NCPA - National Center for Policy Analysis

Will Congress Reform the U.S. Patent System?

April 30, 2015

The Innovation Act is an attempt to address some of the more egregious behaviors of patent assertion entities (PAEs) and build on patent reforms passed in the "America Invents Act of 2011."

The Innovation Act (H.R. 9) includes the following major provisions:

  • Plaintiffs are required to disclose who the owner of a patent is before litigation.
  • Plaintiffs, in their court proceedings, are required to actually explain why they are suing a company.
  • Courts are required to make decisions about whether a patent is valid or invalid early in the litigation process.
  • When parties bring lawsuits or claims that have no reasonable basis in law and fact, the Innovation Act requires judges to award attorneys' fees to the victims of the "frivolous" lawsuit - referred to as a "loser pays" system.  Moreover, the bill allows judges to waive the award of attorneys' fees to both plaintiffs and defendants in special circumstances.
  • The Judicial Conference is required to make rules to reduce the costs of discovery in patent litigation.
  • The Innovation Act creates a voluntary process for small businesses to postpone expensive patent lawsuits while their larger sellers complete similar patent lawsuits against the same plaintiffs.
  • The Patent and Trademark Office is charged with providing educational resources for those facing abusive patent litigation claims.

The public policy issues raised by PAEs are of interest to a wide variety of stakeholders concerned with the effectiveness of the U.S. patent system, says NCPA senior fellow Thomas A. Hemphill.  The crux of the issue over patent reform appears to be twofold: whether Congress should enact comprehensive patent reform legislation, or pass targeted legislation making specific - and limited -improvements to the nation's patent system to address flaws in the system.  This is not a "zero-sum" decision for Congress.

Source: Thomas A. Hemphill, "Target Patent Law Reforms in the 114th Congress," American Action Forum, April 28, 2015. 

 

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