By The Iowa Statesman
Wednesday, the U.S. Sen. Judiciary Committee, chaired by U.S. Sen. Chuck Grassley (R-IA), held a hearing on S. 1137, also known as the Patent Act. In his opening remarks to the committee, Grassley said abusive patent litigation is having a serious impact on small companies, innovators, manufacturers, Main Street businesses, high tech firms, and consumers.
“The patent troll problem is being felt across every sector of the economy, and from small town Iowa to Silicon Valley,” he said. “It’s critical that we enact reforms to prevent this from further stifling the innovation and entrepreneurship that our patent system is designed to protect.”
It has been estimated that the cost patent litigation pursued by patent abusers, who use deceptive tactics to prey on businesses, costs the U.S. economy upward of $80 billion a year.
The Patent Act deters abusive litigation through a series of targeted reforms. Let me state briefly some of the key provisions contained in the bill. The Patent Act establishes clear uniform pleading standards in patent infringement lawsuits and gives defendants clear notice of the claims against them. It increases transparency of the parties bringing lawsuits.
It places standards on demand letters and clarifies that the widespread sending of deceptive demand letters are covered by Section 5 of the FTC Act. The bill also allows manufacturers – rather than end users – to litigate cases in order to protect customers who are targeted for patent infringements cases just because they use a product they purchased off the shelf.
Further, the bill deters frivolous suits and abusive litigation practices by allowing the award of attorney fees if a court determines the position or conduct of a non-prevailing party was not objectively reasonable. It creates a mechanism for a court to recover fees where an abusive litigant is judgment-proof. Finally, in order to deal with asymmetries in discovery burdens and litigation costs, the bill requires courts to stay discovery pending the resolution of certain preliminary motions such as motions to dismiss and transfer venue.
“Because of the wide-ranging positive reactions to the Patent Act, I’m comfortable with where we are on the language contained in the bill. However, I’m also aware of concerns about processes at the Patent and Trademark Office that have been recently raised by patent holders,” Grassley said. “They worry that administrative proceedings created by the America Invents Act – the inter partes review and post-grant review proceedings – are being abused and are stacked against patent holders. Other stakeholders however are of the view that these new proceedings have been very effective at weeding out weak patents. I’ve committed to looking at these concerns, determining whether they are valid or not, and working with my colleagues to see what can be done to improve this process.”
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