U.S. SENATE COMMITTEE LOOKS INTO ABUSIVE PATENT LITIGATION
On March 18 the U.S. Senate Judiciary Committee held a hearing on “The Impact of Abusive Patent Litigation Practices on the American Economy.” Witnesses BRAD POWERS, Kinze Mfg., Inc., STEVEN ANDERSON, Culver Franchising System, Inc., and KRISH GUPTA, EMC Corporation spoke in strong support of legislation to curb abusive litigation. Each said his company has spent large sums dealing with demand letters and/or frivolous lawsuits brought by patent assertion entities, money that otherwise would have funded innovation or other business growth opportunities. While Powers supported a heightened pleading standard for patent infringement, discovery reforms, and requiring transparency, he urged caution regarding fee shifting. Anderson urged demand letter transparency, a heightened pleading standard, and legislation providing for stays of litigation against customers while litigation proceeded against the manufacturer. Gupta favored a strong and balanced patent system and said that the need for reform was critical. He supported attorney fee shifting, a heightened pleading standard, and discovery reforms.
HANS SAUER, Biotechnology Industry Organization and MICHAEL CRUM, Iowa State University, supported some legislation but urged caution on a number of issues. Sauer said investment in small biotechnology companies depended on predictable, enforceable patents. BIO supported S. 632, introduced by CHRIS COONS (D-Del.), which addressed a number of issues related to USPTO post-grant proceedings including “reverse trolling.” Crum said that while abuses should be addressed, legislative proposals should be carefully reviewed to avoid unintended consequences. Fee shifting, mandatory joinder, a heightened pleading standard, and discovery reforms would be problems for universities.
Several members of the committee, including Chairman CHUCK GRASSLEY (R-Iowa), Ranking Member PATRICK LEAHY (D-Vt.) and Sens. JOHN CORNYN (R-Texas) and CHARLES SCHUMER (D-N.Y.) spoke about the need for comprehensive reform. Grassley said recent Supreme Court cases, FTC actions, and USPTO post-grant proceedings had changed the landscape since last Congress, but he still believes legislation is needed. Leahy said common ground on a comprehensive bill could be reached if stakeholders worked together. However, Senator DICK DURBIN (D-Ill.) said he was concerned about returning to patent legislation so soon after the enactment of the America Invents Act and that Congress should be careful not to undermine property rights enshrined in the Constitution.
Witnesses’ written statements and a video of the hearing are on the committee website.
