October 21, 2014

David Donoghue: 4 Key Provisions of the Patent Reform Act for Patent Litigators

The patent blogs are abuzz with detailed analysis of cloture votes, this month’s Senate hearings and the Senate’s overwhelming passage of the America Invents Act (the “AIA”).  With the AIA signed into law by President Obama last week, I am beginning a series of posts looking at its key provisions. This is the first of those posts.  It is based upon a post from earlier this week at my Retail Patent Litigation Blog.

Here are four key provisions of the AIA for patent litigators and litigants:

  1. Smaller Patent Troll Suits: The most immediate impact on patent litigation will be Section 19, limiting joinder in a single suit of unrelated parties. This is not the more extreme restrictions on venue or joinder that many had hoped for. But it will have some positive impact on patent troll litigation. For suits filed on or after the date of enactment, plaintiffs will only be able to join related parties in a single suit — for example, multiple manufacturers, distributors or resellers of an identical product. And while cases against unrelated parties could still be joined for discovery, they will not be able to be joined for trial. At first glance, this is not much of a barrier to entry for patent trolls. Very few defendants get to trial, and cases may still be consolidated for discovery purposes at the court’s discretion. Where a troll today could pay one $350 filing fee and sue 100 unrelated defendants, after enactment that same troll would have to file 100 suits and pay $35,000 in filing fees. $35,000, however, is dwarfed by the settlement demands in many cases. The hassle of filing the extra suits and the related filing fees, however, may be enough to prevent suits against some of the much smaller entities that almost always end up in these suits. And the requirement of separate suits will allow defendants a much greater ability to seek transfer to an appropriate venue. So, while this is not the sea change that many sought, it is a real benefit to retailers who are tired of being sued in Texas and want a better shot at transferring cases. This Section only applies to cases filed after enactment, not pending cases. So, existing cases will not be impacted.
  2. Post-Grant Review: The AIA establishes a brief window for post-grant and inter partes review in Section 6. Third parties may challenge the validity of any claim of a patent for nine months after a patent is granted or issuance of a reissued patent. But you cannot seek post-grant review after filing a suit involving the patent. And when post-grant review ends in a final Board decision, you give up the right to use the arguments used in post-grant review or arguments that could reasonably have been used, in a later ITC proceeding or district court litigation.
  3. False Marking Restrictions: Private citizens that file false marking claims will be required to prove competitive injury and their damages will be limited to the injury. Additionally, Section 16(b) excludes marking with an expired patent from the false marking statute. Furthermore, Section 16 applies to all cases pending when the AIA is enacted, as well as cases filed thereafter. Section 16 will clear out many of the existing false marking cases, but leaves considerable room for competitor false marking cases.
  4. First to Invent: One of the most publicized changes to the U.S. patent laws is the move to a first-to-file patent system, the system used by most of the rest of the world. The first-to-file system incentivizes filing patents as quickly as possible to avoid an earlier filing by a competitor. Section 3 softens the first-to-file system providing for a proceeding between patent owners if the junior patent holder can show that the senior patent holder’s invention was derived from the junior patent holder’s invention. These “derivation proceedings” will replace the current, seldom-used interferences.

Of course, there is much more to the AIA, but these key changes are a good way to start digging into it. If there are other provisions you view as on par with these four from a litigation perspective, I would love to hear about them. Future posts will look at some of the other provisions of the AIA.

Editor’s Note: Recent patent reform is the subject of a CLE program on Wednesday, October 5, entitled The America Invents Act – A Discussion of the Significant Changes in U.S. Patent Law. The event is being co-sponsored by the CBA Intellectual Property Section and presented by Daniel J. Sherwinter, Esq. Click here to register for the program or the live webcast.

R. David Donoghue is a trial attorney and a partner in Holland & Knight’s Intellectual Property Group focusing upon intellectual property litigation and particularly upon patent disputes. He was a faculty member at the 9th Annual Rocky Mountain Intellectual Property and Technology Institute. David blogs at the Chicago IP Litigation Blog, where this post originally appeared on September 9, 2011.

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