United States: A Sign Of Targeted Patent Reform In Congress?

Congress tried hard at patent reform in its past two terms, the 113th (2013-2014) and the 114th (2015-2016). A total of 22 bills were introduced. Momentum was especially strong from late 2013 to early 2015, when the well-publicized Innovation Act was introduced twice. The White House urged reform, as did some justices on the U.S. Supreme Court and many members of Congress. At the time, patent reform seemed inevitable, and many thought that legislation aiming to address perceived problems with the U.S. patent system would pass. But ultimately, no bills became law. Now, three months into the 115th congressional term, no patent bill has been proposed yet, but some legislation, although not specifically targeted at patents, hints at what might come next.

Strong Start with Overarching Reform

Congress' most recent attempt at patent reform started in early 2015, at the beginning of the 114th congressional term. By April 2015, members of the House and the Senate had collectively introduced six bills on patent reform, which included the Innovation Act (H.R. 9) and its companion bill, the Protecting American Talent and Entrepreneurship (PATENT) Act (S. 1137).1

The Innovation Act was originally introduced by Rep. Bob Goodlatte, R-Va., in October 2013, in the 113th congressional term, and advanced as "the solution to the problem of abusive patent litigation."2 It swiftly passed the House in December 2013, but its Senate counterpart at the time stalled and died. When the Innovation Act was reintroduced in 2015, there was great optimism that the bill would pass, with a Republican-majority House and Senate.

The Innovation Act and its subsequent counterpart, the PATENT Act, were overarching bills that aimed to curb so-called "abusive NPE [nonpracticing entity] litigation practices" through various means. For example, both bills would require not only an identification of each patent and claim allegedly infringed, but also an element-by-element analysis of how the accused instrumentality meets all the claim limitations.

The Innovation Act demanded further pleading specificity, such as a description of the authority of the plaintiff to assert the patent and a list of complaints filed that asserted the patent., The Innovation Act also required plaintiffs, upon filing a complaint for infringement, to provide "initial disclosures," which include an identification of the assignee of the patent, any entity with a right to sublicense or enforce the patent, and the ultimate parent entity.

In addition, the Innovation Act would make fee-shifting the default rule and always award the prevailing party reasonable fees and expenses, unless the nonprevailing party's position and conduct were "reasonably justified" or "special circumstances make an award unjust." The PATENT Act, on the other hand, did not go so far as making fee-shifting the default, but it required a district court to determine, upon motion, whether a nonprevailing party's position was "objectively reasonable in law and fact" and whether its conduct was "objectively reasonable."

Also, for inter partes review and post-grant review, both bills would change the claim construction standards from "broadest reasonable interpretation" to "ordinary and customary meaning" and would require that Patent Trial and Appeal Board judges consider claim constructions by district courts.

Losing Steam Due to Competing Interests

The Innovation Act and the PATENT Act were marked up and approved in June 2015 by the House and the Senate Judiciary Committees. But, in July 2015, members of Congress from both parties strongly voiced opposition to the two bills.3 Other interest groups similarly voiced their dissatisfaction and opposed the bills, and thus, neither bill was ever put to a floor vote.

In the aggregate, the Innovation Act and the PATENT Act favor patent defendants. The groups supporting and opposing the bills thus fell into somewhat predictable camps. Technology companies that have largely been the target of NPE litigation generally supported the legislation, while independent inventors, startups, and universities—who have concerns about legitimate patent enforcement—generally opposed the bills. But, while the Innovation Act and the PATENT Act drew support from the government and different industries, a closer look at the supporters shows that they welcome the legislation for different reasons.

For example, according to opinion articles in the press, many technology companies have been targets of abusive NPE patent litigation, and unsurprisingly, they supported the Innovation and PATENT Acts, sharing U.S. Patent and Trademark Office Director Michelle Lee's belief that heightened pleading standards and fee shifting would help curb the use of baseless and exploitative NPE cases.4

On the other hand, those in the pharmaceutical and biotechnology industry generally supported the bills for a wholly different reason—reforming post-grant proceedings. Starting in 2015, some companies in the industry became targets of arguably abusive post-grant proceedings filed by third parties proactively challenging patents for questionable reasons, including manipulating market conditions by casting doubt over the intellectual property of market participants. As a result, the industry began pushing for amendments to the bills that would change the evidentiary and pleading rules for post-grant proceedings.5 Such amendments were not well-received by those in the technology industry frequently targeted by NPEs, because the amendments would make it more difficult to challenge questionable patents, especially those enforced by NPEs.

