Patent News

Jul. 6, 2015

IP Watchdog: University exception to fee shifting in PATENT Act won’t help Iowa State or University of Iowa, by Gene Quinn

This post originally appeared in IP Watchdog on July 6, 2015.

One of the more contentious patent reform issues continues to be associated with statutory fee-shifting language that would codify a loser-pays system. In an attempt to win support from Universities, who have come together to oppose patent reform, Senator Chuck Grassley (R-IA) added language to the fee-shifting provisions in the PATENT Act that would offer an economic hardship exception to fee shifting for “an institution of higher education.” While this may sound reasonable it raises several very important questions.

First, if fee-shifting is so important to the functioning of the patent system why should anyone be exempt? It just doesn’t seem appropriate to sweeten the pot for Universities in an attempt to buy off their opposition while other patent owners, including small businesses and startup companies that overwhelmingly create the most jobs are not similarly exempted. If loser pays is what Congress wants then there is no reason not to apply it across the board. If the loser paying the attorneys fees of the prevailing party is such a great idea then it has to be applied evenly without exception.

Second, even if this University exception is well intended it creates at least two-tiers of University patent owners. In other words, the PATENT Act favors certain Universities and discriminates against other Universities. Ironically, two of the entities that are discriminated against are Iowa State University and the University of Iowa, the two flagship institutions in Senator Grassley’s home state. Why Grassley didn’t offer a economic hardship exception to fee shifting to University of Iowa and Iowa State when he is offering it to certain other Universities is curious. Normally you would expect “home cooking” to result in favorable treatment rather than discriminatory and harmful treatment.