The chairman of the House Judiciary Committee told Human Events the Innovation Act, H.R. 3309, working its way through Congress, will encourage creativity and increased investment in new technologies.
The main points are that the Innovation Act targets abusive patent litigation and protects the patent system, because it does not diminish or devalue patent rights in any way, said Rep. Robert W. Goodlatte (R.-Va.), who leads the House panel.
The Virginia representative grew up in Springfield, Mass., a city in the heart of the Connecticut River Valley, an area that for decades was a hotbed of technical innovation and cross-pollination of ideas among industries such as: firearms, motorcycles and bicycles, watches and clocks, typewriters, specialty metals and even aircraft.
The Innovation Act seeks to foster that same atmosphere in Silicon Valley and in other parts of the country, he said.
The bill passed Goodlatte???s committee Nov. 20, and is now with the chamber???s Rules Committee before moving to the House floor for an up or down vote.
Every Republican in the committee present for the vote voted for it and 12 out of 17 Democrats, the congressman said. ???So, it was very bipartisan.???
Goodlatte said some people may try to assert that the bill weakens patent rights, but it is designed to protect good patents and make it harder to assert what he calls a bad patent.
In today???s patent law regime, patent holders are vulnerable to demand letters and frivolous lawsuits that not only distract patent holders from leveraging their intellectual property, but scare off investors, he said.
The bill also creates a fee-burden for frivolous plaintiffs, he said. It is not a pure loser-pays system, but if the legislation passes losing plaintiffs could be assessed court costs and other fees.
The classic patent troll demand letter is an arbitrage between the cost of the letter and filing of a lawsuit compared to the ever-increasing cost of defending one???s patent, he said. The shifting of fees closes the gap between the cost of defending a patent and paying the troller to go away.
The reforms in the Innovation Act also make it easier to defend high-quality patents, which encourages investment and incentivizes creativity, he said.
The chairman said the Innovation Act is the natural next step after the 2011 America Invents Act.
???The problem is that up until the American Invents Act,??? he said. ???There is a common belief that a lot of lower quality patents, patents that weren???t really novel ideas, were produced in the last, say, 20 years.???
Once the Patent and Trademark Office grants a patent for a low-quality to an entity, just as with other patents, the holder can then demand compensation, he said.
But, the problem is when the thing patented is not a true unique innovation, he said.
???Nevertheless, patents were issued for things like having a shopping cart on your website, so when you???re looking at things you can put things into the cart, so that???s not really a novel idea,??? he said.
Reverse auctions are not a novel idea, yet the PTO granted Priceline.com a patent for reverse auctions, he said.
???That???s part of it, but there???s also just a lot of patents and a lot of very obscure things and if they???re obscure and they???re new and novel, that???s great–but if they???re obscure just because they are already in common thought and someone just thought: ???I???ll just get one because it???s a new way of doing it because it???s on the Internet,??? that???s a problem.???
There was language in the Innovation Act that expanded the Section 18 of the America Invents Act. Because of Wall Street concerns, when the AIA changed the patent system in the United States from a first-to-invent system to a first-to-file system, Congress created in Section 18 a special process for challenging financial services process patents, beyond the routine nine-month window until 2020.
The new Section 18 process would expand the challenge scope to any product, service or enterprise involving data processing and would have eliminated the 2020 sunset, in effect creating a new permanent patent administrative court.
Working with Rep. Douglas A. Collins (R.-Ga.) and Rep. Suzan K. Delbene (D.-Wash.), Goodlatte, using his privilege as the bill???s manager, took out the changes to Section 18 before the bill went before Judiciary.
The chairman said he supported the Collins amendment, but he cannot guarantee that there will not be future attempts to expand Section 18, especially given the interests of the technology community in having the use of the process for themselves.