After introducing several “discussion drafts” of his bill to curb abusive patent litigation tactics, Rep. Bob Goodlatte (R-VA) has now introduced the innocuously titled “Innovation Act,” H.R. 3309. This is his revision to the bill that he introduced in September.
Rep. Goodlatte specifically states the purpose of his bill to be ending “[a]busive patent litigation [that] is a drag on our economy.” The bill seeks to move patent litigation away from the standard notice pleading required in virtually all other areas of litigation in federal courts (with several exceptions generally related to fraud) to a much more detailed requirement that points out specific claims of the patents that are alleged to be infringed, the theory of infringement (direct, indirect, literal, doctrine of equivalents), and a detailed explanation of how each accused product or service meets the limitations of the claims. This type of information is currently not required until much later in the litigation process, once the parties have had an opportunity to engage in discovery.
The proposed bill seeks to make it so that many of these suits do not make it to the discovery stage. Discovery will be limited until after a court provides a ruling on claim construction. This will make it more difficult for patent owners to acquire information necessary to proceed with patent infringement suits.
Fee shifting under current § 285 of the Patent Act is provided in “exceptional cases.” District court judges are provided with great discretion as to the awarding of such fees. It generally occurs when a party has engaged in litigation misconduct, inequitable conduct, or if the case is extremely frivolous. Whether a case is “exceptional” is in the eye of the beholder and the district court judge.
The proposed bill seeks to change the default in patent cases to a fee shifting system. Courts will be instructed to award attorneys’ fees to the prevailing party “unless the court finds that the position of the nonprevailing party . . . was substantially justified or that special circumstances make an award unjust.”
Many other provisions from earlier bills continue in H.R. 3309.
Patent owners must disclose all parties will financial interests in the outcome of an infringement suit. If the patent owner sues a manufacturer and its customer, the suit against the customer is automatically stayed until the suit against the manufacturer is resolved. Civil actions against the PTO would no longer be permitted to obtain a patent; all final rejections from the Patent Trial and Appeal Board must be appealed to the Federal Circuit (what does this have to do with curbing litigation abuse?).
Post-grant review estoppel would be narrowed from grounds a challenger reasonably could have raised to only grounds he actually did raise. In conducting post-grant reviews and similar proceedings, the Patent Office would be required to construe patent claims as the courts currently do; the office would no longer be able to use the “broadest reasonable” interpretation. Double patenting rejections would be codified. The practice of requiring a terminal disclaimer to overcome an obviousness-type double patenting rejection is currently a judicially created law. The bill would slightly modify the covered business method procedure to limit it to post-AIA applications. This procedure would also be made permanent.
A hearing before the House Judiciary Committee (of which Rep. Goodlatte is the chair) is scheduled for Tuesday to consider the bill. The consensus seems to be that there is strong support in Congress to pass the bill. Much of this support has been generated by the mainstream media, which has been condemning the patent system in general and “patent trolls” in particular. Of course, most of this criticism is largely devoid of factual support or an understanding of how the system currently works.