Q&A with Zachary Oubre
Proposed Innovation Act would target abuse of patent litigation
Q: Two years ago, Congress signed into law the America Invents Act, which drastically changed the federal patent filing system. Now Congress is setting its sights on patent litigation. How so?
A: The “Innovation Act,” HR 3309, is a bipartisan bill sponsored by U.S. Rep. Bob Goodlatte, R-Va., the chairman of the House Judiciary Committee. Introduced on Oct. 23, the act addresses a variety of issues concerning litigation abuse in patent-related suits, a growing concern for American lawmakers.
Q: Why are American lawmakers concerned with patent litigation?
A: Over the last 15 years, patent infringement litigation has increased dramatically. Five thousand patent-related lawsuits were filed in the United States last year alone, an increase of nearly 30 percent from 2012. Many blame “nonpracticing entities” (NPEs) for the increase. NPEs are companies that attempt to collect licensing fees by enforcing patent rights against other businesses; however, NPEs do not manufacture products or supply services based upon the patents in question. Due to the high cost of litigation defense, many businesses are forced to settle these suits, even if there is a low likelihood that the NPE's claims would be successful. According to Boston University, nonpracticing entities cost defending businesses $29 billion in legal and licensing fees in 2011 alone.
Q: How would the Innovation Act change patent litigation?
A: Under current law, a patent-infringement plaintiff may initiate a suit without specifying the allegedly infringing products or even the patent claim believed to be infringed. This current pleading standard leaves defendants guessing about the basic details of the plaintiff's claims until after expensive discovery. The Innovation Act requires plaintiffs to allege in their complaint “each patent” and “each claim” alleged to have been infringed as well as the products and/or services of the defendant that are alleged to be infringing “with detailed specificity” as to how the defendant's products allegedly infringe. Other changes include limited discovery aimed at reducing the cost of litigation; a requirement that plaintiffs disclose to defendants all entities with a “financial interest” in the lawsuit; and a provision that would allow manufacturers and suppliers to step into and defend litigation against their respective customers while the claims against those customers are put “on-hold” until the litigation between the manufacturer or supplier and the plaintiff have ended.
Q: Does the Innovation Act provide anything about attorneys' fees?
A: Yes. The Innovation Act would require courts to award attorneys' fees to the prevailing party in any patent litigation unless the position of the nonprevailing party was “substantially justified.” The Innovation Act also includes language that would allow defendants to bring into the lawsuit a party that financially benefits from the litigation even if they are not named plaintiffs. So, if a business successfully defends against infringement claims and is awarded attorneys' fees as a prevailing party, those fees may be recovered from the nonprevailing plaintiff or the joined interested party.
Q: What does the Innovation Act mean for Oklahoma businesses?
A: If passed, the Innovation Act could reduce the number of patent suits filed in federal court, reducing the likelihood that companies will be sued for alleged patent infringement. The act also should make defending a patent infringement case less expensive and provide defendants the potential award of their attorneys' fees if they decide to litigate rather than settle. The Innovation Act would, however, make it more difficult for patent owners to enforce their rights and creates the risk of an attorney fee award in favor of a defendant for potential plaintiffs.
PAULA BURKES, BUSINESS WRITER