Amid Praise for Patent Litigation Reform Bill, House Panel Highlights Concerns
The covered business method review remained the most criticized component of the Innovation Act (HR-3309) at a House Judiciary Committee hearing Tuesday, and witnesses pushed for some language clarifications. Lawmakers noted many of the patent litigation reform bill’s main features -- enhanced pleading standards, fee shifting to the nonprevailing party, limiting discovery until claim construction and increased transparency throughout litigation (CD Oct 24 p12) -- were “noncontroversial,” and “pretty supported” among the witnesses, which included representatives from the technology sector, pharmaceutical industry and a former U.S. Patent and Trademark Office director. But several witnesses including David Kappos, the former USPTO director, urged that the office receive “full fee access” and cautioned that the bill’s language on stays for end-user patent infringement lawsuits might be “overbroad.”
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"I didn’t hear any witness testify today that” it’s necessary to extend the covered business method (CBM) to achieve the reform the bill seeks, said Robert Armitage, former Eli Lilly general counsel. The CBM program is to expire in 2020 under the America Invents Act, and the Innovation Act would expand it to cover all “first to invent” patents. Critics of the extension worry it would give the patent office wide-ranging ability to review all patents after they're granted or reissued (CD Oct 25 p11). “I'm first and foremost concerned that [CBM] not be expanded in a way that covers all software patents,” Kappos said. His preference is simply to leave the program “the way it is.”
Once a patent is in the market, Armitage said it “becomes more difficult” to do an effective post-grant review. Only post-grant reviews occurring immediately after the patent is issued can be effective, he said. “It protects the public if it’s used effectively against patents that might be sued five years, 10 years down the road.”
The bill also protects the public by granting stays for patent infringement litigation against end-users and “mom and pop” retailers while a product manufacturer intervenes to handle the lawsuit, witnesses said. Kappos thinks the bill’s language on this subject has some “dangers in it” and could use “some fine tuning,” he said. “The way it’s written, it can apply to any party in the distribution channel.” Under this broad language, many “large commercial actors such as manufacturers combining procured components into value-added completed devices, as well as assemblers” escape infringement liability, said Kappos. “You want the end-user and the retailer to benefit."
Witnesses said the PTO should receive full fee access. “User fee collections are not reliably available to the office,” Armitage said, recently as a result of sequestration. “I simply cannot overstate the destruction this is causing,” Kappos said. “The work remains without the funding to handle it, creating an innovation deficit that will require future generations of innovators to pay into the agency again in hopes their fees can actually be used to undertake the work for which those fees are paid.” (cbennett@warren-news.com)