Patent reform is likely in 2015. Here’s what it could look like

The head of the House Judiciary Committee, Rep. Bob Goodlatte (R-VA), said on Tuesday that a bipartisan bill to fix America’s dysfunctional patent system failed this spring after it ran into the “DC version of quicksand known as the Senate,” but that 2015 will be a different story.

Speaking at an intellectual property event, Goodlatte — who was the House sponsor of the doomed bill known as the Innovation Act — suggested that the new Republican majority in the Senate will ensure that the new version of the law passes. This would be a different outcome than last time around when Sen. Harry Reid (D-NV) sandbagged the bill, which had the support of President Obama, reportedly at the behest of patent trolls and trial lawyers.

A patent scholar Dennis Crouch notes, the question is how far the new law will go. In particular, real reform will depend on changing the economic asymmetries in patent litigation that allow trolls to flourish, and that lead troll victims to simply pay up rather engage in costly litigation.

Here are some measures we are likely to see under the Goodlatte bill, according to Crouch and legal sources like IAM and Law.com (subscription required):

  • Fee-shifting: Right now, trolls typically have nothing to lose by filing a lawsuit since they are shell companies with no assets. New fee-shifting measures, however, could put them on the hook for their victims’ legal fees.
  • Discovery limits: Currently, trolls can exploit the discovery process — in which each side must offer up documents and depositions — by drowning their targets in expensive and time-consuming requests. Limiting the scope of discovery could take that tactic off the table.
  • Heightened pleading requirements: Right now, patent trolls don’t have to specify how exactly a company is infringing their technology, but can simply serve cookie-cutter complaints that list the patents and the defendant. Pleading reform would force the trolls to explain what exactly they are suing over, and give defendants a better opportunity to assess the case.
  • Identity requirements: This reform proposal is known as “real party of interest” and would make it harder for those filing patent lawsuits (often lawyers working with private equity firms) to hide behind shell companies, and require them instead to identify themselves.

Crouch also notes the possibility of expanded “post-grant” review, which gives defendants a fast and cheaper tool to invalidate bad patents at the Patent Office rather than in federal court.

While these measures appear to be commonsense, they still failed last time around, in part due to a lobbying push by trolls — including the creation of a new PAC by notorious troll Intellectual Ventures.

While such pressure could also derail a new bill, patent reform advocates have also expressed another worry: that the Republicans could overplay their hand. This could occur if Republicans attempt to use patent reform as a vehicle to push far-reaching tort reform, which is a cause dear to many conservatives but that could lead to a pushback from the trial bar and consumer advocates.