What’s Going On with Patent Reform in Congress?

What’s Going On with Patent Reform in Congress?

What’s Going On with Patent Reform in Congress?

So over at the Patent Reform Department of Public Knowledge, we’ve been busy with so many things this summer—the ClearCorrect v. ITC case, technology standards patents, Oracle v. Google (wait, that’s not really patents), writing science fiction—that we haven’t had much time to talk about what’s going on in Congress with patent reform. But trust me, there’s a lot going on over there too.

Right now, Congress is on vacation for the month so there isn’t too much happening immediately, but lots of things are definitely in play and might start to move quickly once Congress is back in session in September. So here’s our summary of what has happened to date and what to expect in the next few months.

Patent reform in Congress has primarily focused on issues surrounding lawsuits over patents, primarily to deal with so-called “patent trolls” and the abusive tactics they use. There are two primary bills moving through Congress at the moment, one in the House and one in the Senate. Let’s look at those first, and then consider some of the issues and sticking points that are coming up.

The House’s Innovation Act Moves Forward (Slowly)

The House bill, H.R. 9, is called the Innovation Act. The House Judiciary Committee voted to approve the bill in July, and the next step is for the bill to go to the House floor to be debated and voted upon.

A very similar bill, H.R. 3309, passed the House by a wide margin—325 to 91—in December 2013, so it might seem like this would be an easy pass. But the companies and lobbyists opposing the bill have been particularly vocal among the representatives, which has caused many of them to call for delays. House Judiciary leadership, who introduced the current year’s bill, plan to seek a vote in early September.

The Senate’s PATENT Act Will Likely Come to Action

The Senate has also been working on its version of a patent reform bill, S. 1137, called the PATENT Act. The bill contains mostly the same provisions as the House bill (though some of the differences are hotly contested).

The Senate Judiciary Committee voted in favor of the bill in early June. However, progress on that bill has stalled since then, possibly over negotiations on various components of the bill such as the IPR provisions (explained below). It will likely come up in discussion again in September, particularly given the fact that the House bill’s passage is not imminent.

Issues in Play

There is general agreement on many parts of patent reform at this point, given the many similarities between the House and Senate bills, but there are still a number of big outstanding questions that will be the topic of debate as the reform efforts move forward.

Venue reform

There is currently an ongoing problem of patent owners seeking out the most favorable courts to bring their lawsuits in, which skews the process and creates a lot of unfairness for companies dragged into remote courts to defend themselves. The most popular of such courts are those in the Eastern District of Texas, which receive a massive bulk of patent lawsuits and are known for making rules unusually favorable to patent owners.

The House bill includes a provision to make it more difficult for patent cases to be dropped in whatever venue the patent owner chooses. It instead devises rules to put cases in reasonable places that are fair to both parties. The Senate bill does not have such a provision, though there are efforts to include one in that bill.

Patent demand letters

This is probably the best-known tactic of patent abuse: the letter asserting infringement on a patent and demanding payment to make a threatened lawsuit go away. As the poster child for patent reform, this issue has been heavily discussed, and it is not without controversy.

The Senate bill contains certain fairly mild language to discourage abusive patent demand letters. The House bill contains no provision on this issue, though internally there have been discussions on different approaches to adding in demand letter reform provisions.

Additionally, other members of Congress have introduced standalone solutions. The Demand Letter Transparency Act offers a comprehensive set of reforms on the issue. In contrast, the TROL Act from the House Energy and Commerce Committee purports to address patent demand letter abuse, but it is so full of loopholes and weaknesses introduced by anti-patent-reform lobbyists that it would ultimately leave the state of things worse than the status quo, as we have explained.

Satisfying biotech and pharmaceuticals

Though the reforms directed to patent litigation would hardly affect biotech and pharmaceutical companies (presumably, as patent troll activity is mostly in the software patent space), those industries have sought to use their influence over Congress to sweeten patent law for themselves. This has primarily been in the area of “inter partes review,” a process by which one can ask the Patent Office to reconsider an issued patent that might be invalid.

The inter partes review procedure is vitally important to dealing with problems of low-quality patents on simple and obvious ideas. But the pharmaceutical and biotech industries want to escape this corrective procedure so that they can hold onto their patents (valid or not) with less fear of revocation. They first sought to introduce barriers to entry for the inter partes review proceedings, and successfully used their influence to pressure the Senate into including many such provisions. The House bill includes some of these provisions cutting back on inter partes review, but less so.

Apparently unsatisfied with that success, though, those industries are continuing to push for further exemptions from inter partes review, now baldly asking Congress to cut pharmaceutical patents out of the program entirely. This move, which would make questionable drug patents harder to challenge, is being strongly opposed by groups concerned with access to medicines.

So there you have it, the current state of patent reform.  We will continue to work closely on these issues, so follow Public Knowledge (and me on Twitter @charles_duan) to learn more. And don’t forget to contact your representatives in Congress, because public support makes a difference!