Legislation, Regulation, and the Industry
Overview
Government concern over the corrosive effects of patent trolling is intensifying. The patent assertion entity issue is currently receiving the attention of the Obama administration as well as the scrutiny of the Congress and government regulators.
In order to help the marketing services industry understand the types of legislative, executive and regulatory initiatives that are currently under consideration, we are providing reference information related to selected governmental and regulatory patent initiatives:
1) Transparency in Assertion of Patents Act: S.2049
Senators McCaskill and Rockfeller introduced the Transparency in Assertion of Patents Act: S.2049 on February 26, 2014. The proposed legislation provides instruction for the FTC related to patent demand letter disclosures, unfair or deceptive patent assertions and civil penalties for unfair or deceptive patent demand letters.
A summary of S.2049, The Transparency in Assertion of Patents Act, is provided here for download (PDF).
2) White House Announces New Patent Executive Actions
The White House announced three new executive actions to encourage innovation and further strengthen the quality and accessibility of the patent system:
- Crowdsourcing Prior Art
- More Robust Technical Training
- Pro Bono and Pro Se Assistance
The White House issued a comprehensive patent report that discusses the patent landscape and proposed solutions to the patent assertion entity problem. The link to the PATENT ASSERTION AND U.S.INNOVATION report that was prepared by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy is provided here.
A recent ADWEEK article - President Obama Tackles Patent Trolls - summarizes the Obama administrations patent initiatives and can be viewed here.
3) Overview of Proposed Patent Legislation
Recently, Senators Charles Schumer (D-NY) and John Cornyn (R-TX) and Representative Bob Goodlatte (R-VA) along with several other congressional leaders have introduced draft patent reform legislation. These bills, variously, press for more specificity and transparency in patent applications, broaden the varieties of patent categories subject to post-grant review, demand limits on litigation costs and propose a shift in the cost burden to the losing party in a patent claim.
Patent experts from the Washington DC based law firm Venable LLP have compiled a summary of some key features that are contained in six pending patent bills. The Venable summary analysis highlights patent quality and legislative process elements of the pending bills including:
- Invalidation of Overly-broad Patents
- Pre-Litigation and Pleading Requirements
- Increased Transparency
- Fee-shifting
- Bonds
- Joinder
- Early Case Management & Limited/Split Discovery
- Bad-faith Cause of Action
The Venable pending patent legislation summary analysis provides a quick reference and overview of the breath of potential patent legislative solutions:
Specific information related to the Goodlatte,Cornyn and Schumer bills is provided below along with information on the Vermont anti-patent trolling law.
4) House Judiciary Committee Chairman Goodlatte (R-VA) draft legislation
Representative Bob Goodlatte has drafted a comprehensive patent reform bill that is"designed to address the ever increasing problem of abusive patent litigation." A link to Chairman Goodlatte's press release, which includes a copy of the discussion draft; is provide here.
5) Senator Cornyn (R-TX) "Patent Abuse Reduction Act."
Senator Cornyn (R-TX) announced introduction of the "Patent Abuse Reduction Act." According to Senator Cornyn, the bill "will deter patent litigation abusers without prejudicing the rights of responsible intellectual property holders.” More specifically, Senator Cornyn states that the "bill would require plaintiffs to disclose the substance of their claim and reveal their identities when they file their lawsuit; allow defendants to hale into court interested parties; bring fairness to the discovery process; and shift responsibility for the cost of litigation to the losing party."
Links to Senator Cornyn's press release and the legislation are provided below.
6) Senator Schumer (D-NY) “Patent Quality Improvement Act.”
Senator Schumer’s patent bill, the “Patent Quality Improvement Act.” The bill amends section 18 of the America Invents Act to make all business method patents eligible for expedited post-grant review. Currently, reviewable patents are limited to business method patents related to financial products and services. The bill also removes the “sunset” provision from the program, making it permanent.
Senator Schumer’s staff believe that allowing more business method patents to be challenged through the new post-grant review process at the PTO will ultimately help deter patent trolls. The Senator believes that post-grant review is a viable, less expensive option for defendants to fight back against these suits. Currently, defendants are forced to either settle or litigate in district courts at great expense. It is their belief that by making this third option more widely available it will help bring balance to the current system in which trolls rely on the fact that defendants would rather settle than pay litigation costs. In the end, the Senator believes that providing this new route at the PTO will serve to deter trolls who are trying to enforce questionable, low-quality patents. Further, Senator Schumer’s staff is aware that this is just one of many troll “fixes” that will be considered over the course of this Congress.
7) Vermont Takes the Lead on Patent Trolls
The state of Vermont law H.299 entitled "Bad Faith Assertions of Patent Infringements" authorizes the Vermont attorney general to bring civil enforcement actions against patent trolls. The law describes bad faith assertion factors including vague demand letters. Discussion related to Vermont H.299 which is scheduled to take effect July 1, 2013 was included in the Forbes article, "Vermont Enacts The Nation's First Anti-Patent Trolling Law".
SUMMARY COMMENT
The significant amount of legislative and regulatory discussion related to the threat to innovation and economic harm caused by patent trolls is an indication of the level of frustration and concern associated with troll activity. Marketers and marketing service entities that are involved with digital activities must stay informed about patent matters. There is reason to be optimistic that solutions to the patent troll problem are being identified and evaluated---however---until such time as laws and regulations are amended and successfully implemented practitioners must remain vigilante.
Previous Posts
What Do the 2011 Amendments to the U.S. Patent Act Mean for the Marketing Industry?
Significant changes to the federal patent statute were signed into law by President Obama on September 16, 2011. These amendments to the United States Patent Act of 1952 have been described in some quarters as the most sweeping in decades. It is clear the changes will require new thinking and modified strategies among patent lawyers. But what do they mean for the marketing industry?
Legislative and Regulatory Authorities
- United States Patent and Trademark Office : http://www.uspto.gov
- Text of H.R. 1249: Leahy-Smith America Invents Act - http://www.govtrack.us/congress/billtext.xpd?bill=h112-1249
- Patent Reform Act; http://www.govtrack.us/congress/bill.xpd?bill=s112-23