Report Prepared for the Executive Committee Meeting of November 2019
Interest Group: Legislation
Report Date: November 12, 2019
Officers: Ben Borson, Chair and Mark Leonard, Vice-Chair
The Interest Groups of the IP Law Section are responsible for delivering programming on the designated subject matter of the committee, networking among members, building community, alerting Section members to hot topics and law updates, and increasing the opportunities for Section members to volunteer and become involved with the Section through committee activities.
Federal Legislation Update
A. Federal Legislation in 116th Congress, 1st Session:
The STRONGER Patents Act of 2019 (S.2082) was introduced on July 10, 2019 and has now had another Committee meeting. This provides a summary of salient features of the proposal.
101. Findings: Congress finds that—
(1) the patent property rights enshrined in the Constitution of the United States provide the foundation for the exceptional innovation environment in the United States;
(2) strong patent rights encourage United States inventors to invest their resources in creating new inventions;
(9) Congress last enacted comprehensive reforms of the patent system in 2011;
(10) unintended consequences of the comprehensive 2011 reform of patent laws are continuing to become evident, including the strategic filing of post-grant review proceedings to depress stock prices and extort settlements, the filing of repetitive petitions for inter partes and post- grant reviews that have the effect of harassing patent owners, and the unnecessary duplication of work by the district courts of the United States and the Patent Trial and Appeal Board;
(11) the Judicial Conference of the United States has made significant revisions to rules governing pleadings and discovery in the Federal Rules of Civil Procedure, which took effect in December 2015;
(12) the Supreme Court issued rulings in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S.Ct. 1749 (2014) and Highmark Inc. v. Allcare Health Management System, Inc., 134 S.Ct. 1744 (2014) that significantly reduced the burden on an alleged infringer to recover attorney fees from the patent owner, and increased the incidence of fees shifted to the losing party; and
(13) efforts by Congress to reform the patent system without careful scrutiny create a serious risk of making it more costly and difficult for legitimate innovators to protect their patents from infringement, thereby weakening United States companies and the United States economy.
Against this backdrop, S.2082 proposes changes to post-grant proceedings. Many of these changes are to align the USPTO post-grant procedures with Court proceedings.
Section 103 Post-grant review
The following provisions apply to inter partes review and post-grant opposition proceedings.
- each challenged claim of a patent, or claim proposed in a motion to amend, shall be construed as the claim would be construed under section 282(b) in an action to invalidate a patent, including by construing each such claim in accordance with—
- the ordinary and customary meaning of the claim as understood by a person having ordinary skill in the art to which the claimed invention pertains; and
- the prosecution history pertaining to the patent; and
- if a court has previously construed a challenged claim of a patent or a challenged claim term in a civil action to which the patent owner was a party, the Office shall consider that claim construction.
Presumption of validity and burden of proof
- Presumption of validity
The presumption of validity under section 282(a) shall apply to a previously issued claim that is challenged during an inter partes review under this chapter.
- Burden of proof
In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability of a previously issued claim by clear and convincing evidence.
In this subsection, the term charged with infringement means a real and substantial controversy regarding infringement of a patent exists such that the petitioner would have standing to bring a declaratory judgment action in Federal court.
- Necessary conditions
A person may not file with the Office a petition to institute an inter partes review of a patent unless the person, or a real party in interest or privy of the person, has been—
- sued for infringement of the patent; or
- charged with infringement under the patent.
Threshold for instituting an inter partes review
- Likelihood of prevailing
Subject to paragraph (2), the Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 show that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.
- Previous institution
The Director may not authorize an inter partes review to be instituted on a claim challenged in a petition if the Director has previously instituted an inter partes review or post-grant review with respect to that claim.
- Nonappealable Determinations:
- Threshold determination
A determination by the Director on the reasonable likelihood that the petitioner will prevail under subsection (a)(1) shall be final and nonappealable.
- Denials of institution
A determination by the Director not to institute an inter partes review under this section shall be final and nonappealable.
- Threshold determination
- Appealable determinations
Any aspect of a determination by the Director to institute an inter partes review under this section, other than a determination described in paragraph (1)(A), may be reviewed during an appeal of a final written decision issued under section 318(a).
Estoppel and Civil Actions
- Proceedings before the Office
A person petitioning for an inter partes review of a claim in a patent under this chapter, or the real party in interest or privy of the petitioner, may not petition for a subsequent inter partes review before the Office with respect to that patent on any ground that the petitioner raised or reasonably could have raised in the initial petition, unless, after the filing of the initial petition, the petitioner, or the real party in interest or privy of the petitioner, is charged with infringement of additional claims of the patent.
- Civil actions and other proceedings
A person petitioning for an inter partes review of a claim in a patent under this chapter that results in an institution decision under section 314, or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) that the claim is invalid based on section 102 or 103 of this title, unless the invalidity argument is based on allegations that the claimed invention was in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.
A person petitioning for a post-grant review of a claim in a patent under this chapter, or the real party in interest or privy of the petitioner, may not petition for a subsequent post-grant review before the Office with respect to that patent on any ground that the petitioner raised or reasonably could have raised in the initial petition, unless, after the filing of the initial petition, the petitioner, or the real party in interest or privy of the petitioner, is charged with infringement of additional claims of the patent.
Real Party In Interest
For purposes of this chapter, a person that directly or through an affiliate, subsidiary, or proxy makes a financial contribution to the preparation for, or conduct during, an inter partes review on behalf of the petitioner shall be considered a real party in interest of the petitioner.
