MVS Filewrapper® Blog: Alternative Patent Reform Legislation Proposed in Senate

Post by Dan Lorentzen

 

Even though the America Invents Act is just over 3 years old, patent reform legislation has arisen on several occasions over the past years.  The most visible legislative efforts have involved the "Innovation Act" proposed by Senator Goodlatte in 2013, and again in 2015.  The version of the Innovation Act introduced in 2013 stalled out in the Senate, but has been re-introduced in the House with a larger number of co-sponsors.   A new, alternative bill has now been proposed in the Senate.

 

Senator Chris Coons (D-Del.), along with co-sponsors Dick Durbin (D-Ill.) and Mazie Hirono (D-Hawaii), has now proposed the "Support Technology & Research for Our Nation’s Growth (STRONG) Patents Act of 2015."  The bill was introduced as S.632 on March 3, 2015 as "[a] bill to strengthen the position of the United States as the world's leading innovator by amending title 35, United States Code, to protect the property rights of the inventors that grow the country's economy." 

 

This new legislation addresses many of the same issues as the Innovation Act in the House, but in some cases does so in markedly different ways.  Included in the provisions are proposed amendments to the Title 35 that would bring claim construction in inter partes review (IPR) and post-grant review (PGR) proceedings at the PTAB in line with litigation in district court.  In particular, the bill would dictate that claim construction in an IPR and PGR proceeding be conducted using the "ordinary and customary meaning" standard instead of the broadest reasonable interpretation (BRI) standard currently applied.  In addition, the bill would require the PTAB in an IPR and PGR proceeding to consider any previous construction of the claims or claim terms at issue performed by a court, provided the patent owner was a party to the prior civil action.  In addition, the bill would import into IRP and PGR proceedings the presumption of validity applied in litigation. 

 

The bill also includes, among other provisions, the elimination of Form 18 for pleading in patent infringement cases in federal court, retention of fees collected by the USPTO, and inclusion of universities and other institutes of higher learning for micro entity status.  In addition, the bill would change the standard for a finding of willful infringement to a preponderance of the evidence.  Finally, the bill would create a cause of action under the Federal Trade Commission Act for sending a demand letter in bad faith.

 

A number of notable organizations have expressed their support for the STRONG Patents Act, including the Association of American Universities, the Association of Public Land Grant Universities, and the Biotechnology Industry Organization (BIO). 

 

The Filewrapper® blog will continue to follow developments for both the STRONG Patents Act and the Innovation Act.  The full text of the STRONG Patents Act is available here.

MVS Filewrapper® Blog: U.S. Takes Final Steps in Joining International Industrial Design System

Post by blog staff

The Hague system for registration of industrial designs offers applicants the potential for obtaining protection in a number of member countries and intergovernmental organizations by means of a single international application.  The system offers possible increased filing efficiencies and cost savings in pursuing protection for designs.

On February 13, 2015, the USPTO announced that the United States had deposited with the World Intellectual Property Organization (WIPO) its instrument of ratification to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs, representing the last step for the United States to join the Hague system. As a result, the treaty, which has already been ratified but not put into law, will go into effect in the U.S. on May 13, 2015.

As discussed in a prior blog post, the proposed rules will allow applicants to file a single international design application, potentially seeking protection of their industrial design in more than 40 countries. U.S. applicants would be able to file their applications with the USPTO as an “indirect filing” and the USPTO would then transmit the application to WIPO for review. The USPTO will continue its examination of design applications and grant patents, whether the application is filed under the Hague Agreement or as a U.S. design patent application.

Final rules will soon be published in the Federal Register and are expected be effective on May 13, 2015. U.S. design patents granted on or after this date will have a 15 year term.

More information on the Hague industrial design system is available here and here, and the USPTO press release is available here.

MVS Filewrapper® Blog: Updates to the Innovation Act

Post by Jill Link

 

 

The Filewrapper® Blog has previously reported on the Innovation Act as passed by the U.S. House of Representatives on December 5, 2013 (H.R. 3309) and the companion bill subsequently failing to pass in the senate (S. 1720). Last week a bipartisan bill was introduced by House Judiciary Committee Chairman Bob Goodlatte (R-Virginia) and again referred to as the "Innovation Act" (H.R. 9). The bill is now co-sponsored by Representatives Peter DeFazio (D-Oregon), Darrell Issa (R-California), Anna Eshoo (D- California), and Lamar Smith (R-Texas). To be clear, this is the same legislation passed in 2013 by the House of Representatives and now brought during the inauguration of the 114th U.S. Congress.