In contrast, those opposed to the overarching reform seem more unified. The many critics of the Innovation and PATENT Acts included independent inventors, startups, venture-capital associations, and universities. As voiced by members of Congress representing these opponents, one of the biggest problems with the bills was their failure to effectively distinguish well-meaning inventors, startups and universities from "abusive NPEs."6 For instance, the proposed heightened pleading standards and fee-shifting provisions would raise enforcement costs, potentially harming independent inventors and startups without the resources of established technology companies. Many universities also feared that their legitimate activities in enforcing their educationally obtained technology rights will be conflated with abusive NPE tactics under the proposed fee-shifting provisions.

Targeted Reform

Given these competing interests by numerous parties, overarching patent reform became almost impossible. Thus, instead of sweeping reforms, which often brought uncertainty and unintended consequences, narrow carve-outs where there was clear consensus seemed more practical. In beginning of the 114th congressional terms, several "small-fix" bills were introduced—the Innovation Protection Act (H.R. 1832), the Demand Letter Transparency (DLT) Act (H.R. 1896), the Targeting Rogue and Opaque Letters (TROL) Act (H.R. 2045), and the Support Technology and Research for Our Nation's Growth (STRONG) Patents Act (S. 632).7

The Innovation Protection Act was narrowly tailored to protect the resources of the patent system by ending fee diversion from the USPTO. The DLT and TROL Acts both tried to crack down on "abusive use" of demand letters, and both included provisions enabling courts to impose sanctions or reduced damages on parties improperly sending demand letters. Failure to comply with the TROL Act could also subject distributors of improper letters to penalties by the Federal Trade Commission. The STRONG Patents Act, in contrast, sought to "strengthen patents" by making them harder to invalidate through post-grant proceedings.

After all-encompassing reforms listed above gradually lost steam, more targeted bills emerged in 2016. The Venue Equity and Non-Uniformity Elimination (VENUE) Act (S. 2733) sought to limit the forums where plaintiffs may bring suit, and the Trade Protection Not Troll Protection (TPTP) Act (H.R. 4829) aimed to prevent most NPEs from asserting patent infringement in the U.S. International Trade Commission.8

What Now in the 115th Congress?

The competing interests that stalled overarching patent reform still exist, and with a litany of other priorities, the 115th Congress has been and likely will stay preoccupied by issues at the top of President Donald Trump's agenda, such as trade, immigration, health care and taxes.9 Thus, targeted reform may remain the most pragmatic approach going forward. Tellingly, while Rep. Goodlatte has pledged to keep pursuing patent reform, he has not yet mentioned any overarching bill like his Innovation Act from the last two terms.10 Instead, he stated that "the House Judiciary Committee plans to reform the litigation system by seeking to reduce frivolous lawsuits, making it harder for trial lawyers to game the system, and improving protections for consumers and small businesses."11

This focus is shown in the first bill in this congressional term that may have an effect on patent litigation, even though the bill does not specifically target patent litigation. The Lawsuit Abuse Reduction Act of 2017 (H.R. 720), co-sponsored by Rep. Goodlatte and passed by the House in early March, would change Rule 11 of the Federal Rules of Civil Procedure to make court-imposed sanctions mandatory when a party makes a frivolous claim. Under the current discretionary standard, if a court determines that Rule 11(b)—which sets forth requirements on representations made to the court and minimum standards any lawsuit must satisfy—has been violated, it "may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation."12 The bill would also remove Rule 11's current "safe harbor" provision, which allows parties or attorneys an opportunity to avoid sanctions by curing the violation within 21 days. The bill sets a baseline sanction of reasonable expenses incurred as a "direct result" of the violation. In patent cases, the baseline likely includes at least the expenses of preparing the motion for sanctions, but "direct result" could mean the entire case, if the infringement allegations on which the complaint is based are truly baseless.

However, these seemingly strong provisions may have limited real-world effects. For the court to impose sanctions, it would still need to find a violation of Rule 11(b) in the first place. The bill would not change the standard of what constitutes a violation. By some measures, less than 1 percent of patent cases involve Rule 11 motions,13 so unless aggrieved parties become more willing to bring such motions under the proposed Rule 11, its effect on patent litigation may be limited. Anecdotally, those accused of Rule 11 violations in patent cases under the safe harbor provision rarely amend their complaint or withdraw offending motions, so removing the provision is not expected to have significant impact either.

