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Senate Subcommittee on IP Holds Hearings on SWOT of STRONGER Bill

This bill has been introduced into both houses of Congress in a bipartisan effort to curb the reach of inter partes review (IPR) proceedings and the broad four-factor analysis for injunctive relief set forth by the Supreme Court in eBay v. MercExchange. I originally posted on this bill and referenced other commentators here on May 25, 2019.

Senator Tillis opened the discussion by asserting that the present high standard for obtaining injunctive relief can discourage “patent trolls”, and that IPR can be an efficient way for small businesses to protect themselves from trolls. However he was concerned about the provisions limiting the number of petitions for IPR that a defendant can file, and the need to choose between conventional infringement litigation and the PTAB’s post-grant procedures called for in the bill. The hearing had six witnesses who were pretty much split on whether or not such broad amendments to the AIA were necessary, but almost all of them testified that some reforms were needed.

Generally in favor of STRONGER, were Bradley Ditty representing InterDigital, a “5G Research Firm”, Earl “Eb” Bright, President of Exploramed, a firm that backs start-ups, and Prof. Adam Mossoff of the Anton Scalia Law School (who had earlier testified in the s. 101 Hearings). Mr. Ditty focused on the necessity of bringing PTAB standards of proof and claim interpretation in alignment with those employed by the courts (e.g., clear and convincing and the Phillips standard of claim construction).

Eb Bright argued that start-ups presently cannot obtain injunctions, and Prof. Mossoff agreed. He also asserted that the AIA presently promoted “efficient infringement”, in which an infringer would bear the cost of a damage award as a sort of pseudo-license fee, while working to design a competitive non-infringing product. Eb stated that he felt that the threat of injunction was needed to encourage design arounds. He also observed that he feels that there is an  “extended start-up slump” in which more venture capital is going to late-stage companies.

On the other hand, Prof. Tom Cotter of the University of Minnesota, Dan Lang of Cisco and Josh Landau of CCIA were opposed to reversing eBay, reasoning that “injunction overkill” (Landau) can permit NPE plaintiffs holding just one patent to stop production and sales of a product comprising a large number of unrelated patents (Cotter). Prof. Cotter observed that courts currently grant injunctions about 70% of the time and that courts are applying eBay reasonably. Mr. Landau noted that about 40% of petitions for IPR fail to result in institution. Dan Lang argued that IPR’s were much less expensive than litigation and that the present ability to file multiple challenges to the same patent should not be limited. As Prof. Cotter put it, “One and done is wrong.”

Perhaps this debate can be summarized as the reformers vs. the establishment. In other words, companies that have relatively few patents want to be able to assert them; they want “strong patents”, while companies that hold big patent portfolios want to be able to defend against accusations of infringement without having to live in the district courts. I have written this post from the notes I took while watching the live-streamed hearing and apologize for misspellings and (unintentional) misrepresenting the testimony.

 

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