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3 New Years Resolutions for Patent Reform

By William Peacock, Esq. on January 02, 2014 | Last updated on March 21, 2019

Everyone, it seems, has an opinion on patent reform. A White House task force chimed in with anti-trolling proposals. The House of Representatives passed a reform-minded bill late last year. Federal Circuit Chief Judge Randall Rader continues to argue on behalf of fixing fee-shifting. And the Supreme Court has two cases on its docket that may grant him his wish.

So maybe, 2014 will be the year of patent reform. Out of all of the proposals floating around, what changes would we like to see?

Fix Fee-Shifting

We're with Judge Rader here. Though he noted that judges have the power to award fees, under Section 285 of the Patent Act, as well as Rule 11 of the Federal Rules of Civil Procedure, only 20 out of nearly 3,000 patent cases filed in 2011 ended with an award of fees. With "patent assertion entities" (patent trolls) bringing 62 percent of all litigation, you'd expect that number to be slightly higher than a fraction of a percent.

What's the problem? In part, it's the Federal Circuit's heightened "objectively baseless" standard, which Judge Rader has criticized frequently, that stands in the way. The standard requires a showing that the claim brought was either known to be bogus, or so obviously bogus that the claimant should have known better. Finding proof of the former is near-impossible without a "smoking gun" email, while the latter "objective" prong is simply really, really, hard to show.

The Supreme Court might intervene. Or the pending Innovation Act, if it passes without being gutted, may solve the problem. Either way, fee-shifting seems like a certainty for 2014.

Pass the Innovation Act

Fee-shifting isn't the only reform found in the Innovation Act, which was passed by the House last month, and seems to have sufficient bipartisan support to make it to the President's desk.

The bill brings a lot of intelligent reforms, such as heightened pleading standards (a party claiming infringement must provide details on the patent and how, exactly, it is being infringed) and disclosure of the true parties in interest (a common tactic of patent trolls is to form shell companies, assign the rights, and then litigate from behind the corporate veil).

It's a welcome, though incomplete, set of reforms.

ADR for Patents

Alternative dispute resolution, in many cases, is cheaper than litigation. So why isn't there ADR for patents?

Well, there is, but its use is limited. Inter partes review, a limited form of ADR that addresses issues of novelty and obviousness based on patents, printed publications, and prior art, has proven to be extremely popular.

Covered Business Method review was supposed to be expanded by the Innovation Act but, according to the Electronic Frontier Foundation, it was stripped out of the House's draft of the bill. CBM review, once initiated, allows parties to put litigation on hold and to have the USPTO review the validity of a patent though a post-grant review.

CBM, like many forms of ADR, is typically cheaper than litigation, which should help all involved, whether they are patent trolls, small businesses, or tech giants. And there's still hope for its inclusion in the Innovation Act. According to the EFF, expanded review is still included in the version still pending in the Senate.

Got any other reforms you'd like to see, such as a constitution-friendly method for curbing frivolous demand letters by patent trolls. Tell us you ideas on LinkedIn.

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