Revised Patent Ownership Disclosure Guidelines Forthcoming, PTO Director Says

Making RPI disclosure a default action will help companies and individuals “targeted” by patent assertion entities (PAEs) by making it easier to identify the ultimate owner of a patent since PAEs “often mask their identity by creating numerous shell entities,” Rea said at an American Intellectual Property Law Association conference. PTO is building the rulemaking based on extensive public comments it has received on RPI, particularly feedback the agency received when it hosted a roundtable discussion on the issue in January (CD Jan 14 p8), Rea said.

Obama’s set of actions also require PTO to improve patent claim clarity on software-related patent applications and improve patent examiners’ training for examination of functional claims. PTO is currently working on improving claim clarity based on feedback it received from the software industry (CD April 24 p10), Rea said. The agency has already begun improving examiners’ training, including posting revised examiner guidance online and providing additional training to examiners, Rea said. The set of actions also required PTO to expand its outreach on patent-related issues and to expand its Edison Scholars Program, which recruits scholars to work at PTO for six-month periods, to include research on abusive patent litigation. PTO has “long viewed public education as a core function of the agency,” and it plans to soon expand its online resources for small businesses and individuals who receive threats of pending patent litigation, Rea said. PTO recently called publicly for new applications to the Edison program to focus on abusive patent litigation involving software-related patents, she said.

PTO is also working closely with Congress to develop legislation to combat abusive patent litigation, just as it did to develop and pass the America Invents Act (AIA), Rea said. Many of Obama’s legislative recommendations on abusive patent litigation are included to some degree in the Innovation Act (HR-3309), which House Judiciary Committee Chairman Bob Goodlatte, R-Va., formally introduced Wednesday (CD Oct 24 p12). Rea noted the introduction of the Innovation Act and the pending introduction of a similar measure in the Senate, but did not directly endorse them. Rea said PTO endorses Obama’s legislative recommendations, including support for a legislative provision that would require patent owners and applicants to file current RPI information before filing a lawsuit, sending demand letters or seeking a PTO patent review. RPI disclosure information should focus on the ultimate parent entity, “not every party holding a minor interest or non-exclusive license,” she said. PTO and courts should be allowed to impose sanctions on entities that knowingly flout the RPI disclosure rules, Rea said.

PTO supports expanding the agency’s covered business method patent review program to include a “limited range of software-related patents,” Rea said. “However, the scope of reviewed patents should be carefully defined and appropriately limited so as not to run afoul of our obligations under trade agreements.” AIA created the program as a “temporary solution” that is scheduled to sunset in September 2020, she said. Proposals to expand the review program have been controversial among some industry groups and companies, with BSA/The Software Alliance, Innovation Alliance and more than 100 companies sending a letter to the leaders of the House and Senate Judiciary committees in September warning against expansion (CD Sept 20 p9).

PTO also supports the revision of fee-shifting rules to allow courts more discretion to require the losing party in a patent case to pay legal fees, Rea said, noting that “such an approach would be consistent with the legal standard applicable to copyright infringement cases.” Legislation that would require a stay of litigation against a product’s end-user in cases where an end-user and a product’s manufacturer are both defendants also has PTO support, Rea said. “Although wholesale prohibitions on such suits are not appropriate, targeted limits may be appropriate provided the end user is using the product solely for its intended use,” she said.

Rea said PTO supported the White House’s recommendation that Congress revise the U.S. International Trade Commission’s standard for granting a patent-related injunction in Section 337 cases to align with the injunction test the Supreme Court created in eBay v. MercExchange. The current ITC standard is far different from the standard used in district courts, which “enhances the leverage of a non-practicing entity in licensing negotiations,” she said. There are no current legislative proposals that seek changes to the ITC standard, but it remains “another interesting area to watch for changes,” Rea said.

PTO continues to also work with Congress on possible changes to copyright law, though progress on that issue has been slow, Rea said. PTO’s Office of Policy and International Affairs released a paper in June analyzing current copyright issues, which seeks to encourage an “appropriate balance between rights and exceptions,” Rea said (http://1.usa.gov/15vOJd4).

Rea, who became acting head of the agency when David Kappos stepped down in January, said sequestration and the recently ended government shutdown have made for an “interesting year.” Despite limits sequestration and the shutdown placed on PTO, the agency was able to continue reducing its backlog of unexamined patent applications, which stood at 586,000 as of Thursday -- an 18 percent decline from where it stood in 2009, Rea said. Although PTO continued to operate during the shutdown because it is funded through user fees, it was not able to collect new fees during the shutdown, she said. PTO has also reduced the average time an application is pending to 29.1 months, down from 35.3 months in 2010, she said. “Shorter pendency means innovators obtain crucial IP protection faster, which empowers them to manufacture goods that are in demand the world over by spurring the U.S. economy,” Rea said. She told PTO employees in September that she plans to soon resign from the agency (CD Sept 13 p15), but did not mention her pending departure during the event.