The Innovation Act is primarily focused on addressing perceived increases in abusive patent litigation by non-practicing entities (often referred to as “patent trolls”). Supporters of the bill state their intention of curbing patent litigation which only seeks to obtain settlement payments from defendants in an effort to pay the millions of dollars it can cost to proceed through a patent infringement trial.  The bill outlines heightened pleading standards, including requiring a patent plaintiff to name the owner of the patent and whether there is any financial harm as a result of the alleged patent infringement. In addition, the bill provides for a fee-shifting provision that requires courts (with some exceptions) to award the prevailing parties reasonable attorneys' fees and other expenses when the court concludes the action was a frivolous lawsuit or claim. 

The Innovation Act also requires a court to make early decisions regarding patent validity in an effort to avoid a patent case being litigated when claims may ultimately be found to be invalid. For example, there would be required delays in the discovery process until after claim construction is determined. In addition, the Judicial Conference would be required to set forth rules aimed to decrease costs associated with discovery (which often creates a barrier to small businesses and other entrepreneurs pursuing patent litigation).

There is also a voluntary process for small businesses to postpone patent lawsuits while larger sellers complete similar patent lawsuits against the same plaintiff. Similarly, the act 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. 

MVS and the Filewrapper® Blog will continue to bring updates on the progress of the House and Senate as the Innovation Act is again considered in 2015.

 

 

MVS Filewrapper® Blog: Update on "Patent Troll" Legislation in the Wake of the 2014 Elections

Post by Luke Holst

In December of 2013, the U.S. House of Representatives passed H.R. 3309, the "Innovation Act," ostensibly to address the problem of abusive patent litigation, sometimes referred to as patent trolling.  While H.R. 3309 passed with bipartisan support by an overwhelming margin of 325-91 votes, its companion bill failed to clear the Senate.  Failure of the Senate bill is attributable to removal of controversial fee-shifting language from H.R. 3309 by Judiciary Committee Chairman Patrick Leahy, D-Vt. The fee-shifting provisions required losing parties in patent litigation to pay their opponent's legal fees—a situation critics argued would discourage the filing of meritorious patent suits by small businesses.  After votes on the Senate counterpart bill stalled repeatedly, Senator Leahy withdrew the bill from the Senate Judiciary Committee's agenda last May.

 

In the wake of the 2014 midterm elections, Republicans have vowed to take up the legislation again early in 2015.  House Judiciary Committee Chairman Bob Goodlatte, R-Va., recently stated that a new version of the Innovation Act, and two companion bills addressing trade secret protections, should be reintroduced in the U.S. House of Representatives in January and pass with bipartisan majorities.  The trade secrets legislation looks to create private civil trade secret misappropriation lawsuits under the federal Economic Espionage Act, which currently only allows prosecutors to bring criminal cases.  On the Senate side, Senator Charles Grassley, R-Ia., is expected to replace Leahy as Chairman of the Judiciary Committee as the Republicans take over the Senate majority in January.  Senator Grassley has signaled his intention to make patent reform a priority in the new Congress and believes patent reform can be accomplished early next year.  In addition, the White House has signaled its support for legislation curbing abusive patent litigation, signaling that this may be an issue for which meaningful legislative action could be seen during the 2015 term.

 

 

MVS Filewrapper® Blog: FDA Releases First "Purple Book" for Biosimilar Products

The Biosimilars Act (BSA) was passed into law on March 23, 2010 with the goal of encouraging the market entry of generic products, similar to the system that exists for generic drugs under the Hatch-Waxman Act.  The BSA sets forth an abbreviated approval pathway for biologics through a regulatory demonstration of biosimilarity (i.e. interchangeability).

 

More than 4 years after the BSA went into effect, the FDA has released its "Purple Book" listing biological products, including any biosimilar and interchangeable biological products licensed by FDA.  The Purple Book is intended to serve a similar function to the "Orange Book" that lists drug products with therapeutic equivalence evaluations that have been approved by the FDA.  The release of the Purple Book follows closely behind the filing of the first two applications for approval of biosimilar products.

 

For more information about the BSA, see the June 2014 issue of MVS Briefs, available here. 

More information on the "Purple Book"—including current lists of licensed biological products— is available from the FDA website here.

