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New anti-troll bill proposes major changes to patent laws

By David Schwartz
Published: October 30th, 2013

Representative Bob Goodlatte (R-VA) with the bipartisan support of ten other House members has proposed a new set of patent reforms titled the “Innovation Act,” aimed at curbing the activities of patent trolls.

The bill would have a substantial impact on the enforcement, procurement and ownership of patents, according to Dennis Crouch, writing on the PatentlyO blog. In general, it requires companies that are filing for patent infringement to provide specific details on what patent is infringed and how it is currently used by the company. But the bill is more far-reaching than other recent proposals, prompting patent attorney Hal Wegner to comment, “every organization impacted by patents must carefully study the Goodlatte bill for hidden features or suffer the consequences.”

In the days after the bill was introduced, observers were giving it a fairly high chance of passage, so this is one you should definitely study. Crouch summarized some of the more significant elements of the bill:

Heightened pleading requirement. Companies filing for patent infringement must provide a statement “with detailed specificity” as to “how the terms in each [asserted] claim… correspond to the functionality of [each] accused instrumentality.” The U.S. Judicial Conference would be ordered to modify the form complaint for patent infringement to reflect the heightened pleading.

Attorney fees will be awarded to the prevailing party. The losing party would have to pay attorney fees “unless the court finds that the position of the nonprevailing party … was substantially justified or that special circumstances make an award unjust.” The measure also allows prevailing accused infringers to collect fees from non-plaintiffs who have a substantial interest in the patent-at-issue in the case. It also indicates that a patentee who extends a covenant-not-to-sue to the other party will be considered a non-prevailing party and will therefore be subject to attorney fees.

Discovery will be limited until a ruling on claim construction is made. The U.S. Judicial Conference would also be ordered to create rules “to address the asymmetries in discovery burdens and costs in any [patent-related] civil action.”

Transparency of ownership. Patentees filing for infringement must disclose anyone with a financial interest in either the patents at hand or the patentee itself, and must also disclose the “ultimate parent entity” of the patentee.

Stay for customer suits. When both a manufacturer and its customer are sued for infringing the same patent, the customer suit would be stayed if the customer agrees to be bound by the results of that case.

IP in bankruptcy. When a foreign company goes bankrupt, its trustee could no longer cancel licenses associated with U.S. patent rights.

No civil action to challenge PTO. The civil action option would be eliminated. Patent applicants refused by the patentee would only have the option of appealing directly to the Federal Circuit.

Shrinking post-grant-review estoppel. The estoppel would only be applied to grounds actually raised, not “any ground that the petitioner raised or reasonably could have raised during that post-grant review,” as the current law allows.

Patent office claim construction. During post-grant or inter partes review, the patent office would be required to construct each claim “in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”

Covered business method patent review. The AIA rule allowing third parties to attack patents involving “covered business method” innovations via post-grant review would be changed. The new law would restrict the scope of CBM review to only cover first-to-invent patents (rather than pre-AIA patents).

Patent term adjustment. The law would eliminate any patent term adjustment for “B delay” occurring after an applicant files a request for continued examination. It proposes to be effective in regards to any “patent application or patent” pending on the Act’s date of enactment. Crouch notes that “this change would have a significant impact on the patent term of a large number of issued patents.”

Source: Patently-O

To access the bill’s full text, click here.

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