On June 4, 2013, US President Barack Obama announced an initiative that includes five executive actions and seven legislative recommendations to “protect innovators from frivolous litigation and ensure the highest-quality patents in our system.” President Obama recognizes that companies continue to be plagued by patent assertion entities (PAEs), companies that “don’t actually produce anything themselves” and instead “leverage and hijack somebody else’s idea and see if they can extort some money out of them.”
This announcement by the Obama Administration occurs in the context of a range of legislative measures already introduced in Congress related to patent reform. While advancing legislation in the current political climate remains exceptionally challenging given limited Congressional appetite for controversial issues and continued partisan gridlock, the topic of patent protection and PAEs remains a significant public policy issue.
Although these executive actions and legislative recommendations are not expected to completely remedy abusive suits from PAEs, these proposals are an important step in continuing to legislate solutions and encourage dialog about how to resolve these issues. As President Obama takes further action on the executive actions and legislative recommendations, we will provide updates on the progress of these proposals.
The executive actions include the following proposals:
- Require patent applicants and owners to regularly update ownership information when they are involved in proceedings before the U.S. Patent & Trademark Office (USPTO), specifically designating the “ultimate parent entity” in control of the patent or application.
- New training to USPTO Examiners to better scrutinize and improve clarify of functional claims, especially for software applications.
- Protect consumers and other end-users from lawsuits for using a product as intended, make end-users more aware of their rights before entering into litigation or a settlement, and answer common questions about demands of a possible troll.
- Obtain more meaningful data and research on the issues bearing on abusive litigation.
- Strengthen the enforcement process of exclusion order from violation of Section 337 in the International Trade Commission (ITC).
The legislative recommendations mirror some previous Congressional bills (referred to in US Congress Proposes a Litany of Solutions to Patent Troll Suits) and include the following proposals:
- Require a party sending demand letters, filing an infringement suit, or seeking USPTO review of a patent to file updated ownership information at the USPTO to disclose the real party-in-interest.
- Permit more discretion to district courts in awarding attorney’s fees as a sanction for abusive court filings.
- Expand the USPTO’s transitional program for post grant review of covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for such review.
- Provide consumers and businesses with better legal protection against liability for using a product off-the-shelf and for its intended use and stay proceedings against consumers when a suit has been brought against a vendor, retailer, or manufacturer.
- Change the standard for obtaining an injunction in the ITC to reflect the Supreme Court’s four-factor test in eBay v. MercExchange, which is used by district courts.
- Encourage public filing of demand letters to make them publicly accessible and searchable to help curb abusive suits.
- Provide the ITC with more flexibility to hire qualified Administrative Law Judges.