Difference between revisions of "Innovation Act"

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Return to [[Innovation Policy#Patent Reform| Patent Reform]].
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Return to [[Innovation Policy#Proposed Patent Reform| Proposed Patent Reform]].
  
 
The [https://www.congress.gov/bill/114th-congress/house-bill/9| H.R.9:Innovation Act] was reintroduced on February 5, 2015, by Representative Bob Goodlatte (R-VA). The bill was referred to the House Committee on the Judiciary and Subcommittee on the Courts, Intellectual Property, and the Internet, and was placed on the Union Calendar on July 29, 2015. Currently the bill has 27 cosponsors, 15 Republicans and 12 Democrats.  
 
The [https://www.congress.gov/bill/114th-congress/house-bill/9| H.R.9:Innovation Act] was reintroduced on February 5, 2015, by Representative Bob Goodlatte (R-VA). The bill was referred to the House Committee on the Judiciary and Subcommittee on the Courts, Intellectual Property, and the Internet, and was placed on the Union Calendar on July 29, 2015. Currently the bill has 27 cosponsors, 15 Republicans and 12 Democrats.  
 
<section begin=summary />
 
<section begin=summary />
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The full title of the act is "To amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections, and for other purposes." <ref name="GovTrack" />[https://www.govtrack.us/congress/bills/114/hr9#| GovTrack] predicts that the Innovation Act has a 36% chance of being enacted. Representative Bob Goodlatte intends for the bill to cut down on abusive patent litigation and strengthen a patent holder's rights.<ref name="innovatioactsummary" />  
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The full title of the act is "To amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections, and for other purposes." <ref name="GovTrack" />[https://www.govtrack.us/congress/bills/114/hr9#| GovTrack] predicts that the Innovation Act has a 36% chance of being enacted. Representative Bob Goodlatte intends for the bill to cut down on abusive patent litigation and strengthen a patent holder's rights.<ref name="innovationactsummary" /> The Innovation Act also proposes certain reforms to the enacted [[Leahy Smith America Invents Act]].
  
 
The bill will target the following areas <ref name="innovationactsummary" />:   
 
The bill will target the following areas <ref name="innovationactsummary" />:   
  
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*Abusive Patent Litigation.   
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*Abusive patent litigation.   
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*Increasing Transparency and reducing Weak Patent Infringement Claims.  
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*Increasing transparency and reducing weak patent infringement claims.  
 
*Clarifying patent litigation procedures and practices.  
 
*Clarifying patent litigation procedures and practices.  
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*Bolstering small businesses built upon IP.  
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*Bolstering IP centered small businesses.  
 
*Reducing referrals to random courts for the review of patent cases.  
 
*Reducing referrals to random courts for the review of patent cases.  
 
*Weakening power of [[Innovation Policy#Patent Trolls| Patent Trolls]].  
 
*Weakening power of [[Innovation Policy#Patent Trolls| Patent Trolls]].  
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===Pleading Requirements===
 
===Pleading Requirements===
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The party alleging patent infringement must include in the initial complaint (unless the information is not reasonably accessible to such party):
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In efforts to diminish the Patent Troll threat by the bill sponsors, the Innovation Act heightens pleading requirements for parties filing for patent infringement. Form 18, the form previously used to submit generalized patent infringement claims, has been eliminated by the Judicial Conference in wide-sweeping amendments. This amendment was expected to be implemented December of 2015. <ref name="patentlyo18" /> The Innovation Act also proposes Form 18's elimination by the Supreme Court to reduce patent litigation, especially litigation involving Patent Trolls or Non-Practicing Entities.<ref name="nationallawreview" /> The Supreme Court would be allowed to codify a new model for filing infringement complaints that would include notifying the accused parties of the claim and its content. <ref name ="govtracksummary" />
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*Identification of each patent allegedly infringed
 
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*All claims (heart of the patent, defines the limits of exactly what the patent does) necessary to produce the identification of each process, machine, manufacture, or composition of matter (accused instrumentalities) that infringe the patent
 
