1. An Update On Patent Litigation Reform Legislation in the United States
IP Practice in China Committee Trip
Sharon A. Israel, AIPLA President
May 2015
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2. Patent Litigation Legislation:
Introduction
Patent Litigation Legislation:
Proposed Legislation
Key Issues
The Current Landscape
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3. Bills Introduced in the 114th Congress
Proposed Legislation
Bills Introduced in the 114th Congress
H.R. 9, Innovation Act
Introduced by Chairman Goodlatte (R-VA) on February 5, 2015
Identical to the bill that passed the House in 2013
Largely focused on reducing abusive patent litigation
House Judiciary Committee Hearing on April 14, 2015
USPTO Director Michelle Lee testified
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4. Bills Introduced in the 114th Congress
Proposed Legislation
Bills Introduced in the 114th Congress
S. 632, the Support Technology and Research for Our Nation's Growth (STRONG) Patents Act
Introduced by Senator Coons (DE) on March 3, 2015
Proposes changes to proceedings before the Patent Trial and Appeal Board
Proposes Federal Trade Commission address claims of patent infringement demand letters sent in bad faith (similar to TROL Act)
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5. Bills Introduced in the 114th Congress
Proposed Legislation
Bills Introduced in the 114th Congress
S. 1137, the Protecting American Talent and Entrepreneurship Act of 2015 (PATENT Act)
Introduced on April 29, 2015
Co-sponsored by Chairman Grassley (R-IA), Cornyn (R- TX), Schumer (D-NY), Lee (R-UT), Hatch (R-UT), Klobuchar (D-MN)
Hearing held on May 7, 2015, to address “Finding Effective Solutions to Address Abusive Patent Practices”
Markup likely to happen soon
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6. Bills Introduced in the 114th Congress
Proposed Legislation
Bills Introduced in the 114th Congress
H.R. 2045, the Targeting Rogue and Opaque Letters (TROL) Act
Similar to the draft considered in 2014; two hearings held
Proposes Federal Trade Commission address claims of patent infringement demand letters sent in bad faith
Approved by Energy & Commerce Committee on April 29, 2015
H.R. 1832, the Innovation Protection Act
Introduced April 16, 2015
Provides permanent funding for USPTO
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7. Bills Introduced in the 114th Congress
Proposed Legislation
Bills Introduced in the 114th Congress
H.R. 1896, the Demand Letter Transparency Act
Introduced April 20, 2015, Sponsor (Rep. Polis – D-CO)
Requires disclosure of information related to patent ownership
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8. Key Issues Heightened Patent Pleadings Fee-Shifting & Recovery
Discovery and Expenses
Patent Ownership Transparency
Stays of Customer Suits
Bad Faith Demand Letters (Federal and State)
AIA Trial Proceedings
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9. Heightened Patent Pleadings
Key Issues
Heightened Patent Pleadings
Many more details on infringement contentions in a complaint
H.R. 9 and S include similar provisions that pleadings must include identification of each claim allegedly infringed; identification of each product/process accused; description of infringement allegations
H.R. 9: If information is not readily accessible, may be generally described with explanation of efforts made
S. 1137: If information is not accessible after a Rule 11 inquiry, general description okay along with statement why info is not accessible
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10. Heightened Patent Pleadings
Key Issues
Heightened Patent Pleadings
Many more details on infringement contentions in a complaint
H.R. 9: Pleadings must further include description of authority of party to assert infringement; whether a standards setting body has declared patent to be essential
S. 1137: Sets forth early disclosure requirements of interested parties
H.R. 9 and S. 1137: Confidential information may be filed under seal (good cause) and claims under section 271(e)(2) exempt
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11. Heightened Patent Pleadings
Key Issues
Heightened Patent Pleadings
S includes specific provisions on dismissals and amendments:
On motion, court shall dismiss for failure to meet requirements, but the fact that a party pleads based on “information not accessible” shall not be basis for dismissal if relief sufficient under Federal Rules of Civil Procedure
Nothing in provision shall affect a party’s leave to amend pleadings
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12. Fee-Shifting & Recovery
Key Issues
Fee-Shifting & Recovery
H.R. 9: Award fees to a prevailing party unless the position and conduct of non- prevailing party is reasonably justified in law and fact or special circumstances make an award unjust; Fee-shifting is presumed and burden on non-prevailing party to show fees should not be shifted. (b) May recover fee award from “interested” joined third party.
Covenant Not to Sue: Deemed to be a non- prevailing party, unless entitled to voluntary dismissal under Rule 41
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13. Fee-Shifting & Recovery
Key Issues
Fee-Shifting & Recovery
S. 1137: Would amend section 285 so that on motion of a prevailing party, fees shall be awarded if the position of the non-prevailing party was not objectively reasonable in law or in fact or the conduct of the noon- prevailing party was not objectively reasonable, unless special circumstances make an award unjust.
