Innovation Alliance Sends Letter to Senate Judiciary Committee Leaders Expressing Continued Concerns with PATENT Act
Washington D.C. – The Innovation Alliance today sent a letter to Senate Judiciary Committee Chairman Charles Grassley (R-IA) and Ranking Member Patrick Leahy (D-VT) expressing continued concerns with the latest version of the Patent Act (S.1137), which is scheduled to be marked up in the Committee tomorrow.
The letter emphasizes that the Innovation Alliance appreciates the work of the Committee to make improvements to the legislation over previous versions, but that the overall bill still includes many troubling provisions that would dramatically weaken U.S. patent laws and cripple the ability of legitimate patent owners to protect their ideas. It also notes that the Innovation Alliance strongly supports targeted measures to address patent litigation abuses, such as the STRONG Patents Act in the Senate and the TROL Act in the House.
The full text of the letter is below:
June 3, 2015
The Honorable Charles E. Grassley The Honorable Patrick Leahy
Chairman Ranking Member
Committee on the Judiciary Committee on the Judiciary
United States Senate United States Senate
Washington, D.C. 20510 Washington, D.C. 20510
Dear Chairman Grassley and Ranking Member Leahy:
The Innovation Alliance appreciates your work and that of the other bill sponsors to craft a patent bill intended to address abuse and we welcome several changes in the S. 1137 Managers’ Amendment that are an improvement over previous versions of the legislation. Nevertheless, we are disappointed that the Managers’ Amendment still makes all U.S. patents less enforceable. In particular, the Managers’ Amendment fails to address the critical overbreadth problems of the customer stay, heightened pleadings, and discovery provisions. Together these provisions place an undue burden on the enforcement rights of legitimate patent owners.
The inventors and entrepreneurs who form the bedrock of our innovation economy deserve a more meaningful debate before we substantially diminish their ability to defend their patented ideas from infringement. We hope to work with the Senate Judiciary Committee and all patent stakeholders to develop legislation that targets abuse in the patent system while protecting the rights of legitimate patent owners, not weakening them.
Without strong enforceable patents, larger companies can ignore the rights of smaller companies and imitate their ideas without paying for them. We see this phenomenon in countries like China, where patent rights are not enforced and therefore not effective to prevent copying. For young, quickly growing startups—the primary job creators in our country—unduly burdening the ability to protect their inventions from infringers would be devastating or fatal. Aside from having to compete against infringing products, venture capital and other investors will not take the risk of investing in companies whose value is based on technology that is difficult to protect under U.S. patent law.
In particular, the customer stay provision as drafted is so broad that it invites further abuse. The Committee’s section-by-section of the customer stay provision states that “the customer stay is available only to those at the end of the supply chain.” The Committee’s short summary further states that “[t]he bill protect [sic] customers who are targeted for patent infringement based on a product they simply purchased from a manufacturer or off the shelf.” The legislative text, on the other hand, makes a stay of litigation widely available to many more entities than innocent end-user “mom and pop” stores and retailers, including companies in the Fortune 10 and beyond. While we are encouraged by the progress of discussion held with the Committee about possible edits, the Managers’ Amendment fails to close the large-company loophole and makes no changes whatsoever to narrow the protections to small businesses. Instead, a stay would remain available to shield large companies who profit most from patent infringement.
The pleadings and discovery sections similarly create threshold barriers to all U.S. patent owners’ ability to enter the courthouse door and to gain access to critical information needed to defend their patent rights.
While we welcome improvements in the PATENT Act over legislation introduced in the Senate last year with respect to issues such as discovery and demand letters, and as compared to patent legislation now pending in the House (H.R. 9), several of the provisions in the PATENT Act, even as amended, would jeopardize the value and enforceability of all U.S. patents and risk serious damage to the economy, job creation, and the future of U.S. innovation.
The Managers’ Amendment remains overbroad in many areas, but does not go far enough in others. The PATENT Act fails to correct the well-documented unfairness and imbalance in the inter partes review procedure (IPR) at the USPTO that is allowing abuse of the IPR system, an unintended consequence of the America Invents Act. Since the IPR program was implemented in September 2012, more than 2,700 requests for IPRs have been made at USPTO, and 78 percent have been decided against the patent holder.
Although the Managers’ Amendment makes some changes to the IPR process, they do not go far enough in reining in the potential for abuse of the IPR system. Changes to the IPR system that aim to end abuse should impose a standing requirement for filing IPR petitions, ensure that patent owners have the right to amend their patent claims to preserve patentability, and grant patent owners a true presumption of validity in IPR proceedings by requiring petitioners to prove their case by clear and convincing evidence. Model language for these reforms can be found in the bipartisan STRONG Patents Act, cosponsored by Senators Durbin, Coons, Hirono, Vitter, and Cotton.
We have made repeated good faith attempts to work with this Committee to fashion a compromise on issues critical to our most innovative research and development companies in all sectors of the economy, and we will continue to do so. But as we have said throughout this process, while we support strongly targeted measures to stop abusive behavior, we simply cannot accept changes that stack the deck against our nation’s most innovative enterprises. We enthusiastically support the STRONG Patents Act and TROL Act because they target specific behaviors by bad actors—abusive demand letters and profiteering from IPR proceedings. The PATENT Act, by contrast, has no language to filter legitimate patent enforcement activities from abuse, but rather targets both equally.
Thank you for consideration of our views. We will continue to work with other patent stakeholders and the Senate Judiciary Committee to seek improvements to S. 1137 as it moves through the legislative process so that we can target abusive behavior while ensuring our patent system continues to incentivize innovation and job creation across the economy.
The Innovation Alliance
ABOUT THE INNOVATION ALLIANCE
The Innovation Alliance represents innovators, patent owners and stakeholders from a diverse range of industries that believe in the critical importance of maintaining a strong patent system that supports innovative enterprises of all sizes. Innovation Alliance members can be found in large and small communities across the country, helping to fuel the innovation pipeline and drive the 21st century economy. Learn more at www.innovation.wideeyeclient.com.
Contact: Kat Maramba, (202) 412-9144, Kathrina@BlueEngineMedia.com