On Wednesday, November 20, the House Judiciary Committee held a mark-up of H.R. 3309, the Innovation Act, which Chairman Bob Goodlatte (R-VA) introduced on October 23.  (A “mark-up” is a committee hearing in which members debate, amend, and vote on pending legislation.)  The bill seeks to amend the Leahy-Smith America Invents Act (AIA) to improve the patent litigation system, specifically by preventing abuses.  By the end of the long day, Chairman Goodlatte’s manager’s amendment with five other amendments were passed out of committee.  You can find them, along with the record of the entire day’s proceedings, here.  http://judiciary.house.gov/hearings/Markups%202013/mark_11202013.html The bill is expected on the House floor sometime in December.

On the Senate side, on Monday, November 18, Senate Judiciary Committee Chairman Patrick Leahy (D-VT) introduced The Patent Transparency and Improvements Act of 2013 (S. 1720).  Among some key differences with the House bill, the Senate bill does not contain a fee-shifting provision or the more prescriptive pleading requirements.  You can find the Senate bill here.  http://www.leahy.senate.gov/download/patent-transparency-and-improvements-act-of-2013  The Senate committee has not yet scheduled a hearing on its bill.

At Conversant, we believe patent owners should act knowledgeably, responsibly, rigorously and with integrity.  Our patent licensing practices adhere to these values, and we are proud to be known for our industrious, comprehensive, fair, and detail-oriented approach.  While patent stakeholders may disagree about the true scope of the litigation-abuse problem, if the public starts to believe that frivolous patent litigation and associated behavior is a major problem, then that itself is a serious problem that needs to be dealt with by all of us who are invested in maintaining and improving a healthy patent system.

To that end, we have issued an open letter to The Honorable Bob Goodlatte, Chairman of the Committee on the Judiciary for the U.S. House of Representatives, in response to the proposed bipartisan Innovation Act (H.R. 3309). We indicated to Chairman Goodlatte that we appreciate his key principle that any patent-reform legislation should focus on abusive behavior, not specific business models or companies.  Conversant also agrees entirely with the other key principles in the bill, which Goodlatte recently restated during the Judiciary Committee’s October 29 hearing:

The Innovation Act contains needed reforms . . . , while keeping in mind several key principles, including targeting abusive behavior rather than specific entities, preserving valid patent enforcement tools, preserving patent property rights, promoting invention by independents and small businesses, and strengthening the overall patent system.

Consistent with these principles and our own practices, there are provisions in the bill that Conversant is prepared to support.  For example, we can support a bill that includes provisions for heightened pleading standards, because a patentee should be prepared to document evidence of use of its patents.  We support greater transparency concerning the real parties in interest to litigation, because a patent’s true, direct ownership should always be disclosed.  And we welcome the consideration of balanced fee shifting in patent cases to encourage parties – both plaintiffs and defendants – to pursue only meritorious claims, because both parties should act ethically and responsibly, and obstructionist, irresponsible, or unreasonable behavior by either party should have consequences for that party.  But those provisions should be crafted in such a way that preserves an independent judiciary and are not overly burdensome to all patent owners.

On the other hand, there are other provisions that we ask be reconsidered as they exist in the bill.  For example, reducing the cost and increasing the efficiency of patent litigation is a laudable goal for all stakeholders, but we are concerned that the bill’s provisions to always stay certain discovery pending claim construction and to direct specific case-management procedures would encroach on an independent judiciary and lead to unjust results in many cases.  In practice, these provisions, as well as the broad mandatory “covered customer” stay provision and the proposed expansion of the covered-business-method program, each could make patent litigation more protracted, expensive, and burdensome regardless of the patentee’s identity and business model.

What are your opinions of Chairman Goodlatte’s proposed bill? Share them in the comments below.

The release of Conversant’s principles for ethical behavior in the patent licensing industry is a sign of just how far the industry has come in recent years.

For years, patent licensing firms have studiously avoided any discussion of “patent trolls” and the harm they cause to small businesses. Most licensing firms refused to even use the term “patent troll” in their communications, fearing that it would only give ammunition to those who wished to weaken patent rights, especially for non-practicing entities.

So, with heads stuck firmly in the sand, most licensing companies hoped that the whole patent troll issue would eventually blow over.

It didn’t. It only got worse, because the patent troll problem got worse. With some trolls now sending out demand letters to hundreds of small businesses across multiple industries, businesses are screaming for action, and Congress is poised to provide it.

But will Congress target only the abusive patent litigants in the industry, or the whole industry itself — including the majority of responsible patent licensing companies?

That remains to be seen. But one thing is clear: only by doing our part to curtail abusive practices in our own industry do we have a chance of ensuring that legislative action focuses only on the few who abuse the patent system rather than the majority who participate in it responsibly to the benefit of our entire economy.

We are not the first industry to face this challenge.

The electronics industry has a code of conduct for worker safety and environmental protection. The insurance industry has a code of conduct to prevent fraud and consumer abuse. Even the marketing industry has a Statement of Ethics that seeks to prevent misrepresentation and unfair or deceptive practices.

Where abuses exist, it’s up to responsible industry leaders to condemn such behaviors and help to end them. Because if industry doesn’t act, government eventually will. You can bet on it.

Conversant has started the ball rolling with its 10-point statement on patent licensing principles. Now it’s time to hear what other responsible players in the industry think.

Last week, Adam Mossof, Professor of Law at George Mason University School of Law, and Senior Scholar at the Center for the Protection of Intellectual Property, testified before the Senate Committee on Commerce, Science, and Transportation Subcommittee on Consumer Protection, Product Safety, and Insurance.

Here is a link to Professor Mossof’s written testimony about patented innovation and the impact that licensing and threatened litigation have on our innovation-driven economy.

http://www.commerce.senate.gov/public/?a=Files.Serve&File_id=c5cc328a-af61-4f12-bea7-e2ae6fb42ce3

Let’s discuss these important issues – submit your comments below.

The Innovation Alliance is launching an important public awareness campaign today that will include features in major media outlets. The campaign, called Who’s Trolling Who, responds to the ‘troll narrative’ that paints patents and patent holders broadly as a drag on the U.S. economy.

The campaign includes a website – www.savetheinventor.com – that will share the stories of inventors who could see their livelihoods, their futures, and the future of American innovation threatened by a weakening of the patent system. The Alliance highlights the misuse of the term “patent troll” by technology incumbents and other large corporations who are using fringe abuses of the patent system to push for a much broader weakening of the entire system.

“While highlighting the behavior of the relatively few patent holders who game the litigation system in patent cases for their own gain, they wilfully ignore the vast benefits that patents and the patent system have delivered to the U.S. economy throughout American history,” says Brian Pomper, Executive Director of the Innovation Alliance. “By doing so, they are attempting to seed public opinion in favor of any measure to combat the ‘patent trolls,’ irrespective of whether it would weaken patent rights for everyone, undermining the foundation of the patent system and ultimately the U.S. economy.”

The Innovation Alliance represents innovators, patent owners and stakeholders from a diverse range of industries that believe in the critical importance of maintaining a strong patent system that supports innovative enterprises of all sizes.