STRONGER Patents—Bad Legislation

Yesterday, the STRONGER Patents Act of 2019 was introduced by Senators Chris Coons and Tom Cotton, along with a House companion bill introduced by Reps. Steve Stivers and Bill Foster.  The bill looks much like the last two times it was introduced [1][2], but there have been a few changes.

What’s New

The title says 2019 instead of 2017.

What’s Old

There’ve been some minor changes, but the majority of the STRONGER Patents Act is a copy of the 2017 edition.

That means that the bill still creates a standing requirement for inter partes reviews (IPRs), incentivizing patent owners to sit and wait until products are developed and profitable before filing their lawsuits and preventing product designers from testing the validity of a patent before making that investment.

The bill still changes the standard of proof in IPRs to clear and convincing evidence–a standard district courts use in deference to the competence of the USPTO.  The USPTO has no need to defer to its own competence—in fact, the multiple technically and legally trained judges composing a PTAB panel are significantly more competent than the single examiner spending an average of 19 hours to examine a patent.

It still defines a real party in interest broadly enough that a stockholder might be a real party in interest and a crowdfunder almost certainly is.  The real party in interest requirement was designed to prevent a company from using control or influence with another company to file an IPR that they wouldn’t have been able to file themselves, something the PTAB already actively polices, and the amended definition of real party in interest goes far beyond that point.

It still requires a separate panel to hear an IPR after a first panel decides to institute, even though that isn’t the way district courts work when they decide threshold issues like motions to dismiss, or the way the Supreme Court works when it decides whether to grant certiorari and then decides the case.  Senator Coons has frequently claimed he wants to harmonize treatment between the PTAB and the courts, but this provision actively contradicts that goal.

And the bill still makes it so that once a patent claim has been challenged once, it can never be challenged again at the PTAB, creating significant incentives for collusive petitions—a very real threat given the multiple attempts by patent owners to use tribal sovereign immunity to shield their petitions, a threat only recently ended.

Senator Coons hasn’t updated the factual findings, either, still claiming that the strategy of filing IPRs to try to short a stock is a threat—even though the one entity that ever tried that strategy failed and quit.

So that’s what’s old.  What’s changed?

What’s Different

There have been a few minor improvements to the 2017 bill—almost entirely made by removing portions of the bill.  The provision on appeal from institution decisions no longer permits interlocutory appeals against institution, though it still provides for a wider range of appeal of institution decisions compared to non-institution decisions, biasing the IPR process even further against challenges to invalid patents.  And the unnecessarily complex and easily abused amendment off-ramp procedure that the 2017 bill proposed is gone.

The 2019 bill also eliminates some of the more significant bad ideas that were part of the 2017 edition.  The ill-conceived provision that would have incentivized sending research and development overseas has been removed.  And the companion provision that would have eliminated the knowledge element of induced infringement is also gone, preserving a century of patent precedent and making sure that you aren’t liable for inducing infringement of a cellular patent just because you texted someone and it caused their phone to operate in an infringing way.

But even the improvements are just eliminating harmful changes from the bill—they don’t actively improve the patent system and they don’t offset the harms to innovation that the bill would create.  The STRONGER Patents Act of 2019 is not a bill that anyone should support if they care about U.S. innovation—a fire that only destroys your kitchen is better than a fire that burns down your entire house, but neither one is desirable.

Over the past 7 years, IPR has provided a successful tool to eliminate patents that shouldn’t have been granted, resulting in lower-cost, less-frequent patent litigation, saving billions of dollars that can be spent on actual research and development instead of lawyers.  And the reduction in litigation has come almost entirely from non-practicing entities, not the kind of productive operating companies that perform research and development.

Why would anyone want a bill that tries so hard to eliminate a program that’s eliminated patents that never should have issued, reduced the amount of troll litigation, and even made litigation less expensive in the process?

Joshua Landau



Follow @PatentJosh on Twitter.