Adobe and Cisco Representatives to Call for Legislative Fixes to Patent Litigation Abuse at Hearing
Representatives for Adobe and Cisco are expected to urge Congress to enact legislative fixes to the U.S. patent system, with both set to tell the House Judiciary Committee’s Courts, Intellectual Property and the Internet subcommittee Thursday that those fixes will curb what they view as patent litigation abuse. “Economically destructive” patent litigation has now spread “from Silicon Valley to Main Street,” affecting small businesses and consumers, said Mark Chandler, Cisco’s general counsel, in a statement prepared for the hearing (http://1.usa.gov/Ybq3Rh). While the America Invents Act (AIA), recent court decisions and actions by the U.S. Patent and Trademark Office (PTO) “have vastly improved the landscape of patent law” in recent years, further action by those entities and industry is necessary to address the effects of patent litigation abuse, said Dana Rao, Adobe vice president-intellectual property and litigation, in a prepared statement (http://1.usa.gov/YoAYtj). Other witnesses set to testify at the hearing are: John Boswell, the SAS Institute chief legal officer; Janet Dhillon, J.C. Penney general counsel; Graham Gerst, a partner at the Global IP Law Group; and Philip Johnson, Johnson & Johnson’s chief intellectual property counsel. The hearing is to begin at 11:30 a.m. in 2141 Rayburn (http://1.usa.gov/ZDED5y).
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Adobe advocates passage of the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act, which Reps. Jason Chaffetz, R-Utah, and Peter DeFazio, D-Ore., introduced in late February (WID Feb 28 p6). “The best way to curb frivolous litigation is to create a system where [patent assertion entities (PAEs)] face consequences if their suits truly lack merit,” Rao said of the SHIELD Act. “Given that it costs $5 million to defend a patent through trial, and the average settlement demand is less than $1 million the PAEs have an economic advantage over the targeted defendants. If, however, the PAEs faced the real possibility that the $5 million [liability] would be shifted to them if they were unsuccessful, I believe they will think twice about bringing lawsuits based on meritless patents."
Cisco also supports passage of the SHIELD Act “or similar legislation,” Chandler said. The SHIELD Act “provides the right balance by shifting the cost of unsuccessful PAE patent litigations back to the PAEs who bring them,” he said. “Entities whose business is licensing and litigating patents should be held to a higher standard when they lose. Litigation is their business and they should be held accountable when they get it wrong."
Adobe supports strengthening Rule 11 of the Federal Rules of Civil Procedure, which “imposes an affirmative duty on plaintiffs not to file a suit aimed at harassing or imposing undue costs on a defendant,” Rao said. While Rule 11 gives judges the authority to impose “substantial sanctions” for rule violations, Adobe wants the committee to examine whether the standard for applying the rule is too high, and to consider steps to ensure it is applied as intended.
Cisco wants Congress to fix estoppel language to the AIA’s post-grant opposition provision, Chandler said. Cisco also wants Congress to curb PAEs’ use of the International Trade Commission (ITC) as a “shakedown mechanism,” he said. PAEs use the ITC’s powers “as a leverage for larger money settlements from the same industries the ITC was intended to protect,” Chandler said. More than 50 percent of all respondents in ITC investigations were respondents to investigations brought by PAEs, he said. Cisco also wants to amend the reach of prior use rights “to ensure that American businesses are not at a disadvantage internationally,” Chandler said.