 

 

 

 

 

MVS Filewrapper® Blog: USPTO Issues Report on Virtual Patent Marking Under the AIA

Among the provisions of the America Invents Act that went into effect on September 16, 2011 was a change to the patent marking provisions contained in 35 U.S.C. § 287(a).  Marking an article as with a patent number provides constructive notice to the public that the article is patented, and failure to appropriately mark an article can preclude the recovery of damages for infringement until effective notice is given. The revised marking statute allows patent owners to identify their products with the web address containing the patent information, limits false marking lawsuits to those filed by the U.S. government or by a competitor who can prove competitive injury, and does away with provisions making it a violation to mark a product with a patent that covered the product, but has since expired.

 

The USPTO has issued a Report on Virtual Marking that provides analysis of the effectiveness of virtual marking under the AIA; whether virtual marking has limited or improved the ability of the general public to access information about patents; legal issues, if any, that arise from virtual marking; and any deficiencies arising from virtual marking.  The report is based on comments solicited by the USPTO, along with independent research. 

 

The conclusion the USPTO Report is that virtual marking has likely met its intended objectives of reducing manufacturing costs and facilitating public notice.  The Report identifies several benefits demonstrated by the analysis, in particular the ability of patent owners to dynamically update patent information, to provide a real-time, complete list of associated patents, and to include additional patent-related information, which all may help increase transparency by improving the public’s ability to access a wider scope of information about relevant patents.  The Report also notes that there is little applicable case law on the subject, due to the recency of the new marking provisions, and that virtual marking may have deficiencies that are not yet totally apparent, and as a result the issues may need to be revisited at a later date. 

 

The full report is available here.

MVS Filewrapper® Blog: Should Trade Secret Misappropriation be Federalized?

The legal community (along with bipartisan legislation) has been discussing the creation of a private cause of action under federal laws for trade secret misappropriation – or trade secret theft. In light increased cyber-espionage and the apparent ease in which trade secrets can be misappropriated in the marketplace, Congress has taken an apparent interest in "strengthening" trade secret protections.

 

Currently, trade secrets are a matter of state law. This means that each state has established requirements for trade secret misappropriation. In sum, these require a finding that a trade secret holder has a "secret" with value as a result of it not being generally known by others (i.e. competitors), that the trade secret holder has taken efforts to maintain secrecy, and that the party alleged to have access or appropriated the secret used some sort of improper means. Although the precise definitions for these standards may vary among the states, there are relatively small distinctions among the states.

 

Both the House and the Senate may consider bills introduced as early as this fall to consider federalizing this cause of action. The "Defend Trade Secrets Act of 2014" ("DTSA") (S. 2267) and the "Trade Secret Protection Act of 2014" (H.R. 5233) have been introduced to create a private cause of action under the existing Economic Espionage Act of 1996.  The DTSA as drafted would authorize a trade secret owner to bring a civil cause of action in federal court for either (1) a violation of the Economic Espionage Act (which criminalized types of trade secret theft), or (2) a “misappropriation of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce.” The Judiciary Committee has held a hearing to discuss the benefits of the federal cause of action. A few of the purported benefits of establishing federal legislation would be to grant access to federal forums (based on the subject matter instead of matters of diversity and/or supplemental jurisdiction), along with granting access to federal remedies for seizures to prevent irreparable harm caused by trade secret misappropriation.

 

As expected, there are vocal critics of such federalization, including a group of legal scholars and professors (see opposition letter at http://cyberlaw.stanford.edu/files/blogs/FINAL%20Professors%27%20Letter%20Opposing%20Trade%20Secret%20Legislation.pdf). As stakeholders continue to voice opinions (and concerns) over pending legislation, more information will be provided through Filewrapper.com.

MVS Filewrapper® Blog: Federal Trade Secret Protection Proposed in the Senate

Defend Trade Secrets Act of 2014

 

Senators Chris Coon (D-DE) and Orrin Hatch (R-UT) proposed a bill on April 29, 2014 that would provide federal protection for trade secrets. Under the current state of the law, trade secrets are protected by a combination of various state statutes, state common law, and aspects of contract law.  There is no private federal cause of action for appropriation of trade secrets, although 18 U.S.C. 1832 is a criminal statute prohibiting theft of trade secrets.

The Defend Trade Secrets Act would allow an owner of a trade secret to pursue civil action in federal court for misappropriation of a trade secret used in interstate or foreign commerce.  The proposed bill would also authorize the court to issue orders for the preservation of evidence in a civil action, including making a copy of electronic storage where the trade secret is located or allowing seizure of any property used to facilitate the theft of the trade secret. However, this seizure is limited to that which is not merely incidental and so long as the seizure does not interrupt the normal and legitimate business operations unrelated to the trade secret. This seizure will essentially be enforced through the requirements in paragraphs (2)-(11) of the Trademark Act of 1946.