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*The name, model number, description of each AI
 
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*How each limitation of each claim is met by the AI
 
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*For indiret infringement, the acts of the infringer that are inducing a direct infringement
 
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*Authority of the party to assert each patent
 
  
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TL;DR If you believe your patent has been infringed on, you must write in your initial complaint letter VERY SPECIFIC information regarding exactly which parts of your patents have been violated and by what model/device.  
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Supporters hope that the act would go further in reducing generalized complaints and eliminating loopholes by requiring (with exceptions) the plaintiff to submit infringement charts with the initial complaint.<ref name="patentlyoIA" /> The purpose of the charts is to force the plaintiff to explain the specifics of a claim, how a product or the specific use of the patented idea or process violates each infringed component of a patent and the scope of each component's infringement. <ref name="patentlyoIA" />
 +
 
 +
Additionally, a claim of previous commercial use may not result in a court invalidating a patent because it lacks novelty, seems to cover obvious subject matter, or due to prior art. <ref name="govtracksummary" /> Prior Art refers to evidence indicating that the technology or invention in question has already been used, discovered, or is generally known. <ref name="EPO" />
  
 
===Fees and Other Expenses===  
 
===Fees and Other Expenses===  
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"Requires courts to award prevailing parties reasonable fees and other expenses incurred in connection with such actions, unless:
 
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(1) the position and conduct of the nonprevailing party was reasonably justified in law and fact; or
 
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(2) special circumstances, such as severe economic hardship to a named inventor, make an award unjust.
 
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Directs courts, upon a motion of a party, to require another party to certify whether it will be able to pay any award of such fees and expenses. Allows the court, if a nonprevailing party is unable to pay such a fee, to make a joined party liable for the unsatisfied portion.
 
  
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Subjects a party claiming a patent in a civil action who subsequently unilaterally seeks dismissal of the action without consent of the other party, and who extends to such other party a covenant not to sue for infringement, to a motion for attorney's fees as if it were a nonprevailing party, unless:
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Writers of the bill propose that a modified "English Rule" become the new standard in patent litigation in America to avoid frivolous lawsuits and adequately sanction patent trolls for pointless or unfounded claims. <ref name="innovationactprovisions" /> <ref name="patentlyoIA" /> The "English Rule" requires the losing party in a trial compensate the prevailing party for its attorney fees. <ref name="NYU" />
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(1) the party asserting such claim would have been entitled, at the time that such covenant was extended, to dismiss voluntarily the action without a court order; or
 
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(2) the interests of justice require otherwise.
 
  
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Removes a provision that prohibits a patent from being deemed invalid based on novelty, prior art, or nonobvious subject matter solely because a defense is raised or established based on prior commercial use."[https://www.govtrack.us/congress/bills/114/hr9/summary]
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The act requires courts to have losing parties provide for "reasonable fees and other expenses" incurred in litigation. The award may be waived  only if the losing party is found to have just legal and factual cause to be part of the litigation. If the losing party is unable to pay due to extraordinary circumstances, the court may ask a joined or interested party to cover the award. <ref name="innovationacttext" /> Additionally, the plaintiff may have to pay attorney fees if it dismisses the claim before going to trial unless they were given the explicit right to settle without a court order. <ref name="govtracksummary" />
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TL;DR Encourages courts to make the losers pay for the winner’s court fees/associated fees
 
  
 
===Joinder of Interested Parties===
 
===Joinder of Interested Parties===
  
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*If the prevailing party is the side defending against an allegation of infringement, and the nonprevailing party can’t pay the award of fees and expenses, then the prevailing party can signal a motion to have a joinder of interested parties, if they show that the nonprevailing party has no substantial interest in the subject matter
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As part of the Fees and Other Expenses provisions, an interested party or parties may be required to cover attorney's fees and other expenses in the case that the nonprevailing party cannot. Sponsors of the bill hope to prevent Patent Trolls from claiming the inability to pay fees by shuffling accounts between all of their companies by including this provision. <ref name="innovationactprovisions" /> Interested parties may include parties that have invented or invested in the disputed patents or that commercially practice or perform R&D in the same field. <ref name="govtracksummary" />
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**Substantial interest is defined as interest if the party invented the subject matter or commercially practices, made substantial preparations directed particularly to commercially practicing, or is engaged in R&D in the subject matter
 
