Last week, the Senate Judiciary Committee voted 16-4 to move the PATENT Act to the full Senate floor, a big step toward making patent reform a reality. This morning, the House Judiciary Committee will take its turn marking up the Innovation Act. Unfortunately, that bill’s fate remains unclear.
When Rep. Goodlatte introduced his Innovation Act earlier this year (in the same form as it was overwhelmingly passed in December 2013), we, along with many others, applauded it as a strong piece of comprehensive legislation that would do much to fix a broken patent system. So were feeling very optimistic last week when the Senate moved its bill, because last year it was the Senate that held up reform. That sense of optimism lasted until earlier this week, when we saw the latest version of the Innovation Act.
Simply put, some of the most important provisions—those surrounding discovery, pleading, and venue—had been watered down, in some cases beyond recognition. As we write this post on the eve of the bill’s markup, we understand negotiations are ongoing, so we remain hopeful that the bill language we see today will indeed provide meaningful reform.
More details on what we’ll be watching:
- Discovery: Currently, discovery is by far the most expensive part of litigation for any party facing suit. For a patent troll who doesn’t make or sell anything, the cost of discovery is next to nothing. However, it can use abusive discovery practices to drive the costs of litigation even higher than they already are. The Senate bill would curb some of the worst of these practices by staying discovery until a party has had a chance to try to have a case dismissed. Unfortunately, the House bill would undermine that reform by limiting this important stay. We’re closely watching and supporting an amendment being introduced by Reps. Collins and Farenthold that would fix this.
- Pleading: Right now someone can file a patent suit without providing almost any basic details about his or her case, information like how a patent is infringed, what products allegedly infringe, and even who owns that patent. This information is easily known to any patent holder at the outset of a case, especially those who engage in a responsible amount of due diligence prior to filing a case. However, getting this information can cost the defendant tens or even hundreds of thousands of dollars. Fixing these pleading practices has long been a cornerstone of meaningful patent reform. The current version of the House bill, however, will not provide that fix. Frankly, the current legislative language is confusing and hard-to-follow, making it impossible to support it in its current form. We’re closely watching for an amendment, hopefully one that would more closely mirror the language in the Senate’s PATENT Act, an effort we would support.
- Venue: The majority of patent troll cases take place in small towns in the Eastern District of Texas. (Watch John Oliver explain it much more hysterically than we can here.) That’s because the Eastern District of Texas is notoriously friendly to patent holders (including trolls) and is hard and expensive to get to, making it even more difficult for startups to defend themselves. We’re glad to see the House bill take on this issue, but the language as it stands has so many loopholes that it wouldn’t be effective. We are closely watching and supporting an amendment that would fix this being introduced this morning by Reps. Issa, Goodlatte, Nadler, Lofgren, Forbes, Chu, Farenthold, DelBene, and Walters.
The good news is that, as stated above, many members look ready to introduce amendments that would fix these shortcomings.
The bad news is that the process has, to put it mildly, gone awry.
We remain optimistic that the bill that comes out of the House Judiciary Committee tomorrow will meaningfully address the patent troll problem, but—until we see today’s vote—we cannot be sure.