I have disagreed with the Innovation Alliance on FRAND issues, but today it issued a press release relating to U.S. patent reform that I believe raises some legitimate concern over one particular aspects of the current patent policy debate. There are certain legislative proposals that would greatly expand the scope (to all IT patents) and the term (which was originally meant to be limited) of the "Covered Business Method (CBM) Patents" program under the America Invents Act. As a result, pretty much every IT-related patent could be subjected to a post-grant review (PGR) even after the nine-month window for a PGR -- and companies would, as the experience with the CBM program shows, routinely request and frequently obtain stays of infringement lawsuits pending a PGR proceeding.
Defendants against U.S. patent infringement lawsuits have a full invalidity defense in an infringement proceeding (unlike in Germany). They can also request reexamination and move for stays based on interim reexamination decisions (though first Office actions and even so-called "final" Office actions don't necessarily impress a court). And I believe the preponderance standard would be the more appropriate one for invalidity rulings than the standard of clear and convincing evidence. But there comes a point where there are so many obstacles to enforcement that innovators are concerned.
The Innovation Alliance is one of more than 100 signatories to a letter that is addressed to the chairmen and ranking members of the Senate and House Judicairy Commitees and raises two primary concerns: it considers the expanded CBM proposals to result in "discriminati[on] against an entire class of technology innovation", which would run counter to U.S. efforts to convince other countries of the benefits of IP protection and to ensure worldwide compliance with the TRIPS Agreement; and it's worried that "infringers would be able to delay legitimate lawsuits they face indistrict court by initiating CBM proceedings at the [patent office]", allowing them to "buy time to gain market share on innovative, patent-holding competitors".
The Innovation Alliance's press release highlights the following ones of the more than 100 signatories: 3M, Adobe Systems, Boston Scientific, BSA – The Software Alliance, Caterpillar Inc., Cleveland Medical Devices Inc., Dolby Laboratories, The Dow Chemical Company, DuPont, Eli Lilly & Company, General Electric, IBM, Innovation Alliance, Inventors Network of the Capital Area, Johnson & Johnson, Microsoft, National Association of Manufacturers (NAM), Procter & Gamble, Qualcomm, Tessera, U.S. Business and Industry Council, and Xerox Corporation, among others.
The collective innovative capacity of those signatories is going to bear substantial weight with U.S. lawmakers, and most importantly, the letter raises serious issues that must be considered.
There's an additional point I'd like to make about those "expanded CBM" proposals. Certain initiatives (such as these) are not limited in their potential impact to so-called "patent trolls". The most vocal critics of "patent trolls" have a far broader agenda. They seek to weaken not only illegitimate IP enforcement but all IP enforcement, at least in the IT sector. The fact that proposals discriminating against a particular (and very large) category of patents would undermine U.S. trade policy in connection with intellectual property is presumably anything but an unintended consequence.
Here's the letter:
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