  
 
===Discovery Stay===  
 
===Discovery Stay===  
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"Establishes procedures to stay discovery pending a preliminary motion, subject to exceptions for: (1) motions to sever, drop a party, dismiss, or transfer; (2) actions in which a patentee is granted a preliminary injunction to prevent competitive harm; (3) consent of the parties; or (4) certain drug and biological product applications."[https://www.govtrack.us/congress/bills/114/hr9/summary]
 
  
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===Demand Letters===
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The act establishes that a claim construction ruling must occur prior to discovery. <ref name="patentlyoIA" /> Discovery is a process that occurs pre-trial in a civil action, a conflict between two private parties, and is defined by the federal government as any party's right to obtain relevant information for the trial. Claim construction defines exactly what a patent includes and the extent to which a patent holder can protect the subject matter. <ref name="claimconstruction" /> The act  also specifies that claim construction previously agreed upon in another court must hold when a patent claim is reviewed by the USPTO or in a new trial. <ref name="patentlyoIA" />
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“The bill precludes a plaintiff from relying on pre-suit demand letters to establish willful infringement if the letters do not specify the asserted patent, the accused product, the plaintiff’s ultimate parent entity, and the grounds for the alleged infringement” [http://www.mofo.com/~/media/Files/ClientAlert/2015/05/150507ProposedPatentReformLegislation.pdf]
 
  
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===Venue===
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Discovery of additional or non "core" documents is not allowed unless the party requesting them covers the costs of discovery and all parties consent to discovery. <ref name="patentlyoIA" /> By enabling courts to limit discovery, sponsors hope to reduce litigation costs and target patent trolls intending to settle a case quickly using information revealed in discovery. <ref name="innovationactsummary" />
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Amends the federal judicial code to restrict the venues where patent actions may be brought to judicial districts where:
 
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the defendant has its principal place of business or is incorporated, has committed an act of infringement and has a regular and established physical facility that gives rise to the act of infringement, or has agreed or consented to be sued in the instant action; an inventor named on the patent conducted research or development; or a party has a regular and established physical facility and has managed significant research and development for the invention claimed in the patent, has manufactured a tangible product alleged to embody that invention, or has implemented a manufacturing process for a tangible good in which the process is alleged to embody the invention.[https://www.govtrack.us/congress/bills/114/hr9/summary]
 
  
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===Willful Infringement===
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===Demand Letters===
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===Disclosure of Ownership===
 
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===Double Patenting===
 
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===Rights of the Manufacturer===
 
  
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==Why it Hasn't been passed==
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To protect small businesses, the act requires that the patent owner explain the reason for the lawsuit and how the infringement has occurred to the accused party or parties. <ref name="innovationactprovisions" /> A demand letter sent prior to the lawsuit cannot be used as evidence of willful infringement unless the demand letter specifies which patent is being infringed, what is infringing the patent, the parent company that owns the patent, and how one or more claims in the patent are being violated. <ref name="patentlyoIA" /> Anyone found violating these requirements would be forced to pay additional damages. <ref name= "sectionsummary" />
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The House Innovation Act and Senate Patent Act are very similar; both acts address abusive litigation through “increased transparency, more limited discovery, heightened pleading standards, and ‘loser pays’ fee shifting”.  However, there has been a delay in the passing of the bills because of controversy surrounding the shifting of attorney fees. Fee shifting was originally suggested as a way to incentivize small firms and businesses that were being unfairly accused of patent infringement to bring the case to court, so that they would not have to pay their attorney fees. However, there have been arguments stating that fee shifting would actually increase the settlement rate of small businesses being accused of patent infringement, because they don’t want to take the risk of losing and paying for the winner’s attorneys’ fees, in addition to their own. [http://www.bna.com/debate-patent-reform-n17179934625/ (Bloomberg BNA)]
 
  
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==Summary==
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===Venue===
  
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===Heightened pleading requirements===
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The act requires that patent infringement suits only be heard in judicial districts with reasonable connection to the conflict. <ref name="sectionsummary" />
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The Innovation Act requires patent owners to show how each limitation of each asserted claim in each asserted patent is found within each alleged infringement.
 
