Two bipartisan bills introduced in Congress would restore some of the patent reliability that the 2011 America Invents Act, administrative actions and judicial rulings have diminished. These measures would address two of the most pressing problems facing U.S. patent rights: biased patent invalidation and narrowing patent eligibility.
Other legislation introduced or needing a sponsor threatens to reduce patent reliability and America’s global leadership in innovation versus China.
First, the Promoting and Respecting Economically Vital American Innovation Leadership, or PREVAIL Act, takes on the flaws that make the Patent Trial and Appeal Board susceptible to gamesmanship against patent owners.
PTAB was touted as a faster, cheaper alternative to federal court for adjudicating patent validity disputes. PTAB not only isn’t faster, cheaper or an alternative, it lacks the fairness and due process Article III courts afford patent owners.
PTAB gives patent infringers another layer of patent validity challenges, another means of denying patent owners quiet title. Its easy patent invalidation weakens U.S. technological leadership.
The PREVAIL Act would raise PTAB’s standards, requiring fair treatment and due process for inventors. For example, the bill would require standing to bring a validity challenge, force challengers to choose either PTAB or court and raise the burden of proof to “clear and convincing” evidence.
In short, PREVAIL would reduce patent infringers’ opportunities to get multiple bites at the apple and to game the system.
Sen. Chris Coons (D-Del.) introduced the PREVAIL Act in the Senate, and Rep. Ken Buck (R-Colo.) is the lead House sponsor. These lawmakers are joined by Sens. Thom Tillis (R-N.C.), Dick Durbin (D-Ill.) and Mazie Hirono (D-Hawaii) and Rep. Deborah Ross (D-N.C.). The bill numbers are S. 2220 and H.R. 4370.
Second, S. 2140, the Patent Eligibility Restoration Act (PERA), addresses the crisis in patent-eligible subject matter, which stems from judicially created exceptions to the plain language of the patent statute. Sens. Tillis and Coons are the sponsors of PERA.
Judges have created exceptions to patent-eligible subject matter, following the Supreme Court’s muddying the patent eligibility waters in Bilski v. Kappos in 2010. In 2012, the court in Mayo v. Prometheus broke its own rule and didn’t consider patent claims as a whole.
In 2013, Association of Molecular Pathology v. Myriad Genetics ruled genetic material that isn’t naturally occurring to be patent-ineligible. In 2014, confusion over software patentability came in Alice v. CLS Bank. The successive narrowing of the threshold criterion once the dam broke has grossly unsettled the law.
The conflicting and disruptive court rulings have given China and other countries an advantage. Inventions no longer patentable here, certain computer-enabled inventions and medical diagnostics, for instance, remain patentable in other nations.
PERA would scratch all judicially created exceptions to patent eligibility. It would return breadth to patent-eligible subject matter. S. 2140 would prohibit examiners, courts, the Patent Trial and Appeal Board, or others from considering substantive patentability requirements (sections 102, 103, and 112) or from considering a patent claim apart from the invention as a whole in determining eligibility.
PERA would exclude mathematical formulae and mental processes alone, natural or genetic material as found in nature, and certain processes as not patent-eligible due to lack of human intervention. In short, S. 2140 would restore clarity about and broaden patent eligibility.
Patent-unfriendly legislation also lurks, promoted by special interests. The Advancing America’s Interest Act, H.R. 3535, would add unwarranted hurdles to the process for getting an exclusion order at the U.S. International Trade Commission.
As a result, patent owners would be unlikely to stop patent-infringing imports from entering the United States. And H.R. 3535 would let infringers that have already imported patent-infringing products merely to take a license and go ahead and sell the goods. Thus, Chinese and Big Tech firms could import first, license later, undermining patent exclusivity.
H.R. 3535 is sponsored by Rep. David Schweikert (R-Ariz.) and Rep. Don Beyer (D-Va.).
Other deleterious draft legislation is looking for sponsors: the Standard Essential Royalty Act and customer stay.
The Standard Essential Royalty Act (SERA) would establish a government royalty rate-setting court that imposed compulsory licensing on standard-essential patents. Of course, patents that read on a technical standard are quite valuable. You can bet SERA’s court-determined royalty rate would undervalue SEPs below what market-based negotiations would yield.
Ironically, SERA would effectively upend FRAND (fair, reasonable and nondiscriminatory) SEP licensing. Patent owners would face unfair, unreasonable and discriminatory compulsory licensing if SERA became law. Infringers would gain the inverse.
In addition, customer stay legislation has resurfaced. It’s pitched as protecting mom-and-pop stores caught between patent-infringing manufacturers and patent owners in litigation. In fact, customer stay would shield other parties in the stream of commerce, including major retail and other corporations.
As IEEE-USA member Ron Katznelson has pointed out, the proposal would turn a reasonable, judicious customer stay that’s used only in exceptional situations into the rule. This would bind courts from exercising appropriate discretion in high-stakes patent-infringement matters.
Additional legislation being shopped on Capitol Hill is the Defending American Patents Act. It actually only defends some American patents — those owned by a party being sued in a foreign court for infringing another U.S. patent. This bill costs a U.S. patent owner six years of patent protection for asserting his or her patent in another nation’s judicial system.
Engineers and other professionals need to be aware of both the positive and the negative patent legislation before Congress. Their patent rights and America’s innovative future hang in the balance.