Two new pieces of legislation were introduced in the past few weeks, one each in the House and the Senate, and both could have drastic implications for PTAB practice. The PACED Act, introduced in the Senate, would eliminate Tribal Immunity as a defense for all Patent Owners in proceedings before the Patent Office. The STRONGER Patents Act, introduced to the House as the counter part to the previous iteration in the senate, would make a number of changes to patent enforcement, including the reversal of the Supreme Court by making the validity standard in the PTAB match the standard in District Court.

The PACED Act

The ongoing Allergan appeal in the Federal Circuit on Tribal Immunity in an IPR is the apparent inspiration for the PACED Act, which would explicitly remove Tribal Sovereign Immunity as an option for defense in IPR’s. The PACED (“Preserving Access to Cost Effective Drugs”) Act, introduced by Senator Tom Cotton, abrogates sovereign immunity in all derivations, reexams, IPRs, post-grant reviews, and in federal reviews of the aforementioned proceedings.[1]

Cotton makes the motivation behind the bill clear, explaining that “This bill will make sure unscrupulous patent holders can’t game the system and block their competitors from entering the market”[2] referring to the ongoing appeal by Saint Regis and Allergan described here. The bill seeks to remove Allergan’s strongest argument, that Sovereign Immunity exists unless the Tribe has waived it or congress has specifically permitted the suit, as outlined by the Supreme Court.[3]

It should be noted that the proposed bill specifically limits the scope of these exceptions to Sovereign Immunity, explicitly stating that “shall apply only to the extent permitted under the 11th amendment to the Constitution of the United States.”

Whether the PACED Act successfully passes through the Senate and on to the House will be something to watch moving forward, though it is possible the Allergan appeal may resolve the issue without legislative intervention.

The STRONGER Patents Act

The STRONGER (“Support Technology & Research for Our Nation’s Growth and Economic Resilience”) Patents Act is the House version of the act introduced to the Senate with the same name last June, co-sponsored by senators Chris Coons, Tom Cotton, Mazie Hirono, and Dick Durbin. The House bill was introduced by the bipartisan duo of Steve Stivers and Bill Foster, and would represent the biggest overhaul of the U.S. patent system since the AIA in 2011[4].

Most of the notable changes proposed for the PTAB involve the relationship between the PTAB and federal District Court, with a goal of increasing efficiency and limiting litigation. Specifically, the bill would align the PTAB’s invalidity standards with the District Court’s, require the PTAB to consider District Court claim constructions along with prosecution history, and preclude institution if validity on § 102 or § 103 grounds had already been decided by a Federal Court or by the ITC.

Additional language weighing the scales in Patent Owners’ favor would require petitioners to demonstrate a reasonable likelihood of being sued for infringement of the patent or competitive harm from the validity of the patent and allow Patent Owners access to an expedited amendment process before a patent examiner during IPR and PGR proceedings. Conversely, the bill would also empower the ITC and state attorneys to curb bad faith demand letters for misleading language about their right to enforce a patent against the recipient.

With the bill now being introduced in both houses of Congress by bipartisan sponsors, and gaining considerable support, it will be worth monitoring moving forward.

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[1] https://www.govtrack.us/congress/bills/115/s2514/text

[2] https://www.cotton.senate.gov/?p=press_release&id=901

[3] Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 754 (1998).

[4] https://stivers.house.gov/uploadedfiles/stronger_patents_act.pdf