Bipartisan Group of Senators Introduce “STRONGER Patents Act of 2017”

In late June, three Democratic senators (Chris Coons (D-DE), Dick Durbin (D-IL), and Mazie Hirono (D-HI)) and one Republican senator (Tom Cotton (R-AR)) introduced the “STRONGER Patents Act of 2017.” This bill appears to have been motivated by a recent report from the U.S. Chamber of Commerce that had been heavily critical of the U.S. patent system, ranking it tenth in the world, down from a rank of first in their previous report. The legislators have claimed, in a one-pager released by Senator Coons’s office, that the bill would “enact balanced reforms to restore the U.S. patent system to the world’s gold standard.”

The bill includes a number of significant revisions to the inter partes review (IPR) and post-grant review (PGR) procedures set forth by the America Invents Act, as well as several attempts to legislatively overturn Supreme Court decisions. Four of the most significant are as follows:

  • First, the bill would significantly narrow the scope of who can institute an IPR or PGR and introduce greater estoppel rules. The proposed legislation states that “the Director shall not authorize an inter partes review to be instituted on a claim challenged in a petition if the Director has previously instituted an inter partes review or post-grant review with respect to that claim.’’ IPRs and PGRs would also only be able to be petitioned for by entities that have been sued for infringement or that have been threatened with such a suit. This would bring post-grant actions into greater conformity with the rules for filing a declaratory judgment in federal district court.

  • Second, the bill would expressly allow for interlocutory appeals of the USPTO’s decision to institute an IPR to the Federal Circuit. This appeal could be made on “any basis except for the determination made under section 314(a)(1) [i.e. whether there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims they have challenged in the petition].” In particular, the bill notes that the Federal Circuit may consider factors such as whether the institution decision (1) “appears to be in error and mere institution presents a risk of immediate, irreparable injury to the patent owner;” (2) “presents an unsettled and fundamental issue of law, important both to the specific proceeding and generally, that is likely to evade end-of-the-proceeding review; or” (3) “is manifestly erroneous.” The bill provides that the underlying IPR would not be automatically stayed during the interlocutory appeal.
  • Third, the bill also provides patent owners a “way out” of IPRs that would essentially allow the patent owner to convert the IPR into a reexamination (an “expedited IPR reexamination”). The patent owner must show good cause as to “why an expedited IPR reexamination would further the goals of the patent system,” which might include consideration of whether there have been substantial “ investments in research directly related to the claimed invention; secondary indicia of non-obviousness, such as commercial success, long-felt but unsolved needs, or failures of persons skilled in the art to develop the claimed invention; or changes in case law governing relevant substantive patentability requirements since the patent was issued.” This process would require the patent owner to cancel all challenged claims and submit substitute claims to a patent examiner, who would then have 18 months to examine the claims. As with standard reexaminations, this would provide the patent owner with an opportunity to salvage some claims from a patent when prior art has been cited that would render the claims anticipated or obvious, at the cost of needing to cancel their existing challenged claims (thus requiring the patent owner to waive past damages for infringement).
  • Fourth, the bill would eliminate the use of the “broadest reasonable interpretation” claim construction standard by the Patent Trial and Appeal Board, in favor of the “ordinary and customary meaning” standard set forth in 35 USC §282. Likewise, the same presumption of validity that applies in district court proceedings (under 35 USC §282) would apply during PTAB proceedings.

The bill would also have several effects outside of the realm of IPRs. For example, the bill would eliminate the requirement that a defendant know of the asserted patent in order to be held liable for induced infringement, and would significantly improve the ability of a patent holder to get a permanent injunction by enacting a presumption that the first two eBay factors (“irreparable injury” and “no remedy at law”) are met in every case.

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