  
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===Presumption of attorney fees===
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A judicial district in which the following have occurred is considered to have reasonable connection to the dispute: <ref name="govtracksummary" />
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The act encourages judges to make a party pay attorney fees if the lawsuit or claim is deemed frivolous.
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* the defendant is headquartered or incorporated.
 +
* the defendant infringed the patent.
 +
* the defendant's facility where the patent continues to be infringed.
 +
* the defendant was informed and agreed to the suit.
 +
* an inventor of the patent led R&D.
 +
* either party runs R&D for the patented invention.
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* either party manufactures a physical product that violates the patent's claims.
 +
* either party runs a process using the patented invention.
  
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===Transparency of ownership===
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===Disclosure of Ownership===
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The Innovation Act requires plaintiffs to disclose the owner of the patent in question so the identity of the real parties behind the litigation is clear.  This will ensure that patent trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation.
 
  
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===Discovery limits===
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An initial complaint must disclose specifics about the patent including the parent company of the patent and any party with a financial interest in the patent. <ref name="sectionsummary" /> Any change in patent ownership must be provided to the UPSTO. If the information is not provided or updated when changes occur, then the court will make the patentee cover the defendant's attorney fees. <ref name="patentlyoIA" />
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The act would limit discovery in litigation until after a claim construction ruling. This provision is aimed at reducing the costs of litigation.
 
  
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==Analysis Notes (not organized yet)==
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===Double Patenting===
  
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Before: The court may conclude that the patent claim is not valid if it is shown that the claimed invention was disclosed in a prior patent or patents, a book, a magazine, a newspaper, a television show or movie, a webpage or other published work before the date of the claimed invention.
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Within the Innovation Act, several reforms are suggested to the Leahy-Smith America Invents Act. One of these reforms concerns codifying double patenting. <ref name="govtracksummary" /> Double patenting is when two patents are awarded for the same invention to one patent holder. The first-to-file (FTF) system was introduced in the American Invents Act and put into effect in March of 2013. In the FTF system, the first inventor to file for a patent has priority in protecting the idea. <ref name="entrepreneur" /> The Innovation Act applies the FTF system to double patenting restrictions. If a patent claim is filed on the same day or before a similar second patent, then the first patent will be deemed prior art to the second patent. Thus, double patenting would be prevented unless nonobvious subject matter can be proven. <ref name="govtracksummary" />
  
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After: Innovation Act removes a provision that prohibits a patent from being deemed invalid based on novelty, prior art, or nonobvious subject matter solely because a defense is raised or established based on prior commercial use.
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===Manufacturers===
  
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'''Findings from Katznelson Study''' [http://poseidon01.ssrn.com/delivery.php?ID=343101100066123115123030102069064070118044003044069029011021030023117116127093101102018016059122121033039091077119112065111125116011031037081086111123082086020094071083084027120105093116082106100121110075118106014075071122118023002022027125120031067&EXT=pdf]
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To protect manufacturing investments and patent owners, the act prohibits foreign courts from eliminating a company's US IP licenses in bankruptcy, in accordance with US law. <ref name="sectionsummary" /> On the other hand, the act pushes for plaintiffs to deal with manufacturers instead of the retailers or end users that have purchased the manufacturer's products. <ref name="patentlyoIA" /> Courts may stay customer suits while litigation with manufacturers accused of infringing the same patent is ongoing. <ref name="govtracksummary" />
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Historically, as a fraction of issued patents, reported litigation rates in the first part of the 19th century exceeded that of the last two decades by about a factor of five.
 
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Patent litigation intensities in recent years had not exceeded those experienced during the 20th century. Rather , patent litigation surges are consistent with major shifts in technological developments, which introduce novel terms and uncertainty in patent claims and require infrimgement analysis of novel and less understood products.
 
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'''NPEs vs PAEs'''
 
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[https://www.justice.gov/sites/default/files/atr/legacy/2012/12/10/290073.pdf]
 
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We need to make a distinction between NPEs and PAEs (otherwise known as patent trolls). These terms are often used interchangeably but universities and startups are included under the definition of a non-practicing entity. If you define a Practicing Assertion Entity (PAE) as a company that asserts patents on existing products as a business model, then you separate universities and startups from PAEs, inventor monetizers, and special purpose patent monetizers.
 
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Issues/cricism of the innovation act [http://www.ipwatchdog.com/2015/05/20/study-should-pause-patent-reform/id=57946/]:
 
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*Apparent automatic fee-shifting in lawsuits
 
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*Heightened pleading standard
 
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*Discovery stay
 
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*Broad ‘customer stay’ provision could shield retailers/importers from infringement claims
 
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*Pierce corporate veil with “ownership transparency”
 
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Indirect infringement:
 
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*Someone who has contributed to the infringement of a patent is liable
 
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*Can only arise when the indirect infringer has some knowledge and intent regarding the patent and infringement
 
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*ex. someone who actively induces infringement of patent by encouraging, aiding, or causing another person to infringe a patent. Inducer must be aware of patent and intend for their actions to result in third party infringing that patent
 
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*Contributory infringement: seller provides part of component that itself does not infringe on a patent, but has a particular use as a part of some other machine that is covered by a patent
 
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===Detailed Summary of the Bill===
 
  
 +
===Small Businesses===
  
 +
In addition to reducing costs and curbing patent troll abuses, the act requires the USPTO to create and distribute educational materials for small businesses involved in aggressive patent litigation. Working outreach programs would be modified to include information on patent litigation practices that are threatening the success of small businesses. This information would also be disseminated through the Small Business Administration and the Minority Business Development Agency. The act directs the USPTO to have public records online about when a patent claim is brought to court along with other specifics regarding the patent's ownership to increase transparency. <ref name="govtracksummary" />
  
 
==References==
 
==References==
Line 117: Line 78:
 
<ref name="GovTrack"> [https://www.govtrack.us/congress/bills/114/hr9#] 'H.R.9:Innovation Act', ''govtrack.us''. </ref>
 
<ref name="GovTrack"> [https://www.govtrack.us/congress/bills/114/hr9#] 'H.R.9:Innovation Act', ''govtrack.us''. </ref>
 
<ref name="innovationactsummary"> [https://judiciary.house.gov/wp-content/uploads/2016/02/782015_InnovationAct3.pdf] 'The Innovation Act', ''Judiciary Committee: Chairman Bob Goodlatte'', (Washington, D.C.). </ref>
 