Discovery shall be limited to—
- the deposition of witnesses submitting affidavits or declarations;
- evidence identifying the petitioner’s real parties in interest; and
- what is otherwise necessary in the interest of justice.
Federal Court Validity
- Institution barred
An inter partes review of a patent claim may not be instituted if, in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the InternationalTrade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court has entered a final judgment—
- that decides the validity of the patent claim with respect to section 102 or 103; and
- from which an appeal under section 1295 of title 28 may be taken, or from which an appeal under section 1295 of title 28 was previously available but is no longer available.
- Stay of proceedings
- In general
If, in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court has entered a final judgment that decides the validity of a patent claim with respect to section 102 or 103 and from which an appeal under section 1295 of title 28 may be taken, the Patent Trial and Appeal Board shall stay any ongoing inter partes review of that patent claim pending a final decision.
If the validity of a patent claim described in subparagraph (A) is finally upheld by a court or the International Trade Commission, as applicable, the Patent Trial and Appeal Board shall erminate the inter partes review.
- In general
Section 104: Composition of panels
Section 105: Reexamination
Any person at any time may file a request for reexamination by the Office of any claim of a patent on the basis of any prior art cited under the provisions of section 301. The request must be in writing and must be accompanied by payment of a reexamination fee established by the Director pursuant to the provisions of section 41. The request must identify all real parties in interest and certify that reexamination is not barred under section 303(d). The request must set forth the pertinency and manner of applying cited prior art to every claim for which reexamination is requested. Unless the requesting person is the owner of the patent, the Director promptly will send a copy of the request to the owner of record of the patent.
Reexamination barred by civil action
An ex parte reexamination may not be instituted if the request for reexamination is filed more than 1 year after the date on which the requester or a real party in interest or privy of the requester is served with a complaint alleging infringement of the patent.
Upon a finding by a court of infringement of a patent not proven invalid or unenforceable, the court shall presume that—
- further infringement of the patent would cause irreparable injury; and
- remedies available at law are inadequate to compensate for that injury.
Section 202: Unfair or deceptive assertion letters
- In general:
It shall be an unfair or deceptive act or practice within the meaning of section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) for a person, in connection with the assertion of a United States patent, to engage in a pattern or practice of sending written communications that state or represent that the recipients are or may be infringing, or have or may have infringed, the patent and bear liability or owe compensation to another, if—
- the sender of the communications, in bad faith, states or represents in the communications that—
- the sender is a person with the right to license or enforce the patent at the time the communications are sent, and the sender is not a person with such a right;
- a civil action asserting a claim of infringement of the patent has been filed against the recipient;
- a civil action asserting a claim of infringement of the patent has been filed against other persons;
- legal action for infringement of the patent will be taken against the recipient;
- the sender is the exclusive licensee of the patent asserted in the communications;
- persons other than the recipient purchased a license for the patent asserted in the communications;
- persons other than the recipient purchased a license, and the sender does not disclose that such license is unrelated to the alleged infringement or the patent asserted in the communications;
- an investigation of the recipient’s alleged infringement occurred; or
- the sender or an affiliate of the sender previously filed a civil action asserting a claim of infringement of the patent based on the activity that is the subject of the written communication when the sender knew such activity was held, in a final determination, not to infringe the patent;
- the sender of the communications, in bad faith, seeks compensation for—
- a patent claim that has been held to be unenforceable due to inequitable conduct, invalid, or otherwise unenforceable against the recipient, in a final determination;
- activities undertaken by the recipient after expiration of the patent asserted in the communications; or
- activity of the recipient that the sender knew was authorized, with respect to the patent claim or claims that are the subject of the communications, by a person with the right to license the patent; or
- the sender of the communications, in bad faith, fails to include—
- the identity of the person asserting a right to license the patent to, or enforce the patent against, the recipient, including the identity of any parent entity and the ultimate parent entity of such person, unless such person is a public company and the name of the public company is identified;
- an identification of at least one patent issued by the United States Patent and Trademark Office alleged to have been infringed;
- an identification, to the extent reasonable under the circumstances, of at least one product, service, or other activity of the recipient that is alleged to infringe the identified patent;
- a description, to the extent reasonable under the circumstances, of how the product, service, or other activity of the recipient infringes an identified patent and patent claim; or
- a name and contact information for a person the recipient may contact about the assertions or claims relating to the patent contained in the communications.
- the sender of the communications, in bad faith, states or represents in the communications that—
- Affirmative defense
With respect to subsection (a), there shall be an affirmative defense that statements, representations, or omissions were not made in bad faith (as defined in subparagraphs (B) and (C) of section 201(1)) if the sender can demonstrate that such statements, representations, or omissions were mistakes made in good faith. Evidence that the sender in the usual course of business sends written communications that do not violate the provisions of this title shall be sufficient to demonstrate good faith. Good faith may also be demonstrated by other evidence.
There are other features addressing fee diversion, revolving fund, institutions of higher learning, and small business assistance, enforcement by the Federal Trade Commission and preemption of State laws regarding fraudulent or misleading demand letters.
Comment: Patent holders have been frustrated by conflicts between USPTO standards and those of Federal Courts. S.2082 appears to have solutions to many of the conflicts, and if passed, should help streamline the post-grant proceedings before the USPTO.