On December 5, 2013, the U.S. House of Representatives passed H.R. 3309, the "Innovation Act", with bipartisan support by an overwhelming margin of 325-91 votes. H.R. 3309 was drafted to address the perceived growing problem of abusive patent litigation attributed to alleged “patent trolls.” Early next year, the Senate will likely consider a companion bill, S. 1720, the "Patent Transparency and Improvements Act of 2013", previously introduced by Senator Leahy (D-VT). While S. 1720 has similar goals of H.R. 3309, the bills have many provisions that are not shared or coextensive. Thus, it remains to be seen what impact H.R. 3309's passage will have on Senate deliberations in light of the fact the bill enjoys support from the White House. If legislation passes the Senate, then the House and Senate bills will need to be reconciled in conference committee and sent to the President's desk for signature. In the meantime, the Senate Committee on the Judiciary will address the issue by holding a hearing entitled "Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse" on December 17, 2013.
Supporters of H.R. 3309 praised its passage as instituting important patent reforms made necessary after the passage of the America Invents Act (P.L. 112-29). Particularly, the bill heightens pleading standards; requires patent plaintiffs to name anyone who has a financial interest in the patent being litigated; requires courts to delay the discovery process until after claim construction is determined; creates a voluntary process for small businesses to postpone patent lawsuits while their larger sellers complete similar patent lawsuits against the same plaintiff; and, allows a manufacturer to intervene in a lawsuit against its customers and have the action stayed for the customer if both the customer and manufacturer agree. The centerpiece of the legislation is a fee-shifting provision that requires courts (with some exceptions) to award prevailing parties reasonable attorneys' fees and other expenses when parties bring frivolous lawsuits or claims that have no reasonable basis in law or fact. Proponents of this legislation include broad support from the technology sector, including internet companies such as Google, Microsoft, Amazon, and Apple. H.R. 3309 is also favored by brick-and-mortar industries such as restaurants, retailers, realtors, hotels, casinos, airlines, and the auto industry.
On the other side, opponents of H.R. 3309 are concerned that the fee-shifting provision would likely favor wealthy parties while discouraging small inventors from pursuing legitimate patent infringement claims. Opponents include members of the biotechnology and pharmaceutical industries, the Intellectual Property Owners' Association, patent attorneys, and even universities—which warned that the legislation would harm their patent-licensing revenues. Notably, the Biotechnology Industry Organization ("BIO") believes that the Act will undermine biotech research and innovation, as it would ultimately make it more difficult for patent holders with legitimate claims to protect their intellectual property. In a press release, BIO stated "[p]rovisions in the legislation would erect unreasonable barriers to access justice for innovators, especially small start-ups that must be able to defend their businesses against patent infringement in a timely and cost-effective manner, and without needless and numerous procedural hurdles or other obstacles."
Additional information about H.R. 3309 and S. 1720 will be available shortly from MVS.