The bill also provides for remedies including the granting of injunction against any actual or threatened violation of the Act and if appropriate, affirmative actions to protect the trade secret. Additionally, if injunction is inequitable, the court may condition the future use of the trade secret on the payment of a reasonable royalty for the time for which use could have been prohibited. The court may also award damages for actual loss and for any unjust enrichment caused by the misappropriation. Finally, if the trade secret is wilfully or maliciously misappropriated, the court may also award exemplary damages not to exceed three times the amount of actual damages. The Act would also allow for the granting of attorney's fees in this instance and in the situation where the claim of misappropriation was made in bad faith.

It is important to note that misappropriation is defined within the statute as using improper means to acquire the trade secret including: theft bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. However, improper means does not include reverse engineering or independent derivation.

The text of this Act reads very similar to the Uniform Trade Secrets Act (USTA) which has been enacted by 48 states (New York and Massachusetts have not adopted this legislation). However, each state often modifies the UTSA allowing for different interpretations.  Notably, the Defend Trade Secrets Act states that nothing in the Act would "preempt any other provision of law" and does not contain the language of the USTA which states that it "displaces tort, restitutionary, and other laws." Ultimately, this means that the Defend Trade Secrets Act still leaves the possibility for state law variations and allows plaintiffs to choose federal or state court for their action.

The Senate Judiciary Committee, Subcommittee on Crime and Terrorism held a hearing on May 13, 2014 concerning economic espionage and theft of trade secrets, including the proposed bill, and heard testimony from two panels of witnesses. No action has been documented since that date.

 

 

MVS Filewrapper® Blog: Senate Bill Aimed at Combating Cyber Espionage

Senator Carl Levin (D-MI) has introduced a bill called the "Deter Cyber Theft Act" to the Senate floor that would require the Director of National Intelligence to report annually to congressional committees concerning foreign countries that engage in economic and industrial cyber espionage relating to intellectual property and proprietary information owned by U.S. companies.

 

Under the proposed regime, each report would include:

·         A list of foreign countries engaging in economic or industrial cyber espionage against U.S. entities, including a watch list of the worst offenders;

·         A list of U.S. technologies or proprietary information being targeted, and if possible, a list of the information that has been stolen;

·         A list of items manufactured or services provided as a result of the stolen technologies and information;

·         A list of foreign companies benefiting from such theft;

·         Details of the espionage activities of foreign countries;

·         Actions being taken by U.S. federal agencies to combat cyber espionage.

 

The bill went before the Senate on May 7, 2013 and was referred to the Committee on Finance. Although no action on the bill is currently pending, Senator Levin has stated that his renewed efforts to move this bill through Committee are prompted by recent events concerning cyber espionage.  Senator Levin's complete comments on the bill can be found here. 

MVS Filewrapper® Blog: Senate Consideration on Patent Transparency and Improvements Act Stalls Out

With the House of Representatives passing H.R.3009 Innovation Act in December 2013, the question is now whether the Senate will pass their version of an Innovation Act in the coming months. The Patent Transparency and Improvements Act (S.1720) is similar to the House text, with eight of the eleven major Senate provisions included in the bill approved by the House. The primary distinction is that while the House appears to focus on rules of procedure, specifically those regarding joinder and discovery, the Senate does not include those provisions but rather promotes a heightened layer of transparency for parent entities who are transferred patent rights. Three provisions discuss parent entities in detail, leading to the ultimate conclusion that nondisclosure of a transfer of rights to a parent entity after the three-month grace period is considered misconduct that will enable fee shifting and the possibility for recovering increased damages. It appears that this Senate bill represents a compromise between the House patent reform bill and the current law.

 

S.1720 was repeatedly slated for consideration by the Senate Judiciary Committee, which held a primary hearing on December 17, 2013. Testimony was heard from two panels of witness testimony, including intellectual property counsel for private corporations as well as the Executive Director of the American Intellectual Property Law Association. In addition, a number of organizations—including the American Bar Association—have addressed letters to the Judiciary Committee voice their support and concerns for the bill.

 

S.1720 has been removed from the Judiciary Committee agenda as of May 21, 2014.  Senator Leahy, chairman of the Judiciary Committee, has cited insufficient support behind any comprehensive deal as the reason for taking the patent bill off the Senate Judiciary Committee agenda.  The press release from Senator Leahy is available here.

 

In light of this stall in the Senate, it is extremely unlikely that any patent reform legislation will be enacted this year.

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