{"id":644,"date":"2015-02-03T19:32:58","date_gmt":"2015-02-04T03:32:58","guid":{"rendered":"http:\/\/savingusmanufacturing.com\/blog\/?p=644"},"modified":"2015-02-03T19:32:58","modified_gmt":"2015-02-04T03:32:58","slug":"anti-inventor-legislation-being-proposed-in-congress","status":"publish","type":"post","link":"https:\/\/savingusmanufacturing.com\/blog\/innovation\/anti-inventor-legislation-being-proposed-in-congress\/","title":{"rendered":"Anti-Inventor Legislation Being Proposed in Congress"},"content":{"rendered":"

Sometimes it seems we have to play “Whack-a-mole” against well-meaning legislation that would have harmful, unintended consequences. Last year, the Innovation Act, H.R. 3309<\/a> passed the House of Representatives by a 325 – 91 vote on December 5, 2013. It seemed like a comparable bill would easily pass the Senate until a concerted effort to defeat this bill was undertaken by Randy Landreneu, Founder of the Independent Inventors of America, and another inventor, Paul Morinville, by visiting key people in the offices of about 60 Senators.<\/p>\n

Their efforts were aided by such organizations as CONNECT and Biocom in San Diego, the Biotechnology Industry Group, and the Independent Inventors of America. Because of the opposition by these groups and other groups not cited, the bill ended up being dropped in the Senate.<\/p>\n

Why did these organizations oppose this effort on patent reform? Gary Klein, V. P. Public Policy, of San Diego\u2019s CONNECT<\/a> organization, stated: \u201cA startup company\u2019s main asset is its intellectual property. Most investors\u2019 first question to startups is about how their technology is protected. The Innovation Act that passed the House has several provisions \u2013 fee shifting, covered business methods, joinder rules, discovery and customer stay \u2013 that will have some very serious adverse consequences for small\/startup companies, universities and research institutions, as well as companies who use licensing as a business model.\u201d<\/p>\n

Joe Panetta, President and CEO of Biocom,<\/a> stated “Not only does H.R.3309 fail to adequately address the abusive litigation practices it aims to curb, but it would place burdensome and unnecessary requirements and penalties on all patent holders. The bill is likely to inadvertently harm the world\u2019s greatest innovation system by limiting legitimate patent holders’ ability to assert their rights.”<\/p>\n

The Biotechnology Industry Group (BIO) was concerned that it would undermine biotech research and innovation. Daniel Seaton noted on BIO’s Patently Biotech blog<\/a>, \u201cthe Act would ultimately make it more difficult for patent holders with legitimate claims to protect their intellectual property\u2026Provisions in the legislation would erect unreasonable barriers to access justice for innovators, especially small start-ups that must be able to defend their businesses against patent infringement in a timely and cost-effective manner, and without needless and numerous procedural hurdles or other obstacles.\u201d<\/p>\n

The Independent Inventors of America against Current Patent Legislation, representing independent inventors and small patent-based businesses across the country, disputed the claim that patent infringement litigation had escalated. They initiated a petition<\/a> stating \u201cThe Government Accounting Office Report required by the America Invents Act <\/em>finds that there is no \u2018patent troll\u2019 problem. Data supporting the claim of billions of dollars of reported cost cannot be verified and actually represent primarily voluntary and court directed license agreements for valid patents. In addition, analysis of patent litigation shows that the number of patent suits relative to the number of patents issued today remains consistent over the 200 plus year history of the patent system with the exception of a short period prior to the Civil War when the rate was higher than it is today. The reports supporting this latest round of legislation are simply not valid.\u201d<\/p>\n

They argued that \u201cwhat is being characterized as a \u201cpatent troll,\u201d and the target of the proposed legislation, is really an investor. As individual inventors and small patent-based businesses, we need investors to practice and protect our inventions. A patent is sometimes the sole asset we can leverage to attract that investment. Damaging investors therefore damages inventors.\u201d<\/p>\n

The petition stated, \u201cThis legislation will levy grave harm upon independent inventors and small patent-based businesses, as well as the investors we need to help commercialize new technologies and to protect our inventions.\u201d They \u201cstand firmly against the proposed legislation and any future legislation that would weaken the American Patent System.\u201d The governing body of the San Diego Inventors Forum, of which I am a member, signed the petition along with many of our members.<\/p>\n

The main reasons why inventor organizations opposed the Act were:<\/p>\n

Loser Pays<\/strong> \u2013 would significantly increase the risk and cost of defending a patent and \u201ccould be fatal to a large percentage of inventions.\u201d<\/p>\n

\u201cJoinder\u201d clause<\/strong> \u2013 allows investors to be personally liable for legal fees if inventor loses lawsuit, so this would severely limit investment in new technologies.<\/p>\n

Patent Term Adjustment <\/strong>\u2013 eliminates a patent adjustment for a delay in patent issuance caused by the U. S. Patent Office (Note: Patents are granted for 17 years, but if it takes five years to get a patent, the patent term would be only 12 years instead of 17.)<\/p>\n

New Bill in the Works<\/strong><\/p>\n

Now, Washington, D. C. insiders are indicating that legislation very similar if not identical to the\u00a0Innovation Act will be introduced in <\/em>the House of Representatives as early as February.<\/p>\n

Why is a new version of the Innovation Act being proposed? The stated purpose is to curb frivolous lawsuits for patent infringement by so-called \u201cpatent trolls,\u201d a derogatory term defined by Wikipedia <\/a>as \u201ca person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question, thus engaging in economic rent-seeking. Related, less pejorative terms include patent holding company (PHC) and non-practicing entity (NPE).\u201d<\/p>\n

Proponents of the Innovation Act said<\/a> that\u201d in the two years since the AIA was enacted, patent litigation has exploded. More and more firms are acquiring broad patents not to use the technology but rather to extract licensing fees from companies that infringe the patents accidentally\u2026so a number of industry groups that weren’t traditionally involved in patent debates have begun agitating for patent reform.\u201d<\/p>\n

However, the Patent Freedom organization states<\/a>, \u201cNPEs are not all cut from the same cloth. Some inventors choose not to pursue the development, manufacturing, and sales of their inventions. They may lack the resources to do so, or the interest, passion, and commitment that such an effort requires. Instead, they may seek to license their inventions to others who can use them to deliver better products and services, often with the assistance of those with experience in this area. Or they may choose to sell the patents outright\u2026. some entities buy patents with the express purpose of licensing them aggressively. For instance, about 25% of \u201cparent\u201d NPEs tracked by Patent Freedom are enforcing only patents that they had acquired. Another 60% are asserting patents originally assigned to them, and the remaining 15% are asserting a blend of originally assigned and acquired patents\u201d<\/p>\n

If new legislation is crafted to be similar to the Innovation Act, it would create additional requirements as part of the legal process associated with patent infringement under United States law. Some of the provisions <\/a>that were in the Innovation Act are paraphrased below:<\/p>\n