Patent trolls, beware! Patent reform legislation currently pending in both houses of Congress is aimed at fixing what is considered by many as a broken patent system and at reducing the flood of corresponding litigation. Among a plethora of other modifications, the proposed bills would make changes to both the post-grant review (PGR) and the inter partes review (IPR) processes. Three of the more exciting changes are highlighted below.
First, components of both the House’s Innovation Act (H.R. 9) and the Senate’s STRONG Act (S. 632) both contain provisions affecting claim construction during the review process. As recently as February 2015, the Federal Circuit held that, during PGR and IPR, claims were to be given the “broadest reasonable interpretation;” a standard which has been widely used by the Patent and Trademark Office (PTO) in proceedings involving unexpired patents (see In re Cuozzo Speed Technologies, LLC.) However, the pending bills would change that standard of claim construction to mimic that of the federal court system. The bills would require the PTO to construe claims in the same manner as a district court in light of the “ordinary and customary meaning” of each claim. Furthermore, if a district court has construed a claim in a previous action, the PTO must consider that previous claim construction. Both of these changes would favor the patentees during PGR and IPR.
Second, changes proposed by the Senate bill would require the Patent Trial and Appeal Board (PTAB) to apply a “presumption of validity” during the PGR and IPR processes. The bill raises the burden of proof on petitioners to a “clear and convincing evidence” standard on existing claims as opposed to the currently utilized “preponderance of the evidence” standard. The effect of this change will be to reduce patent trolls’ ability to sustain an action against the valid patent owner’s hard-fought claims.
Third, the STRONG Act modifies the standing requirements to bring both PGR and IPR petitions. In regards to PGR, the bill states that a person, or real party in interest to the person, can only bring a petition if they can demonstrate a reasonable possibility of being sued for or being charged with infringement; or alternatively if they can establish a competitive harm regarding the validity of the patent. To petition for IPR, the bill requires the petitioner to have already been sued or charged with infringement such that the petitioner could file for declaratory judgment in a district court. The final coup de grâce to patent trolls’ ability to file for post-issuance proceedings comes in the fact that the Senate bill would now allow respondents to compel discovery of evidence concerning the real party in interest of the petitioner.
With the proposed legislation, Congress has decided to once again enter the arena to combat patent trolls who plague many businesses both small and large. Though not a panacea for all the ailments in the patent system, these bills indicate Congress’ willingness to address the problems and are important first steps in broader reform and overhaul of the broken system.