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Innovation Act Passed By House

December 5, 2013
The Innovation Act (H.R. 3309), which is intended to reduce frivolous patent-related litigation, was passed by the House today. As we’ve noted, BIO does not support the bill in its current form, which would ultimately undermine biotech research and innovation by making it more difficult for patent holders with legitimate claims to protect their intellectual property.

A number of Representatives offered amendments to the bill, several of which BIO supported. These amendments address serious shortcomings with the bill, and we appreciate the work that lawmakers have done to address the concerns that many innovators and patent holders have expressed.

BIO supported the following amendments to the bill:

Rohrabacher 20 – Agreed to, 216-156

HR 3309 would eliminate the right to certain kinds of patent appeals under 35 USC 145. Rohrabacher 20 strikes this repeal of 35 USC 145. We agree that section 145 shouldn’t be repealed outright. Under current law, patent applicants can appeal from an adverse decision in the USPTO to either the Federal Circuit or – under 35 USC 145 – to US district court.

Such “section 145 appeals” to US district courts are rare. But there are legitimate instances where such appeals are important and necessary, because one can introduce new evidence that could not otherwise be considered in deciding the patentability of an invention.

This amendment accomplished an important goal by preserving – not completely eliminating – the right to appeal to US district court.

Massie 1 – Defeated, 119-296

This amendment strikes the “customer suit exception” from HR 3309, a provision intended to defer patent litigation against end-users, retailers or wholesalers in instances where the manufacturer of the infringing product (who is normally better-positioned to defend the case) joins the litigation. But in its current form, the provision is ambiguous, and applies not just to end-users or resellers. Even manufacturing businesses that are properly sued for patent infringement would be able to deflect lawsuits towards their parts suppliers and put off the question of their own liability until much later in the case.

In this way, the current provision would invite piecemeal adjudication and opportunities for systematic delays in cases where patent owners must defend their businesses against ongoing patent infringement. This provision, which is intended to simplify and streamline litigation, could end up doing the exact opposite.

Watt 17 – Defeated, 213-199

Watt 17 makes an addition to HR 3309′s “loser pays” provision. The amendment would give district courts discretion to reduce or deny a “loser pays” award if the prevailing party unreasonably and unduly engaged in dilatory litigation tactics.

We supported this amendment because litigants should not expect to be reimbursed if they unreasonably run up huge bills, draw out the litigation unnecessarily, and drive up costs for both parties – even if they ultimately win the litigation.