Proposed Amendments to Patent Laws to Rein in Litigation Abuses

Recently, House Judiciary Committee Chairman Bob Goodlatte (R-VA) announced a 47-page draft of a bill that proposes various amendments to the Patent Act, Title 35 of the United States Code and the Leahy-Smith America Invents Act.

Importantly for IP practitioners, the draft bill would heighten pleading requirements for patent cases under a new 35 U.S.C. § 281A, by requiring detailed information in a complaint, including all the patents alleged to be infringed, an identification of each accused product and information with “detailed specificity” regarding how the product infringes. The proposed revisions would eliminate the current “Form 18,” which is the baseline model for alleging patent infringement.

In addition, the draft bill includes provisions that require the losing party in patent cases to pay the costs of the prevailing party unless the judge finds that the suit was “substantially justified.” Of course, this would create a significant exception in patent cases to the so-called “American rule,” under which parties basically pay for their own attorneys’ fees and litigation costs, unless the case is found to be “exceptional” under 35 U.S.C. § 285. Additionally, the bill includes a new 35 U.S.C. § 299A, which proposes limiting discovery in patent litigations to information necessary for claim construction, prior to a claim construction ruling from the court.

Other provisions of the draft bill would require identification and joinder of parties having a financial interest in the patents-in-suit in patent cases, staying actions against “covered customers” of defendants already under suit, and add constraints on the scope of discovery in patent cases. In addition, the draft bill would eliminate the “reasonably could have raised” estoppel presently applied in U.S. Patent & Trademark Office (USPTO) post-grant review (PGR) procedures, remove the transitional term of USPTO covered business method (CBM) reviews, and require the USPTO to the same claim construction standards in its post-grant proceedings as are presently applied in the district courts.

According to a press release, Sen. Goodlatte indicated that “Abusive patent litigation and specifically patent trolls have a significant impact on American competitiveness, costing our economy billions of dollars each year. I am pleased to announce that, working with Chairman Leahy, I have produced a draft that helps to address the issues that businesses of all sizes and industries face from patent troll-type behavior and aims to correct the current asymmetries surrounding abusive patent litigation. This discussion draft is the product of much work and numerous hearings, spanning multiple Congresses. It is my hope that this discussion draft is the first step in enacting meaningful legislation that reduces the costs of frivolous litigation, increases patent certainty and promotes the creation of American jobs.”

Many provisions of the draft bill, if passed into law, would have a significant impact on the practice of patent litigation. Gibbons will continue to monitor this and other IP law developments.

Thomas J. Bean is  a Director in the Gibbons Intellectual Property Department.  Owen J. McKeon  and Ralph A. Dengler, former Directors in the Gibbons Intellectual Property Department, co-authored this post.
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