Patent Litigation Reform Moving Through Congress

Just over two years after the America Invents Act (AIA) was signed into law to overhaul aspects of the U.S. patent grant system, several bills are being proposed to adjust how patents are litigated in federal court in the U.S.

The litigation reforms are primarily meant to address several perceived issues that are caused by NPEs asserting their patents against a multitude of companies that do not make products, such as restaurants and coffee shops that offer Wifi to customers, as well as fix a few technical issues with the AIA.

Last Thursday, the House of Representatives overwhelmingly passed H.R. 3309, the patent litigation bill introduced by Judiciary Committee Chairman Bob Goodlatte (R-Va.), by a vote of 325 to 91.  The bill has many provisions, including “fee shifting” where the loser of a lawsuit pays attorney fees except in certain cases, higher pleading standards to decrease or defer some costs of discovery by the defendant, stopping suits against customers and end-users of a technology while a suit against the product manufacturer is decided, and disclosure of the “real parties of interest” when claiming patent infringement.

The bill now goes to the Senate, where several other bills are being considered, starting with a Judiciary Committee hearing on Dec. 17 titled “Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse”.

Patent owners have been concerned that some of the proposed litigation reforms in some of the bills would limit patent owners’ ability to enforce patents through litigation. In particular, discussion during H.R. 3309 drafting led to a provision being dropped that would have expanded the “business method” patent review program.  The Senate may try to resurrect this provision.

Other observers – including five Democratic members of the House Judiciary Committee who opposed H.R. 3309 in committee – argue that the bill doesn’t address the issue of low-quality patents, which they say is a root cause of frivolous patent lawsuits and should also be tackled.

While end-of-year activities and the upcoming budget bills will keep Congress busy in the coming months, the strong support in the House and activity in the Senate indicate that there is momentum to passing patent litigation reform.

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