Legislative Update – STRONG Patents Act Takes Aim at IPR and PGR

8797259_s (1)With the new Congress firmly seated and various legislative efforts gaining momentum, another effort to reform patent system is taking its share of the spotlight. In early February, the House of Representatives took the first step with Rep. Bob Goodlatte re-introducing the Innovation Act, the identical patent-reform legislation that overwhelmingly passed the House in 2013.

Not to be outdone, a group of 3 senators has proposed its version of patent reform, including taking direct aim at post-grant review proceedings. In a bill sponsored by Sens. Chris Coons, Dick Durbin, and Mazie Hirono, known as the STRONG Patent Act of 2015, significant changes to post-grant proceedings would be made, including:

INTER PARTES REVIEW:

  1. Claim Construction: The standard for construing claims in post grant proceedings would be changed from “Broadest Reasonable Interpretation” to a construction similar to that performed in a district court, pursuant to the Phillips decision; relatedly, if a court had previously construed a claim limitation, the Board must consider that construction;
  2. Motions to Amend: Removes the requirement that only one motion to amend may be filed and states that, “a motion to amend filed by the patent owner shall be granted if the proposed number of substitute claims is reasonable”;
  3. Burden of Proof: In deference to the presumption of validity of section 282(a), the burden of proof would be changed from “preponderance of the evidence” to “clear and convincing evidence” for claims that had previously been issued; for claims that are amended in the proceeding, the preponderance of the evidence would be the standard applied;
  4. Standing: A petition to institute an IPR could not be filed unless the Petitioner had either been sued for infringement or charged with infringement;
  5. Discovery of Real Party in Interest: Would explicitly allow discovery of evidence to identify the real party-in-interest;
  6. Evidence Supporting Patent Owner Preliminary Response: Would allow a Patent Owner to submit the same type of evidence in the preliminary response that a Petitioner can submit in a Petition; additionally, if a reply is allowed to Petitioner in response to the Patent Owner Preliminary Response, then the Patent Owner would have the opportunity to file a sur-reply;
  7. Coordination with Other Proceedings: No IPR can be instituted if the patent is already subject to reissue or reexamination proceedings;
  8. Composition of the Board: Any judge that participates in the decision to institute trial may not participate in the actual “trial.”

POST GRANT REVIEW:

The provisions for PGR are substantially similar to those set forth above, relative to IPR, except that, for standing, the Petitioner must demonstrate a “reasonable possibility” of being sued for infringement or charged with infringement; or that there is a competitive harm related to the validity of the patent.

MISCELLANEOUS PROVISIONS:

Among the other aspects of the proposed STRONG Patents Act, include:

  1. Ex parte reexamination could not be filed more than one year after the requester has been served with a complaint alleging infringement;
  2. Form 18 of the Federal Rules of Civil Procedure is eliminated;
  3. PTO Fee diversion is ended;
  4. Changes the standard for finding willful infringement to a “preponderance of the evidence” standard;
  5. Ensures that, for contributory or induced infringement, it is not a requirement that the steps of the patented process be practiced by a single entity;
  6. Expands the entities that are considered “institutions of higher education” for purposes of being considered a micro entity;
  7. Expands the Patent Pilot Program to address “special issues raised in patent infringement suits against individuals or small business concerns”; and
  8. Making the “pattern or practice of sending written communications that state or represent that the recipients are or may be infringing,” under certain circumstances, an unfair and deceptive practice under the Federal Trade Commission Act.

Each side to the debate has now set forth its opening offer – it will be interesting to watch the negotiations unfold to see if another major patent reform effort will be successful.