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.