Covenant not to sue language included based on unilateral covenant and “may” be the subject of a motion for fees
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14. Fee-Shifting & Recovery
Key Issues
Fee-Shifting & Recovery
S. 1137: Recovery of award provision
Party defending against claim of infringement may file before scheduling conference a statement that party asserting infringement is in primary business of assertion and enforcement of patents or licensing
Certification by party alleging infringement that sufficient funds available for fee award, not primary business, identifies interested parties, or states no such interested parties. (Ongoing obligation to supplement)
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15. Discovery and Expenses
Key Issues
Discovery and Expenses
H.R. 9:
Statutory stay for discovery prior to claim construction ruling;
Requirement for adoption of patent specific discovery rules by Judicial Conference.
S. 1137:
Stay of discovery during pendency of initial motions to dismiss, transfer or sever; with some discretion of court; 271(e) exemption
Judicial Conference “should” develop patent specific discovery rules
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16. Patent Ownership Transparency
Key Issues
Patent Ownership Transparency
H.R. 9:
Disclose specific information about entities with interest in patent, including financial interest (assignee, entities with a financial interest in patents or plaintiff, ultimate parent of assignee)
Must update disclosure during litigation
Section 271(e)(2) exemption
Failure to comply limits fees and enhanced damages
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17. Patent Ownership Transparency
Key Issues
Patent Ownership Transparency
S. 1137:
Requires disclosure to USPTO of assignments on issuance of patent or not later than 3 months after assignment, including name of ultimate parent of assignee
Failure to comply limits fees and enhanced damages during period of noncompliance, unless manifestly unjust
PTO Director may promulgate regulations relating to patent ownership
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18. Stays of Customer Suits
Key Issues
Stays of Customer Suits
H.R. 9/S. 1137: Stay of suit against customer if covered manufacturer agrees and is party to same or parallel litigation
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19. Bad Faith Demand Letters
Key Issues
Bad Faith Demand Letters
Various proposals to address bad faith assertions of patent infringement prior to litigation
TROL Act proposals include federal preemption
H.R. 9/S. 1137: Limits ability to establish willful infringement if pre-suit notification doesn’t include specific information
S. 1137: Similar to TROL Act, but without preemption provision and no private right of action
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20. Bad Faith Demand Letters
Key Issues
Bad Faith Demand Letters
23 States Have Passed Bills on Demand Letters
Alabama, Georgia, Idaho, Illinois, Indiana, Louisiana, Maine, Maryland, Mississippi, Missouri, Montana, New Hampshire, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Utah, Virginia, Vermont, Washington, Wisconsin
17 States Now Have Had a Bill Introduced or Pending in a Current or Prior Session of the State’s Legislature
California, Colorado, Connecticut, Florida, Iowa, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, Nebraska, New Jersey, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas
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21. Bad Faith Demand Letters
Key Issues
Bad Faith Demand Letters
Now have a patchwork of state laws, which may be hard to navigate.
Varies from state to state regarding scope of bills, tests used, who can enforce, remedies available.
© AIPLA 2015

22. Key Issues
AIA Trial Proceedings
Proposals to address certain issues in proceedings before the Patent Trial and Appeal Board
STRONG Patents Act: addresses standing, claims construction, amendments, burdens of proof
H.R. 9: Addresses claim construction and PGR estoppel
S. 1137: addresses PGR estoppel
© AIPLA 2015

23. What’s Next? Potential direction of the legislation
The Current Landscape
What’s Next?
Potential direction of the legislation
White House Support
Landscape in Congress
Potential implications on our practice
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24. White House Proposals The Current Landscape
On June 4, 2013, the National Economic Council and the Council of Economic Advisers released a report titled Patent Assertion and U.S. Innovation, which found, among other things, that:
Patent Assertion Entity (PAE) lawsuits tripled in the last 2 years from 29% of infringement suits to 62%
PAEs may have threatened over 100,000 companies last year
Practicing firms are beginning to use aggressive litigation tactics
PAEs are increasingly targeting downstream users
PAEs take advantage of unclear patents, particularly software patents
Using this report, the White House Task for on High-Tech Patent Issues issued Legislative Recommendations and Executive Actions
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25. White House Proposals: Legislative
The Current Landscape
White House Proposals: Legislative
Require patentees and applicants to disclose the “Real Party-in- Interest”
Provide district courts with more discretion to award attorney’s fees under 35 USC 285
Expand Cover Business Method (CBM) Review
Protect off-the-shelf use by consumers and businesses and stay customer suits in favor of suits brought against a vendor, retailer, or manufacturer.
Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange
Demand letter transparency
Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges.
© AIPLA 2015

26. Major Players: Support Reform
Current Landscape
Major Players: Support Reform
Printing Industries of America
Alliance of Automobile Manufacturers
Internet Association
Consumer Electronics Association
Electronic Frontier Foundation
United for Patent Reform
App Developers
Coalition for Patent Fairness (CPF)
National Restaurant Association
National Retail Federation
National Association of Realtors
American Hotel & Lodging Association
American Bankers Association
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27. Major Player: Have Concerns
Current Landscape
Major Player: Have Concerns
IP Bar Associations - AIPLA, ABA-IPL, FCBA
Coalition for 21st Century Patent Reform
IPO
Biotech Industry Organization
Phrma
Innovation Alliance
Judicial Conference
Patent Office Professional Association
Institute of Electrical and Electronics Engineers
National Small Business Association
Medical Device Manufacturers Association
National Venture Capital Association
Higher Education Community (AAU, ACE, AAMC, APLU, AUTM, COGR)
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28. House Judiciary Committee - Republicans
Congress: The House
House Judiciary Committee - Republicans
Robert Goodlatte (VA-6), Chairman
F. James Sensenbrenner (WI-5)
Lamar Smith (TX-21)
Steve Chabot (OH-1)
Darrell Issa (CA-49)
J. Randy Forbes (VA-4)
Steve King (IA-5)
Trent Franks (AZ-8)
Louie Gohmert (TX-1)
Jim Jordan (OH-4)
Ted Poe (TX-2)
Jason Chaffetz (UT-3)
Tom Marino (PA-10)
Trey Gowdy (SC-4)
Raul Labrador (ID – 1)
Blake Farenthold (TX-27)
Doug Collins (GA-9)
Ron DeSantis (FL-6)
Mimi Walters (CA-45)
Ken Buck (CO-4)
John Ratcliffe (TX-4)
Dave Trott (MI-11)
Mike Bishop (MI-8)
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29. House Judiciary Committee - Democrats
Congress: The House
House Judiciary Committee - Democrats
John Conyers, Jr. (MI-13), Ranking Member
Jerry Nadler (NY-10)
Zoe Lofgren (CA-19)
Sheila Jackson Lee (TX-18)
Steve Cohen (TN-9)
Hank Johnson (GA-4)
Pedro R. Pierluisi (PR)
Judy Chu (CA-27)
Ted Deutch (FL-21)
Louis Gutierrez (IL-4)
Karen Bass (CA-37)
Cedric Richmond (LA-2)
Suzan Delbene (WA-1)
Hakeem Jeffries (NY-8)
David Cicilline (RI-1)
Scott Peters (CA-52)
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30. House IP Subcommittee Congress: The House REPUBLICANS
Darrell Issa (CA-49) , Chairman
Doug Collins (GA-9), Vice-Chairman
F. James Sensenbrenner (WI-5)
Lamar Smith (TX-21)
Steve Chabot (OH-1)
J. Randy Forbes (VA-4)
Trent Franks (AZ-8)
Jim Jordan (OH-4)
Ted Poe (TX-2)
Jason Chaffetz (UT-3)
Tom Marino (PA-10)
Blake Farenthold (TX-27)
Ron DeSantis (FL-6)
Mimi Walters (CA-45)
DEMOCRATS
Jerry Nadler (NY-10), Ranking Member
Judy Chu (CA-27)
Ted Deutch (FL-19)
Karen Bass (CA-37)
Cedric Richmond (LA-2)
Suzan Delbene (WA-1)
Hakeem Jeffries (NY-8)
David Cicilline (RI-1)
Scott Peters (CA-52)
Zoe Lofgren (CA-19)
Steve Cohen (TN-9)
Hank Johnson (GA-4)
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31. Senate Judiciary Committee
Congress: The Senate
Senate Judiciary Committee
REPUBLICANS
Chuck Grassley (IA), Chairman
Orrin Hatch (UT)
Jeff Sessions (AL)
Lindsey Graham (SC)
John Cornyn (TX)
Mike Lee (UT)
Ted Cruz (TX)
Jeff Flake (AZ)
David Vitter (LA)
David Perdue (GA)
Thom Tillis (NC)
DEMOCRATS
Patrick Leahy (VT), Ranking Member
Dianne Feinstein (CA)
Charles Schumer (NY)
Richard Durbin (IL)
Richard Whitehouse (RI)
Amy Klobuchar (MN)
Al Franken (MN)
Chris Coons (DE)
Richard Blumenthal (CT)
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32. Thank you! Sharon A. Israel, President
American Intellectual Property Law Association
© AIPLA 2015