The Senate's Judiciary Committee favorably reported S.515, as amended by the Leahy, Specter, Feinstein, Cornyn, Whitehouse, Kaufman amendment (GRA09451), by a vote of 15-4. The committee's report was published earlier this month. In that report (attached), there were numerous additional, supplemental, and minority views.
Additional Views of Senator Grassley
Senator Chuck Grassley, who will take over for Senator Jeff Sessions on the Judiciary Committee in the next Congress, filed additional views which were both conciliatory and deferential. He argued for the adoption of his ban against "tax planning strategy" patents, and reached out to the other side in noting:
However, I believe that more due diligence and work needs to be done. I share several of the concerns expressed in the views of Senator Kyl and others, in particular those dealing with the provisions on post grant review. There are legitimate concerns about the threshold for access to, and the open-ended nature of, the expanded inter partes reexamination process. The U.S. Patent and Trademark Office has expressed concerns that they may not be able to administer the changes proposed in the bill, and that they will be overwhelmed with filings. It would be prudent for the Judiciary Committee to work with the PTO to determine whether these provisions contained in the bill are workable and can effectively be implemented.
Supplemental Views of Senator Hatch
Senator Hatch was not so conciliatory or deferential. In continuing his outrage over the absence of meaningful reform in regards to inequitable conduct, he maintained that "[i]nequitable conduct reform is core to patent reform, as it dictates how patent applications are prosecuted years before litigation." Of particular note to Coalition members in his beliefs that:
The current law has made patent applicants over-disclose information to the U.S. Patent and Trademark Office (USPTO) for fear of missing something. During the 110th Congress, former USPTO Director Jon Dudas testified before the Senate Judiciary Committee. He brought with him a box of materials to show the Committee what a patent examiner reviews when processing an Information Disclosure Statement. There were about 2,600 pages of material submitted in one box. And there were 27 other boxes that had the same amount of material for the one patent application. Such a deluge of information is not only counterproductive, but it certainly does not help produce high-quality patents.
Unfortunately, as things currently stand, anything an applicant does to help the examiner focus on the most relevant information during examination becomes the target of an inequitable conduct challenge in court. This highly corrosive result undermines the original intent of the doctrine. Moreover, it precludes an open and interactive examination process, which we would all agree would result in the granting of high-quality patents. The development of a more objective and clearer inequitable conduct standard will remove the uncertainty and confusion that defines current patent litigation. We cannot settle for mere codification of current practices. [emphasis added]
Supplemental Views On Ending Fee Diversion From Senators Coburn, Hatch, Grassley, and Kyl
Strong support for ending fee diversion is evidenced in the supplemental views from Senators Coburn, Hatch, Grassley, and Kyl. As they noted in opening:
Previous and current versions of the Patent Reform Act have been stymied because of major disagreements among the varying, competing interests within the patent community. For several years, industry heavyweights from numerous sectors of the American economy have battled multiple provisions of the bill. However, the one area where Patent Reform Act combatants reach near unanimous agreement is the need for Congress to permanently end "fee diversion."
They emphasized that:
The most recent data from the USPTO show that the backlog now consists of 1.2 million patent applications waiting to be issued, with 771,000 of those applications waiting for an examiner to pick up the application and begin examining it. Current pendency statistics show that it takes an examiner anywhere from 19 to 32 months to pick up and start a first action on the patent application. To fully dispose of the patent application takes anywhere from 32 to 43 months depending on the type of patent being sought. Thus, Congress' chronic action to divert fees has resulted in an "innovation tax" on the American economy. In these challenging economic times, what great ideas are trapped in that backlog, helplessly waiting to jumpstart America's economy by creating jobs, expanding business, and bringing new products and technology to market?
This jobs and tax approach might well work out. They continued with several examples of support for creating a USPTO fee lockbox and permanently ending fee diversion. However, they could not overlook the 800-pound gorilla in the room, admitting that:
Although a few appropriators have raised the concern that the Amendment does not provide adequate oversight of USPTO, a plain reading of the amendment reveals that the amendment requires the USPTO to provide Congress four different annual reports. These reports give Congress oversight and accountability tools to monitor the performance of the USPTO and its use of user fees. Additionally, the witnesses at the Senate Judiciary Committee hearing held on S.515 believed the Coburn Amendment provided Congress and themselves as representatives of the USPTO user community, plenty of information by which to monitor USPTO actions and expenditures.
It will be interesting to watch the debate with those appropriators.
Minority Views of Senators Kyl, Feingold, and Coburn
Post-grant review and willfulness dominated these minority views. These issues were "the primary reason why [Senators Kyl, Feingold, and Coburn] opposed this bill in the Judiciary Committee."
In particular, inter partes re-examination was at the root of their dissatisfaction. As the majority report notes, the PTO has identified could-have-raised estoppel as "the primary deterrent to using [inter partes re-examination]." Many businesses also have described could-have-raised estoppel as a powerful brake on their use of inter partes re-examination. They find this standard vague and uncertain, and fear that if they challenge a patent in an inter partes re-examination, they will lose the ability to raise later-discovered prior art against the patent if they are subsequently sued for infringement.
Senators Kyl, Feingold, and Coburn believe that there can be little doubt that, by striking the 1999 limit and eliminating could-have-raised estoppel, S.515 will result in the greatly expanded use of inter partes re-examination. They conclude:
In sum, the current system of inter partes re-examination can be misused to greatly devalue, if not effectively nullify, a patent for most of its useful life, even if that patent is perfectly valid and enforceable. This is the system that, by doubling the universe of challengeable patents and eliminating could-have-raised estoppel, the committee-reported bill proposes to vastly expand.
With respect to the issue of willfulness, they argue that:
Section 4 of the bill sharply restricts the circumstances under which a party that has infringed a patent may be found to have done so willfully and be subject to enhanced damages. Proposed section 284(c) effectively confines all findings of willfulness to one of the following three scenarios: (1) the infringer continued to infringe after receiving a demand letter that describes with particularity how the infringer's product infringes a patent; (2) the infringer intentionally copied the patented invention and knew that it was patented; or (3) the infringer continued its same infringing activities after having been found by acourt to infringe.
They point out that the fact that proposed (c)(2)(A)(i) continues to incorporate the "reasonable apprehension of suit" test that was eliminated by MedImmune v. Genentech, 549 U.S. 118 (2007), tends to confirm the supposition that the bill's willfulness provisions "not only unduly restrict the bases of willfulness and immunize conduct that merits enhanced damages; they also are a step backward for accused infringers, returning us to the pre-Seagate world of inquiries into the infringer's subjective intent and the cottage industry of opinion counsel."