Kappos to Urge Caution in New Patent Revamp Efforts at House Judiciary Hearing
Congress should “proceed with caution” as it considers a second round of changes to the U.S. patent system, former Patent and Trademark Office (PTO) Director David Kappos is expected to tell the House Judiciary Committee Tuesday. Kappos, now a partner at Cravath Swaine, is to testify at a 10 a.m. hearing to get industry input on the Innovation Act (HR-3309). The bill, introduced last week by committee Chairman Bob Goodlatte, R-Va., attempts to curb abusive patent litigation by making changes to court rules governing patent cases, as well as through changes to PTO programs (CD Oct 24 p12).
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The U.S. patent system is just beginning to show the effects of the passage of the America Invents Act -- and there’s not an emergency in the system that requires immediate action, Kappos said in written testimony released Monday. “The building is not on fire,” he said, noting a recent Government Accountability Office report that found the rise in patent lawsuits in recent years is largely attributable to AIA changes rather than growing patent assertion entity (PAE) activity (CD Aug 23 p9). Congress should be more deliberative in enacting the Innovation Act and other patent legislation to avoid a dangerous “overcorrection” away from patent holders, and to allow small innovators and other entities that depend on strong IP rights more time to “make their views heard,” Kappos said (http://1.usa.gov/16GPoHl).
Many of the Innovation Act’s provisions “have the potential to improve our patent litigation processes, reduce litigation uncertainties and costs, and increase the value of legitimate patent rights for American innovators,” Kappos said in his written testimony, though he said the committee needs to do more work on the bill. Provisions that would change court rules on fee-shifting, joinders, real-party-in-interest disclosures and heightened pleading standards “represent good policy” that can become more effective with refinements that take into account further input from judges and “legitimate patent holders,” Kappos said. He encouraged Congress to hold off on expanding the PTO’s covered business method patent review program because it is “too early” to evaluate the program’s effects at this point. Kappos endorsed a provision that would allow courts to stay patent lawsuits against a product’s end-users in some cases, but he said the provision needs modifications, including wording it in a way that would not allow large commercial entities to escape a lawsuit. Kappos didn’t endorse or oppose a provision that would change the PTO’s claim construction standard, but noted that Congress needs to understand that changing the standard could result in the agency’s issuing more generally defined claims.
Kevin Kramer, Yahoo deputy general counsel-IP, said in written testimony that Yahoo is “extremely encouraged” by the Innovation Act. Kramer endorsed the bill’s provisions on fee-shifting, limits on discovery, heightened pleading requirements and real-party-in-interest disclosures. Yahoo will also be interested in the bill’s provisions on changing the PTO’s claim construction standard and expanding the PTO’s covered business method program, he said. The current program is “limited in scope to only those patents used in the practice, administration or management of a financial product or service,” Kramer said (http://1.usa.gov/1al1AUB).
Krish Gupta, EMC deputy general counsel, said in written testimony that the Innovation Act “makes significant strides to address the most egregious and established abuses of the current patent litigation system.” EMC is particularly supportive of the bill’s fee-shifting provision, which it believes is “the simplest way to discourage the filing of frivolous and abusive suits by imposing financial accountability in the patent system,” he said. EMC supports the real-party-in-interest disclosure and joinder provisions because they would “allow EMC to recover fees, and to file counterclaims, against the entity that is truly behind the lawsuit,” Gupta said. EMC also supports the heightened pleading requirement, limits on discovery and the end-user case stay provision. The stay provision will “ease some of the burden of frivolous patent litigation brought against end users,” Gupta said. He also endorsed the Patent Abuse Reduction Act (S-1013), which in concert with the Innovation Act would be “essential to protecting America’s position as the most innovative nation in the world” (http://1.usa.gov/HrNync).
The Computer and Communications Industry Association and more than two dozen other industry organizations also called Monday for the expansion of the covered business method program. The groups said in a letter to the leaders of the House and Senate Judiciary committees that expanding the program beyond financial services patents would provide a non-court alternative to “address the low-quality patents that are fueling the PAE litigation explosion and harming American companies” (http://bit.ly/1ipyNgC).