Stakeholders in patent litigation experienced mixed emotions yesterday, as Senate Judiciary Committee Chairman Patrick Leahy announced that he was removing his Patent Transparency and Improvements Act from the committee's agenda. For several months now, anti-patent-troll reform has been at the top of most state and federal legislative priorities.1 So far, 12 states—including Tennessee—have passed anti-patent-troll laws, with similar laws under consideration in at least 14 other states. However, Congress has not yet reached a consensus on how best to identify "a troll" and, once found, what to do about it. As is often the case, the devil is proving to be in the details. Notwithstanding considerable pressure for action, Senator Leahy sensed a lack of bipartisan support as many stakeholders expressed significant concerns about unintended consequences of the pending federal legislation.
Senator Leahy's committee was also considering Representative Bob Goodlatte's Innovation Act, which passed the U.S. House of Representatives with broad bipartisan support in December 2013.2 Most observers expected that the two bills would be merged through a conference committee.
The various federal legislative proposals this session in both chambers of Congress have addressed pleading standards, attorneys' fees, joinder, pre-Markman discovery, electronic discovery, bad faith demand letters, transparency of patent ownership, stays of customer suits pending resolution of manufacturer suits, and other topics. Some stakeholders were concerned that the demand letter provisions would expose legitimate businesses to increased litigation and liability for taking the routine and prudent step of sending a demand letter before filing a complaint. Another controversial provision related to the presumptions and burdens for attorneys' fees in patent litigation. The need for such fee-shifting legislation, however, may have been tempered by the U.S. Supreme Court's recent rulings in Octane Fitness3 and Highmark,4 which we discussed in a previous Alert.5 In those cases, the High Court eased the standard for district courts to award attorneys' fees in patent litigation and increased the appellate deference to district court fee awards.
Although the Senate may yet revive one or more patent reform bills, yesterday's announcement most likely sounded the death knell for all patent reform efforts in this legislative session. In light of the risk of unintended consequences, especially to universities, small businesses, and individual inventors, many stakeholders support further Congressional debate on patent reform. In the absence of meaningful reform, however, patent infringement filings and costs likely will continue to trend upward.
We will continue to provide updates on patent reform efforts in all three branches of the federal government and in the state governments, as they develop. If you have any questions about the content of this alert, please contact one of the authors listed above or any member of our Intellectual Property and Technology team.