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Obama Administration Weighs In On Patent Abuse Legislation

UPSTO Deputy Director: Administration Supports Giving Courts More Discretion to Shift Fees to Losing Party 10/24/2013 4:53 PM Eastern

 

The Obama Administration supports lowering the "exceptional cases" standard for assessing attorney fees in patent suits to help shift the fees to the losing party and discourage so-called "patent trolls."

 
"Given the recent move by many PAEs to use contingency-fee lawyers, low litigation costs for failure create a substantial incentive for potentially abusive litigation practices," said U.S. Patent and Trademark Office deputy director Teresa Stanek Rea in a speech to the annual convention of the American Intellectual Property Law Association in Washington Thursday. "Lowering this standard could help deter PAEs from driving up defense costs in meritless cases, and should apply equally to defendants that engage in abusive litigation practices."
 
That fee-shifting was one of the elements in a just-introduced patent litigation reform bill from House Judiciary Committee Chairman Bob Goodlatte (R-Va.), the Innovation Act (HR 3309), targeted at so-called patent trolls. Cable operators were among those applauding the bill and pledging to work for its passage.
 
In the speech, Rea pointed to the Goodlatte bill and a similar bill she expected to be introduced shortly and outlined the White House's thoughts about various proposals--the President has made patent system overhaul a priority and issued an executive order earlier this year to help address "the risk to small businesses and others from abusive litigation by certain patent assertion entities, or PAEs."
 
Rea said the administration also supports legislative proposals that would "[R]equire patent owners and applicants to file current RPI (real party in interest) ownership information prior to filing an infringement action, sending demand letters, or seeking USPTO review of a patent." Courts should also be able to impose sanctions for knowingly failing to comply with those disclosure requirements.
 
She said the administration does not support wholesale prohibitions on PAE suits against retailers or even consumers and other end-users of patented technologies, but that "targeted limits may be appropriate" so long as the end users are using the product solely for its intended use, and in certain cases limiting liability based on that intended use.
 
The White House supports requiring a stay in such judicial proceedings against downstream users of a patented technology if the manufacturer is also being sued.
 
The administration also supports encouraging public filing of demand letters (a patent owner's initial contact with alleged infringers) and limiting "abusive" discovery by making parties seeking the info at least partly responsible for the expense when it extends "beyond core topics." But it is not so high on proposals to limit that discovery prior to a ruling on claim construction (where there is a valid claim), saying it could ultimately raise the cost and lengthen the duration of the case.

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