White House pushes for innovation in U.S. patent system

June 12, 2013

On June 4, 2013, the President of the United States announced seven legislative recommendations to Congress and five executive actions designed to protect innovators from frivolous litigation and to better the quality of patents issued by the United States Patent and Trademarks Office. (The informal Executive Actions differ from Executive Orders in that they are not legally binding and are seen more as a way to signal a policy shift.)

The Executive Actions announced by the White House are as follows:

  1. Identifying the “Real-Party-In-Interest”: the USPTO will begin a rulemaking process to require regular updates to ownership information, specifically designating the parent entity in control of the patent. This is expected to assist defendants in identifying the full extent of the patent portfolio held by a plaintiff, as such information is quite helpful in negotiating settlements.
     
  2. Additional USPTO training on Functional Claims: the USPTO will provide targeted training to examiners and develop strategies to address overly broad claims, especially in the context of software patents.
     
  3. Empowering “Downstream Users”: the USPTO will develop new education and outreach materials to aid those end-users using patented technology who face demands from a possible patent troll for simply using a product as intended. 
     
  4. Expanded Outreach and Study: the White House has acknowledged that engagement with stakeholders (including patent holders, research institutions, consumer advocates, public interest groups and the general public) is very important in ensuring that necessary reforms are identified to ensure that the U.S. patent system is efficient and reliable. The USPTO Edison Scholars Program, which permits academic experts to conduct research on the issues involved in abusive patent litigation, will be expanded.
     
  5. Exclusion Orders: the U.S. Intellectual Property Enforcement Coordinator will launch a review of existing procedures that U.S. Customs and Border Protection and the U.S. International Trade Commission use to evaluate the scope of exclusion orders (orders which prevent the importing of products that infringe patent claims) and work to ensure that the process for enforcement of those orders is transparent, efficient, and effective.

The Legislative Recommendations ask Congress to pursue the following measures (some of which echo the priorities set out above) to protect innovators from frivolous litigation. 

  1.  Require patentees and applicants to disclose the “Real-Party-In-Interest” by requiring the filing of updated ownership information with the USPTO or district court when sending demand letters, among other acts. 
     
  2. Permit more discretion in awarding “costs” to prevailing parties in patent cases. 
     
  3. Expand the USPTO’s “covered business method patent” transitional program to more types of computer-enabled patents, and permit a wider range of challengers to petition for review of issued patents. The program provides faster and cheaper review of covered patents as an alternative to litigation. 
     
  4. Protect consumers by providing them with better legal protection against liability if they are using a patented product “off-the-shelf” and solely for its intended use, and allowing a stay of judicial proceedings against consumers if there is a lawsuit against the vendor, retailer, or manufacturer of a product.
     
  5. Change the standard applied by the International Trade Commission for obtaining injunctive relief in order to enhance consistency in the standards applied by the ITC and district courts. 
     
  6. Initiating steps to incentivize public filing of demand letters so that the public may search them.
     
  7. Ensure the International Trade Commission has the flexibility required to hire judges with a background in administrative law

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