<ref name="innovationactsummary"> [https://judiciary.house.gov/wp-content/uploads/2016/02/782015_InnovationAct3.pdf] 'The Innovation Act', ''Judiciary Committee: Chairman Bob Goodlatte'', (Washington, D.C.). </ref>
 +
<ref name="patentlyo18"> [http://patentlyo.com/patent/2016/04/elimination-pleading-infringement.html] L. Morad and A.J. Bramhall, 'An Early Review of the Impact of Form 18's Elimination on Pleading Direct Infringement',''PatentlyO''.</ref>
 +
<ref name="nationallawreview">[http://www.natlawreview.com/article/supreme-court-adopts-amendments-to-federal-rules-may-deter-patent-infringement] Jura Zibas and Gregory Brescia, 'Supreme Court Adopts Amendments to Federal Rules', ''The National Law Review'', (Western Springs, IL). </ref>
 +
<ref name="patentlyoIA"> [http://patentlyo.com/patent/2015/02/patent-reform-innovation.html] Dennis Crouch, 'Patent Reform: Innovation Act of 2015', ''PatentlyO''. </ref>
 +
<ref name="innovationactprovisions"> [https://judiciary.house.gov/wp-content/uploads/2016/02/for-packet-plain-english.pdf] 'The Innovation Act: Key Provisions', ''Judiciary Committee: Chairman Bob Goodlatte'', (Washington, D.C.). </ref>
 +
<ref name="NYU"> [http://lsr.nellco.org/cgi/viewcontent.cgi?article=1245&context=nyu_lewp] Theodore Eisenberg and Geoffrey P. Miller, 'The English vs. the American Rule on Attorneys Fees', ''New York University Law and Economics Working Papers''. </ref>
 +
<ref name="innovationacttext"> [https://www.congress.gov/bill/114th-congress/house-bill/9] 'Summary: H.R.9-114th Congress', congress.gov. </ref>
 +
<ref name="EPO"> [https://www.epo.org/learning-events/materials/inventors-handbook/novelty/prior-art.html] 'What is prior art?', "European Patent Office: Inventors' Handbook", (Munich, Germany). </ref>
 +
<ref name="govtracksummary"> [https://www.govtrack.us/congress/bills/114/hr9/summary] 'Summaries for the Innovation Act', "govtrack.us". </ref>
 +
<ref name="interestsofjustice"> [https://www.wilmerhale.com/uploadedFiles/WilmerHale_Shared_Content/Files/PDFs/how-PTAB-applies-interests-of-justice-discovery-standard.pdf] 'How PTAB Applies 'Interests of Justice' Discovery Standard', "Law360", Portfolio Media, Inc. (New York, New York). </ref>
 +
<ref name="claimconstruction"> [http://patentlyo.com/patent/2009/09/claim-construction-a-structured-framework-1.html] Peter S. Menell, Matthew Powers, and Steven Carlson, 'Claim Construction: A Structured Framework', "PatentlyO". </ref>
 +
<ref name="sectionsummary" > [https://judiciary.house.gov/wp-content/uploads/2016/02/072015-Section-by-Section-of-HR-9-Innovation-Act.pdf] 'H.R.9, The "Innovation Act": Section-by-Section Summary", 'Judiciary Committee', (July 2015). </ref>
 +
<ref name="entrepreneur"> [https://www.entrepreneur.com/article/231884] Kirby Drake,'How to Take Advantage of the First-to-File Patent System', Entrepreneur Media, Inc. </ref>
 +
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[[Category: Public]]
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[[Public Classification::Legislation| ]]

Latest revision as of 15:07, 2 September 2016

Return to Proposed Patent Reform.

The H.R.9:Innovation Act was reintroduced on February 5, 2015, by Representative Bob Goodlatte (R-VA). The bill was referred to the House Committee on the Judiciary and Subcommittee on the Courts, Intellectual Property, and the Internet, and was placed on the Union Calendar on July 29, 2015. Currently the bill has 27 cosponsors, 15 Republicans and 12 Democrats.

The full title of the act is "To amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections, and for other purposes." [1]GovTrack predicts that the Innovation Act has a 36% chance of being enacted. Representative Bob Goodlatte intends for the bill to cut down on abusive patent litigation and strengthen a patent holder's rights.[2] The Innovation Act also proposes certain reforms to the enacted Leahy Smith America Invents Act.

The bill will target the following areas [2]:

  • Abusive patent litigation.
  • Increasing transparency and reducing weak patent infringement claims.
  • Clarifying patent litigation procedures and practices.
  • Bolstering IP centered small businesses.
  • Reducing referrals to random courts for the review of patent cases.
  • Weakening power of Patent Trolls.

Provisions

The provisions of the Innovation Act encompass all of the areas of reform currently in consideration by Congress.

