A Beautiful Day

04-29-2015

Posted by Dana Rao, Vice President of Intellectual Property and Litigation

Today, the Senate introduced the Protecting American Talent and Entrepreneurship (PATENT) Act of 2015. Everyone following this process understands that the PATENT Act isn’t just another patent reform bill. It is much more than that. It is a patent reform bill that stands a real chance of passing the Senate, it is bipartisan, and it contains very important provisions that should fundamentally improve the U.S. patent system. The original sponsor and cosponsors of this bill should be applauded for their efforts.

Nevertheless, there’s been a lot of talk about whether or not patent reform is still needed, whether the system is fixing itself, or whether bills like these will end society as we know it. Maybe too much talk. A quick review of the data: 2014 had the third highest number of patent lawsuits filed in history, and December 2014, January 2015, and February 2015 saw a year-over-year increase in patent litigation of 4%, 26%, and 10% respectively, with patent trolls comprising over half of the new suits filed.

And fee shifting, while occurring slightly more often than it used to, still isn’t happening enough. A few weeks ago, we had a case dismissed against us by a large patent troll. The troll had sued us, we believed we were licensed to the patent, the troll refused to turn over the critical documents that would prove it, and prolonged the litigation with us hoping we would give up and settle. On the eve of the hearing where the license defense would be heard, the troll dropped the case and walked away. After we spent over $1M dollars defending ourselves. We moved for fees, and the court said that since she didn’t get to hear the merits of the license defense, she could not award us fees. So the patent troll got away clean. This is just one example, our latest example, of a problem that has been plaguing our industry for years. It is time to take action.

The Senate bill will introduce much needed reforms to our system. And they are balanced reforms, reflecting over a year’s worth of multi-lateral stakeholder negotiation representing all types of users of the patent system. There is fee shifting to deter both plaintiffs and defendants from engaging in bad conduct or taking unreasonable positions, there is a recovery provision to ensure accountability from the investors who are profiting from abusive litigation, there is an enhanced pleading requirement to ensure due diligence is done before embarking on a multi-million dollar lawsuit, and there is a customer stay provision to ensure that the most appropriate parties are able to defend a case in the most economical way.   All of these provisions together will help to rehabilitate a creaky old patent system not designed for 21st century technologies and industries, and restore the good name of patents in our society.

Today’s introduction, on the back of the recent re-introduction of the Innovation Act in the House, may only be a first step on the path to a law. But it is a very important, long awaited, and long needed step. That’s why it’s worth taking a moment to celebrate. My thanks to all of those involved in this process, especially Senators Grassley, Leahy, Schumer, Cornyn, Hatch, Lee, and Klobuchar on the Senate side, and Chairman Goodlatte and Representatives Lofgren and Jeffries on the House side, for coming together in a bipartisan manner to move us forward on this important issue.

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