Also, while the bill has passed the House, it could still face significant opposition in the Senate. Its provisions are similar to those in an earlier version of Rule 11 that was in effect from 1983 to 1993, when sanctions were nondiscretionary. Opponents of the bill have argued that it would reopen the door to abuses seen under the earlier Rule 11, such as preventing civil rights lawsuits and a possible chilling effect on indigent or small plaintiffs.

Regardless of the fate of the Lawsuit Abuse Reduction Act, it shows a clear sign that after learning that overarching patent reform cannot be easily achieved, legislators are now pursuing targeted patent reform or general litigation reform that may have disparate effects on patent cases. Comprehensive patent reform, especially in view of the sweeping changes brought about by the American Invents Act about five years ago, proved to be too much too soon, and individual courts are using existing tools to address concerns over so-called abusive practices that Congress sought to remedy.14


1 For a detailed discussion of these bills, see A Review Of Patent Bills In The 114th Congress, Lionel Lavenue et al., Law360 http://www.law360.com/articles/664670/a-review-of-patent-bills-in-the-114th-congress).

Press Release: Goodlatte, Defazio, Issa, Nadler, Smith, Lofgren, Eshoo Introduce Patent Litigation Reform Bill, (Feb. 5, 2015) (http://judiciary.house.gov/index.cfm/2015/2/goodlatte-defazio-issa-nadler-smith-lofgren-eshoo-introduce-patent-litigation-reform-bill
(quoting Representative Eshoo)).

3 Steve Brachmann, Innovation Act delayed in House amid Bipartisan Bicameral Disapproval, IPWatchdog (July 15, 2015) (http://www.ipwatchdog.com/2015/07/15/innovation-act-delayed-in-house-amid-bipartisan-bicameral-disapproval/id=59858/).

4 Hearing Before the House Judiciary Committee, No. 114-20 (Apr. 14, 2015) (http://judiciary.house.gov/_cache/files/8e33d461-7e7c-49db-ad8f-b623e424485e/114-20-94184.pdf). 

5 Jeff John Roberts, Patent reform inches onwards but poison pill could kill it, Fortune (June 5, 2015) (http://fortune.com/2015/06/05/patent-reform-pharma/).

6 Steve Brachmann, Innovation Act delayed in House amid Bipartisan Bicameral Disapproval, IPWatchdog (July 15, 2015) (http://www.ipwatchdog.com/2015/07/15/innovation-act-delayed-in-house-amid-bipartisan-bicameral-disapproval/id=59858/).

7 For a detailed discussion of these bills, see A Review Of Patent Bills In The 114th Congress, Lionel Lavenue et al., Law360 (http://www.law360.com/articles/664670/a-review-of-patent-bills-in-the-114th-congress).

8 For a detailed discussion of these two bills, see Patent Reform Beyond The Innovation Act: The VENUE Act, Lionel Lavenue et al., Law360 (http://www.law360.com/articles/788794/patent-reform-beyond-the-innovation-act-the-venue-act); Patent Reform Beyond The Innovation Act: The TPTP Act, Lionel Lavenue et al., Law360 http://www.law360.com/articles/788810/patent-reform-beyond-the-innovation-act-the-tptp-act).

9 See Innovate Bigly?—Patent Reform Under @realDonaldTrump, Lionel Lavenue et al., Law360(https://www.law360.com/ip/articles/865950/innovate-bigly-patent-reform-under-realdonaldtrump).

10 Chairman Goodlatte Announces Agenda for 115th Congress, House Judiciary Committee Press Release (https://judiciary.house.gov/press-release/goodlatte-announces-agenda-115th-congress/).

11 Chairman Goodlatte Announces Agenda for 115th Congress, House Judiciary Committee Press Release (https://judiciary.house.gov/press-release/goodlatte-announces-agenda-115th-congress/).

12 Fed. R. Civ. P. 11(c)(1) (emphasis added).

13 Why There Is No Frivolous Patent Lawsuit Crisis, Jaime A. Siegel et al., Law360 (https://www.law360.com/articles/539922/why-there-is-no-frivolous-patent-lawsuit-crisis).

14 See De Facto Patent Reform in the Eastern District of Texas, Lionel Lavenue et al., Law360 (https://www.law360.com/articles/750017/de-facto-patent-reform-in-the-eastern-district-of-texas).

Originally published in Law360.

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.

Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions