) where the defendant has agreed or consented to be sued in the instant action;
    (3) where an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit;
    (4) where a party has a regular and established physical facility that such party controls and operates, not primarily for the purpose of creating venue, and has—
        (A) engaged in management of significant research and development of an invention claimed in a patent in suit prior to the effective filing date of the patent;
        (B) manufactured a tangible good that is alleged to embody an invention claimed in a patent in suit; or
        (C) implemented a manufacturing process for a tangible good in which the process is alleged to embody an invention claimed in a patent in suit; or
    (5) in the case of a foreign defendant that does not meet the requirements of section 1400(b) of title 28, in accordance with section 1391(c)(3) of such title.

Further, under proposed Section 330(c) the bill creates a presumption that after a finding of infringement the inventor-owner will suffer irreparable harm unless the court grants an injunction, and provides for rebutting the presumption only upon a showing by clear and convincing evidence that the patentee would not be irreparably harmed.

The bill further provides in Section 330(d) that an inventor-owner can elect, "at any time before final judgment is entered by the court," to obtain recovery under this Section, which will include: (1) profit disgorgement, which will include all infringer's revenues relating to the infringing article, with the infringer bearing the burden of showing any "elements of cost or production" claimed to reduce this amount; (2) interests and costs; (3) treble damages for willful infringement; and (4) attorneys fees in the amount that exceeds 10% of the amounts set forth in subparagraph (1)-(3).

The University of Illinois/Chicago is in Rep. Davis's congressional district but he has not sponsored much patent-related legislation before.  One possible consequence of this bill should it pass (which is unlikely) is that patents will remain "owned" by (i.e., assigned) to the named inventors, even in corporate settings, with their corporate masters holding licenses (likely exclusive licenses) to get the benefit of the bill's provisions while retaining traditional control of the patented invention.  Care will need to be taken to avoid situations where the scope of the license is so restrictive to amount to an assignment, thus frustrating the purpose (see "St Regis Mohawk Tribe v. Mylan Pharmaceuticals").

According to a press release posted on Rep. Davis's website, "[t]he Inventor Rights Act provides narrowly targeted relief only to inventors that own and control their own patents.  This bill does not apply to large corporations, drug companies, or typical non-practicing entities."  The bill will be taken up in due course by the House, presumably in the next session beginning in early 2020.

Comments

[Paul Cole]

Appears very helpful so far as it goes.

On the question of injunctions, the UK statute i9s essentially the same as in the US and leaves grant of injunctions to the discretion of the court on principles of equity since an injunction was originally an equitable remedy. Howevr, UK courts routi9nely grant injunctions unless there are compelling reasons otherwise. Why the difference in the US?

[Kevin E. Noonan]

Courts routinely granted permanent injunctions to prevailing patentee plaintiffs prior to eBay v. MercExchange, where the Supreme Court was convinced by some legal academics that "trolls" were abusing the system. (Ignorance is certainly not bliss, or at least not bliss-producing.) There is an anecdote that when the parties went back to the district court on remand the judge said (in chambers) that he had read the Supreme Court's decision and the Court's instructions on how to apply the law properly, and said that unfortunately that was exactly what he had done in the first place.

Merry/Happy Christmas to you and yours.

[skeptical]

It has been routinely noted that the Desired Ends of the Court have dictated that trying to follow their actual Means is a fruitless exercise.

So too, with "principles of equity."

Remember, we are mostly talking about cases in which a patent has been found both to be not invalid and infringed.

First principle of equity: make the aggrieved as whole as possible.

Second principle of equity: recognize the context of the right transgressed.

Instead, the Court has reached back to its own "principles" and declared that ENTIRELY OUT OF CONTEXT, injunctions are the harshest form of equitable relief, and thus some other form of relief would be a better "default."

Add to this oversized Nannyism, the Court's general aversion to patents (a REPEATED historical aversion - recalling the self-anointed moniker of "The only valid patent is one that has not yet appeared before us"), and it is clear to see that we have yet another instance of the Court crafting patent law to how they want patents "to work."

[Greg DeLassus]

"UK courts [routinely] grant injunctions unless there are compelling reasons otherwise. Why the difference in the US?"

To be fair, it is not really clear that the US *is* different in this respect. If you go looking for district court orders following a patent infringement case, in which the patent has been found both valid and infringed, but in which an injunction is not granted, they actually tend to be fairly thin on the ground, and I cannot see evidence that the incidence of no-injunction judgments has increased post-Ebay relative to pre-Ebay.

Still and all, the *law* used to be that an injunction was presumptively favored, whereas the *law* is now that the patentee actually has to prove up irreparable harm and inadequate remedy at law. This bill would put things back to a situation in which the defendant (opposing an injunction) has to prove up a *lack* of irreparable harm or a *lack* of adequate remedy at law.

In other words, it is more a case of who has to pay the lawyers more, the plaintiff or the defendant. It is entirely possible that the incidence of no-injunction outcomes will not actually change if the bill were to pass (just as it is not clear that the incidence changed on account of Ebay v. MercExchange).

[skeptical]

"In other words, it is more a case of who has to pay the lawyers more, the plaintiff or the defendant."

I cannot get there from here.