Pleading Requirements

In efforts to diminish the Patent Troll threat by the bill sponsors, the Innovation Act heightens pleading requirements for parties filing for patent infringement. Form 18, the form previously used to submit generalized patent infringement claims, has been eliminated by the Judicial Conference in wide-sweeping amendments. This amendment was expected to be implemented December of 2015. [3] The Innovation Act also proposes Form 18's elimination by the Supreme Court to reduce patent litigation, especially litigation involving Patent Trolls or Non-Practicing Entities.[4] The Supreme Court would be allowed to codify a new model for filing infringement complaints that would include notifying the accused parties of the claim and its content. [5]

Supporters hope that the act would go further in reducing generalized complaints and eliminating loopholes by requiring (with exceptions) the plaintiff to submit infringement charts with the initial complaint.[6] The purpose of the charts is to force the plaintiff to explain the specifics of a claim, how a product or the specific use of the patented idea or process violates each infringed component of a patent and the scope of each component's infringement. [6]

Additionally, a claim of previous commercial use may not result in a court invalidating a patent because it lacks novelty, seems to cover obvious subject matter, or due to prior art. [5] Prior Art refers to evidence indicating that the technology or invention in question has already been used, discovered, or is generally known. [7]

Fees and Other Expenses

Writers of the bill propose that a modified "English Rule" become the new standard in patent litigation in America to avoid frivolous lawsuits and adequately sanction patent trolls for pointless or unfounded claims. [8] [6] The "English Rule" requires the losing party in a trial compensate the prevailing party for its attorney fees. [9]

The act requires courts to have losing parties provide for "reasonable fees and other expenses" incurred in litigation. The award may be waived only if the losing party is found to have just legal and factual cause to be part of the litigation. If the losing party is unable to pay due to extraordinary circumstances, the court may ask a joined or interested party to cover the award. [10] Additionally, the plaintiff may have to pay attorney fees if it dismisses the claim before going to trial unless they were given the explicit right to settle without a court order. [5]

Joinder of Interested Parties

As part of the Fees and Other Expenses provisions, an interested party or parties may be required to cover attorney's fees and other expenses in the case that the nonprevailing party cannot. Sponsors of the bill hope to prevent Patent Trolls from claiming the inability to pay fees by shuffling accounts between all of their companies by including this provision. [8] Interested parties may include parties that have invented or invested in the disputed patents or that commercially practice or perform R&D in the same field. [5]

Discovery Stay

The act establishes that a claim construction ruling must occur prior to discovery. [6] Discovery is a process that occurs pre-trial in a civil action, a conflict between two private parties, and is defined by the federal government as any party's right to obtain relevant information for the trial. Claim construction defines exactly what a patent includes and the extent to which a patent holder can protect the subject matter. [11] The act also specifies that claim construction previously agreed upon in another court must hold when a patent claim is reviewed by the USPTO or in a new trial. [6]

Discovery of additional or non "core" documents is not allowed unless the party requesting them covers the costs of discovery and all parties consent to discovery. [6] By enabling courts to limit discovery, sponsors hope to reduce litigation costs and target patent trolls intending to settle a case quickly using information revealed in discovery. [2]

Demand Letters

To protect small businesses, the act requires that the patent owner explain the reason for the lawsuit and how the infringement has occurred to the accused party or parties. [8] A demand letter sent prior to the lawsuit cannot be used as evidence of willful infringement unless the demand letter specifies which patent is being infringed, what is infringing the patent, the parent company that owns the patent, and how one or more claims in the patent are being violated. [6] Anyone found violating these requirements would be forced to pay additional damages. [12]

Venue

The act requires that patent infringement suits only be heard in judicial districts with reasonable connection to the conflict. [12]

A judicial district in which the following have occurred is considered to have reasonable connection to the dispute: [5]

  • the defendant is headquartered or incorporated.
  • the defendant infringed the patent.
  • the defendant's facility where the patent continues to be infringed.
  • the defendant was informed and agreed to the suit.
  • an inventor of the patent led R&D.
  • either party runs R&D for the patented invention.
  • either party manufactures a physical product that violates the patent's claims.
  • either party runs a process using the patented invention.

