Patent News

Feb. 20, 2015

Intellectual Asset Management: Goodlatte insists there is no fee-shifting presumption in the Innovation Act; but is he right?, by Richard Lloyd

This post originally appeared in Intellectual Asset Management on February 20, 2015.

Of all the provisions in the Innovation Act Mark 2, the one that concerns the shifting of attorneys’ fees remains politically the most sensitive. It motivates Republicans who, opponents claim, have ambitions for broader tort reform and worries Democrats with close connections to the powerful trial lawyers lobby.

Last week the Subcommittee on the Courts, IP and the Internet (which is part of the House’s Judiciary Committee) held a hearing on “Examining recent Supreme Court cases in the patent arena”, the first hearing to be held since the Innovation Act was reintroduced earlier this month. During the course of the session a particularly interesting exchange, concerning fee shifting, took place between National Venture Capital Association counsel Robert Taylor, who had been called as a witness, and Congressman Goodlatte, Chairman of the full Judiciary Committee and author of the Innovation Act. The latter reacted particularly strongly to Taylor referencing what he clearly saw as the presumptive shifting of fees in the proposed legislation. Here’s what Goodlatte had to say:

It’s not a presumptive shifting of fees. There is no presumptive shifting of fees in this law. It is only a shifting of fees when the court finds there was no reasonable basis in law or in fact for that to take place. So this constant assertion that there’s going to be rampant fee shifting in patent cases after this law is incorrect. What will happen is that there will be much greater certainty about when this fee shifting will take place so that you and your client will be able to determine whether they have a good patent defence or a good claim to assert against somebody else.

In light of Goodlatte’s comments I contacted a small and unscientific sample of lawyers who have been keeping a close eye on the legislative process. The vast majority (six to one) disagreed with Goodlatte and thought that there was a presumption in the Bill. Given the relevant section of the legislation it’s easy to see how they reached that conclusion.