Empty vintage congress hall with seats and microphones.The House of Representative’s Innovation Act, H.R. 9, was voted to the House floor for further consideration on June 11, by a 24-8 vote of its Judiciary Committee, after the Senate’s PATENT Act, S. 1137, was voted to the Senate floor on June 4 by a 16-4 vote of its Judiciary Committee.  See prior entry, “PTAB Review Reform in Bill Approved by Senate Committee.” Both bills target abusive litigation tactics and post-grant proceedings, IPRs and PGRs.

Notably, amendments were introduced to H.R. 9 to prevent the types of IPRs filed by Kyle Bass-type hedge funds for monetary gain, and to permit the patent owner to support its preliminary response with new declaration evidence.

The Innovation Act includes the following proposed changes relating to post-grant proceedings:

  • IPR and PGR petitioners must certify that
    1. It and the real parties in interest “do not own and will not acquire a financial instrument [examples omitted] that is designed to hedge or offset any decrease in the market value of an equity security of the patent owner or an affiliate of the patent owner, during a period following the filing of the petition to be determined by the Director.”
    2. It and the real parties in interest “have not demanded payment, monetary or otherwise, from the patent owner or an affiliate of the patent owner in exchange for a commitment not to file a petition [for IPR or PGR] unless the petitioner or the real party in interest of the petitioner has been sued for or charged with infringement of the patent, during a period to be determined by the Director.”  H.R. 9, sec.  9(b), as amended June 9. These provisions would be effective upon enactment of the Act.
  • The patent owner is permitted to support its preliminary response with new declaration evidence, a departure from the current practice which prohibits the submission of such new testimony evidence.  The petitioner is also now permitted to reply to new issues raised in the preliminary response. Id.
  • The PTAB must use the district court standard for interpreting patent claims in post-grant proceedings, rather than the PTAB’s current ‘broadest reasonable interpretation’ standard. Id.
  • CBM proceedings can now consider prior art described by section 102(e), in addition to prior art under section 102(a). Id.
  • The impact of estoppel is changed for PGR; estoppel in civil actions is limited to grounds that were actually raised, striking the previous estoppel requirement which previously included grounds that the petitioner “reasonably could have raised.”  Id., sec. 9(a).
  • The Director is directed to designate as precedential certain decisions, including (A) Dell Inc. v. Electronics and Telecomms. Research Inst., IPR2015–00549, Paper 10 (PTAB Mar. 26, 2015); (B) Zimmer Holdings, Inc. v. Bonutti Skeletal Innovations LLC, IPR2014–01080, Paper 17 (PTAB Oct. 31, 2014); (C) Prism Pharma Co., Ltd. v. Choongwae Pharma Corp., IPR2014–00315, Paper 14 (PTAB July 8, 2014); (D) Unilever, Inc. v. The Procter & Gamble Co., IPR2014–00506, Paper 17 (PTAB July 7, 2014).

The Innovation Act also includes a strong fee-shifting provision that presumptively awards attorneys’ fees and other expenses to the winning party, adds a new section 106 to Title 35 codifying double patenting, heightens pleading requirements that require more clarity and specificity in identifying the patent claims and how they apply to the accused products or acts, adds discovery stays until after motions are decided, and limits venues for patent suits.

An amendment introduced briefly by Congresswoman Mimi Walters (R-CA), which would have prevented institution and maintenance of IPRs on patents covering drug or biological products subject to FDA approval, was withdrawn.

The Innovation Act was introduced February 2, 2015 by House Judiciary Committee Chairman Robert Goodlatte.  His similar Innovation Act of 2013 overwhelmingly passed the House by a 325–91 vote but foundered in the Senate.