United States: 4 Off-The-Radar Things You Need To Know About Proposed Patent Reforms

Current patent reform efforts in Congress center around two pieces of legislation. One, pending in the House of Representatives is sponsored by Rep. Bob Goodlatte (R-VA) (H.R. 9, known as the "Innovation Act"). The other is pending in the Senate and is sponsored by Sen. Chris Coons (D-DE) (S.632, the Support Technology and Research for Our Nation's Growth or "STRONG Patent Act"). Each calls for reform above and beyond that brought by the last major patent reform effort, the America Invents Act, which passed not quite five years ago. And each attempts to address concerns about so-called patent assertion entities or patent trolls.

Many of the provisions in the bills are widely known and have been even more widely debated. Fee shifting provisions, heightened pleadings requirements, ownership transparency, and demand letter reform are all areas that have gotten much attention and discussion. But there are four other areas of the proposed reform that are less well known, but perhaps of equal or greater importance.

1) Ending fee diversion (STRONG Patent Act only)

All of the money needed to operate the U.S. Patent and Trademark Office comes from the fees the Office charges patent and trademark applicants (and others interacting with the Office). These fees are collected by the Office and are then turned over to Congress, which then allocates them back to the Office, as needed. But not all of the fees collected by the Office are allocated back to the Office by Congress. Estimates vary, but it is thought that, since 1999, over $1 billion of Office fee revenue has been withheld from the Office and directed by Congress to other government programs and operations. Without the diverted fee income, the Office makes due, but with fewer examiners, less technology, and other improvements that would otherwise have been available to hasten, streamline, and improve patent and trademark examination.

The Senate's STRONG Patent Act includes provisions to end this fee diversion. Were it to pass, this change would greatly impact the Office and the services it offers. The Office would be free to hire more examiners and to keep the more skilled examiners it already employs. The Office could potentially invest in additional technology to allow for even more efficient patent and trademark examinations — leading to faster, better examinations for all applicants.

While not as glitzy other provisions, allowing the Patent and Trademark Office to keep all of its fee income would likely have a larger effect on far more people than the other proposed changes. But ending fee diversion has been discussed — and dropped — before. Only the Senate's STRONG Patent Act calls for it this time — and the Democrats' STRONG Act is the less likely of the two pending bills to pass. Still, with the provision on the table, this remains a possible positive outcome.

2) PGR reform (Both STRONG Patent Act and Innovation Act)

The America Invents Act expanded the administrative review possibilities offered by the Office for reviewing issued U.S. patents. That expansion has led to an explosion in post-grant review and inter partes review filings. It is thus not unexpected that the latest round of patent reform would include some tweaks to these post-grant review proceedings.

First, both the STRONG Patent Act and the Innovation Act call for changing the claim construction standard applied by the Office in reviewing patent claims in all post-grant review and inter partes review proceedings. The change would alter the standard used in claim construction from the "broadest reasonable construction" standard to a standard that construes a patent claim "in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent." This would undoubtedly result in the Office having to review more file histories and consider more evidence about the understanding of one of ordinary skill in the art, and would likely result in narrower constructions of patent claims — leading to more patent claims surviving these reviews.

Second, the STRONG Patent Act changes the burden of proof in the Office's administrative reviews by incorporating a presumption of validity. Under the STRONG Act's provisions, those seeking review would no longer succeed simply by showing the unpatentability of a claim by the preponderance of the evidence. Instead, because of a presumption of validity that would accompany the issued claims during review, those seeking reviews would need to show the unpatentability of the claims by the higher "clear and convincing" standard applied by the Courts. This too is likely to lead to an increase in the number of patent claims surviving these reviews. 

Third, the Innovation Act also calls for changing the estoppel provisions applicable to post-grant reviews. Currently, anyone who brings a post-grant review is barred from raising, in a later civil action, any issues that they raised or could have raised in connection with the post-grant review. The Innovation Act changes would remove the underlined language and apply estoppel only to those issues actually raised in the post-grant review proceeding. This provision may impact the availability of stays in federal litigation.

With the passage of the AIA, courts recognized the efficiency of allowing the Office to review its patents and decide issues of invalidity for the court. The estoppel provisions allowed the courts to delegate the invalidity question to the Office, as any and all issues that could have been raised were going to be estopped anyway. But if a party may raise only some issues in a review and remain free to raise other issues in court, there is little incentive for courts to stay litigation. This may drastically lower the appeal of administrative reviews as a whole — which the AIA tried so hard to encourage.

3) Customer suit exception (Innovation Act only)

A common tactic of patent assertion entities is to sue customers and purchasers of allegedly infringing technology, instead of the manufacturers or sellers of that technology. Using this strategy, patent assertion entities can collect numerous settlement payments (albeit smaller than could possibly be obtained from a large manufacturer) and avoid having to defend their patents from attacks brought by sophisticated manufacturers. In response, courts will stay suits filed earlier against customers in favor of later-filed suits filed against (or by) manufacturers of the accused products. But this so-called customer-suit exception is not uniformly applied. Accordingly, the Innovation Act seeks to implement this policy as law.

One concern with this change, however, is the broad way the law defines "customer." Conceivably, the law could be used by large companies to stay suits when the large companies assemble accused products made from components even where the components are purchased from small manufacturers. This could shift the burden of litigation from large savvy companies to small, resource-limited companies. More troubling, the law could leave patent holders with no infringer at all to pursue where infringing manufacturers are located outside the U.S. or lack the assets to answer for infringement.

4) Big Pharma opt out (Innovation Act only)

Many of the proposed changes found in the Innovation Act are inapplicable to cases brought by pharmaceutical companies. Under the Innovation Act, such cases would typically not need to comply with the proposed heightened pleading standard, patent ownership disclosure requirements, nor the customer suit exception provisions.

While this is likely of little import in the short term — as the patent troll cases targeted by the litigation rarely if ever involve pharmaceutical components — it does raise the question of whether Congress intends to create two patent systems: one for pharmaceutical companies and one for everyone else. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.