On April 14, 2011, the House Judiciary Committee voted 32-3 to send an amended version of H.R. 1249 to the floor for debate. One of the changes to the Bill coming out of the Judiciary Committee was the inclusion of Section 34, which orders the Comptroller of the United States to “conduct a study of the consequences of litigation by nonpracticing entities.” The study must include:
- The annual volume of litigation described in subsection (a) over the 20-year period ending on the date of the enactment of this Act.
- The volume of cases comprising such litigation that are found to be without merit after judicial review.
- The impacts of such litigation on the time required to resolve patent claims.
- The estimated costs, including the estimated cost of defense, associated with such litigation for patent holders, patent licensors, patent licensees, and inventors, and for users of alternate or competing innovations.
- The economic impact of such litigation on the economy of the United States, including the impact on inventors, job creation, employers, employees, and consumers.
- The benefit to commerce, if any, supplied by non-practicing entities or patent assertion entities that prosecute such litigation.
Of the six provisions, only the last even accounts for the possibility that litigation by nonpracticing entities benefits the economy.
Originally, § 34 was to require the Comptroller to present recommendations for any change to laws and regulations to minimize, “the negative impact of abusive patent litigation on the patent process.”
During the markup, Congressman Mel Watt successfully changed this language to “any negative impact of patent litigation that was subject of such study.” The amended act passed the Judiciary Committee by a vote of 32 to 3.
While all that § 34 requires is a study, such overwhelming passage should concern nonpracticing entities. Prior patent reform contained much more sweeping changes to litigation, and the report that comes out of § 34 could be the catalyst for the next round of reform. Holders of patents that are not currently in commerce should circle September 16, 2012 on their calendars, and read the GAO study carefully. If and when the GAO requests input on the § 34 study, nonpracticing entities, and those who are being targeted, should not hesitate to contribute.