Disclosure of Ownership

An initial complaint must disclose specifics about the patent including the parent company of the patent and any party with a financial interest in the patent. [12] Any change in patent ownership must be provided to the UPSTO. If the information is not provided or updated when changes occur, then the court will make the patentee cover the defendant's attorney fees. [6]

Double Patenting

Within the Innovation Act, several reforms are suggested to the Leahy-Smith America Invents Act. One of these reforms concerns codifying double patenting. [5] Double patenting is when two patents are awarded for the same invention to one patent holder. The first-to-file (FTF) system was introduced in the American Invents Act and put into effect in March of 2013. In the FTF system, the first inventor to file for a patent has priority in protecting the idea. [13] The Innovation Act applies the FTF system to double patenting restrictions. If a patent claim is filed on the same day or before a similar second patent, then the first patent will be deemed prior art to the second patent. Thus, double patenting would be prevented unless nonobvious subject matter can be proven. [5]

Manufacturers

To protect manufacturing investments and patent owners, the act prohibits foreign courts from eliminating a company's US IP licenses in bankruptcy, in accordance with US law. [12] On the other hand, the act pushes for plaintiffs to deal with manufacturers instead of the retailers or end users that have purchased the manufacturer's products. [6] Courts may stay customer suits while litigation with manufacturers accused of infringing the same patent is ongoing. [5]

Small Businesses

In addition to reducing costs and curbing patent troll abuses, the act requires the USPTO to create and distribute educational materials for small businesses involved in aggressive patent litigation. Working outreach programs would be modified to include information on patent litigation practices that are threatening the success of small businesses. This information would also be disseminated through the Small Business Administration and the Minority Business Development Agency. The act directs the USPTO to have public records online about when a patent claim is brought to court along with other specifics regarding the patent's ownership to increase transparency. [5]

References

[1] [2] [3] [4] [6] [8] [9] [10] [7] [5] [14] [11] [12] [13]

  1. ↑ 1.0 1.1 [1] 'H.R.9:Innovation Act', govtrack.us.
  2. ↑ 2.0 2.1 2.2 2.3 [2] 'The Innovation Act', Judiciary Committee: Chairman Bob Goodlatte, (Washington, D.C.).
  3. ↑ 3.0 3.1 [3] L. Morad and A.J. Bramhall, 'An Early Review of the Impact of Form 18's Elimination on Pleading Direct Infringement',PatentlyO.
  4. ↑ 4.0 4.1 [4] Jura Zibas and Gregory Brescia, 'Supreme Court Adopts Amendments to Federal Rules', The National Law Review, (Western Springs, IL).
  5. ↑ 5.0 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 [5] 'Summaries for the Innovation Act', "govtrack.us".
  6. ↑ 6.0 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 [6] Dennis Crouch, 'Patent Reform: Innovation Act of 2015', PatentlyO.
  7. ↑ 7.0 7.1 [7] 'What is prior art?', "European Patent Office: Inventors' Handbook", (Munich, Germany).
  8. ↑ 8.0 8.1 8.2 8.3 [8] 'The Innovation Act: Key Provisions', Judiciary Committee: Chairman Bob Goodlatte, (Washington, D.C.).
  9. ↑ 9.0 9.1 [9] Theodore Eisenberg and Geoffrey P. Miller, 'The English vs. the American Rule on Attorneys Fees', New York University Law and Economics Working Papers.
  10. ↑ 10.0 10.1 [10] 'Summary: H.R.9-114th Congress', congress.gov.
  11. ↑ 11.0 11.1 [11] Peter S. Menell, Matthew Powers, and Steven Carlson, 'Claim Construction: A Structured Framework', "PatentlyO".
  12. ↑ 12.0 12.1 12.2 12.3 12.4 [12] 'H.R.9, The "Innovation Act": Section-by-Section Summary", 'Judiciary Committee', (July 2015).
  13. ↑ 13.0 13.1 [13] Kirby Drake,'How to Take Advantage of the First-to-File Patent System', Entrepreneur Media, Inc.
  14. ↑ [14] 'How PTAB Applies 'Interests of Justice' Discovery Standard', "Law360", Portfolio Media, Inc. (New York, New York).
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