In my last blog post we began discussing the Goodlatte bill and how it purports to curb patent litigation abuse. In this blog post, we finish our discussion.

Customer-Suit Exception

The Goodlatte bill has provided for an exception where, at times, certain patent litigation against consumers can be stayed. This may be one of the most controversial parts of the bill. Congress has already considered one of the more abusive tendencies of patent litigation that of going after the end user rather than the company that created the technology. As such, the Goodlatte bill currently allows for an exception where, if agreed upon by the customer and manufacturer, patent litigation can be pursued against the manufacturer and patent holder, with the litigation against the customer set aside or stayed. Note that the exception may only be used when the manufacturer is a party to a suit involving the same patents. As such, the bill states that a court must grant a motion to stay an action against what it terms a “covered customer” if (1) the customer and what the bill terms a “covered manufacturer” give written consent, (2) the covered manufacture is a party or is in a separate action on the same patent or a patent related to the same covered product, and (3) the covered customer agrees to be bound by the action against the covered manufacturer. (§5, page 17).

Note that this motion to stay must be filed within 120 days of service of the first pleading specifically identifying the covered product. In addition, the court in the separation action must determine that these requirements have been satisfied.

Judicial Conferences

The Goodlatte bill also makes some changes to judicial conferences. Under the bill, Judicial Conferences would be required to use “existing resources” to develop rules on discovery limitations and costs. (§6, page 21) And then under such requirements, each party would be further responsible for producing “core documentary evidence,” which is further defined by the bill as:

“Conception, reduction to practice, and patent applications; Technical operation of the product or process identified in the complaint; Potentially invalidating prior art; Patent licensees entered into before the complaint was filed; Profits attributable to the claimed invention; Accused infringer’s knowledge of the patent before the complaint was filed; Patent marking or notice of the patent.

The bill further requires that each district court amend its local rules to implement the rules developed by the Judicial Conference. Another new provision of the bill also provides that each party may seek “nondocumentary discovery as otherwise provided” by the Federal Rules of Civil Procedure.

The Goodlatte bill also requires that the Supreme Court actually go as far as eliminating the Form 18 altogether. Form 18 is a complaint form for patent complaints. In the interim, it would allow for the Supreme Court to replace the complaint form, provided that the form gives notice of the claims, the accused product or process, and the theory of how the product or process meets each claim. This is similar to how the patent complaint pleadings were to be newly set forth as provided for by the Goodlatte bill. (See the Pleadings section in my blog post earlier this week.)

America Invents Act Changes

The Goodlatte bill also provides for the right to bring a civil action against the United States Patent and Trademark Office (“USPTO”) and the ability to challenge a decision of the Patent Trial and Appeal Board.

Covered Business Methods

The Goodlatte bill also extends the review for covered business method patents beyond the current nine-month post issue date. Please note that this would only apply to the pre- America Invents Act patents granted under the first-to-invent system, however.

Bankruptcy

Interestingly, the bill also goes as far as to propose to amend the Bankruptcy Act by creating a provision recognize foreign proceedings and protect the rights of intellectual property licensees. The provision also seeks to adjust the patent terms to extend for “1 day for each day after the end of that 3-year period until the patent is issued.” (§9(f) page 45).

Conclusion

The Goodlatte bill is the first real salvo we have seen from Congress that directly address the business model of patent non-practicing entities. While, the support we have seen on the floor in the Congressional Hearings so far has not been overwhelmingly optimistic, only time will tell whether or not the Act will pass.

Source: http://cdn.arstechnica.net/wp-content/uploads/2013/10/Goodlatte.Innovation.Act_.pdf

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