President Barack Obama has announced a new executive and legislative initiative aimed at curbing patent infringement suits by “patent trolls,” who generate revenue through extortionate litigation, not real innovation.
As the White House press release notes, the proposed legislative agenda would:
| 1. | Increase transparency in patent litigation (and presumably settlement negotiations), by requiring any party sending demand letters, filing an infringement suit or seeking USPTO review of a patent to file updated ownership information and enabling the USPTO or district courts to impose sanctions for non-compliance. |
| 2. | Give trial judges more discretion to award attorneys’ fees to prevailing parties in patent cases as a sanction for abusive litigation (similar to the legal standard that applies in copyright infringement cases). |
| 3. | Expand the USPTO’s transitional program for business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board. |
| 4. | Protect off-the-shelf purchasers by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use. Also, under the initiative, judicial proceedings against such consumers would be stayed when an infringement suit has also been brought against a vendor, retailer or manufacturer. |
| 5. | Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied by the ITC and district courts. |
| 6. | Incentivize public filing of demand letters in a way that makes them accessible and searchable to the public to help curb abusive suits. |
| 7. | Ensure that the ITC has adequate flexibility in hiring qualified ALJs. |
To enhance these proposed new rules, the White House is taking a series of executive actions to increase transparency, tighten functional claiming, empower downstream users and strengthen enforcement.
Learn more about the impact of the President’s proposals and their meaning for your business.