Inventor Protection Act

The Inventor Protection Act restores patent protection for inventors by reversing a generation of laws, regulations, and court decisions that have discouraged innovation  by failing to secure to inventors the exclusive rights to their discoveries.

TODAY’S INVENTORS –

  • Face hundreds of thousands of dollars in legal expense and annihilation of their patent rights in unlimited third-party patent validity challenges at the Patent Trial and Appeal Board (PTAB)
  • Must endure up to a decade and spend tens of millions of dollars in legal expense to obtain a final judgment in court against infringers
  • Are denied standing to file suit in their own home district under the 2018 TC Heartland decision
  • Are denied the basic right to exclude others from using their invention under the 2006 Ebay decision
  • Are not compensated fairly or sufficiently to prevent efficient infringement of their patent rights
  • Are denied meaningful participation in the patent system which stifles our main source of innovation

Incentivizing inventors is the whole purpose of innovation policy. Inventors are the ones who must be equipped and motivated to apply their knowledge and creativity to solving problems.

But current policies and case law focus instead on patents as monetary assets held by corporations, injecting extremely high cost and risk to enforcing any single patent and making patent enforcement a “game of kings”. Big corporations play the game by hiring dozens of lawyers, hording hundreds of patents, and pouring millions of dollars into litigation.

Inventors cannot play that game and need a viable path to enforce their patent rights. In order to encourage inventors to participate in the grand bargain – sharing their discovery in exchange for a time-limited exclusive right – patents owned by the original inventor must be protected from the policies that target assets held and traded by non-inventors.

PROTECTION FROM ADMINISTRATIVE PROCEEDINGS

Under the America Invents Act, infringers challenge the validity of patents in the PTAB, which cancels claims in 85% of issued patents. Serial petitions are common with valuable patents suffering a dozen or more attacks with an average cost of $350,000 each to defend. In the rare instance that the PTAB permits an inventor to keep his patent, there is no monetary recovery. This means the inventor has nothing to offer a law firm to take the case on a contingency basis. Pro bono defense is not available either. Inventors with valuable inventions have virtually no chance of keeping their patents in the PTAB. Traditional federal courts on the other hand still provide a fair playing field for an infringer to challenge patent validity. Inventors need the protections of tenured judges, juries, rules of evidence, and standards of proof offered in court, as well as the right to recover monetary damages from the infringer. This legislation exempts inventors from PTAB proceedings while preserving the right for an accused infringer to raise patent validity as a defense at trial in a judicial court.

CHOICE OF VENUE

It is a general rule that federal suits can be filed at the scene of the crime – “in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred”. But in TC Heartland (2018) the Supreme Court held that inventors must file suits for patent infringement in the state where the infringer is incorporated, or many different states when multiple corporations infringe the patent. Under this ruling when an inventor works, hires employees, builds prototypes, manufactures, and pays taxes in one state, and a corporation commits an act of infringement in that state, the inventor nevertheless must go to the state where the infringer is incorporated to enforce his patent rights. Inventors should have equal treatment under the law including the right to file a suit in their own district or any district where infringement has been committed.

EXPEDITED JUDICIAL PROCEEDINGS

Complex and lengthy procedures govern patent infringement suits. It frequently takes three to four years of proceedings with hundreds of thousands of pages of pleadings to get to trial. That is followed by a year of post-trial proceedings plus two years of appeals, usually resulting in a retrial on some part of the case. The whole thing can take ten years and no more than a handful of cases reach a final judgment each year. Fortune 500 corporations can weather a decade and tens of millions of dollars as merely a cost of doing business, but inventors cannot survive it. This bill eliminates the waste and guarantees a speedy resolution so the inventor can move forward with building a business on the patented technology.

RESTORING INJUNCTIVE RELIEF

A patent grants to the inventor the right to exclude others from using the invention. But in Ebay (2006) the Supreme Court decided that is not so. Instead they determined that the infringer should have to pay the inventor whatever an expert economist hired by the infringer determines the invention is worth, and then they can continue to infringe the patent rights. Instead of choosing whether to sell, who to sell to, and at what price to sell, inventors are forced into a compulsory license with terms they would not otherwise agree to in a voluntary transaction. Under Ebay infringers are discouraged from avoiding the patent or paying up front because in the unlikely event the inventor has the resources to prevail in court, the worst case for the infringer is they have to pay the inventor what they should have in the first place. This bill restores rudimentary functionality of the patent system by preventing unauthorized use of an invention as long as the inventor holds an unexpired patent.

SIMPLIFIED MONETARY DAMAGES

The Patent Act of 1952 which is still in effect gives inventors the right to recover “damages adequate to compensate for the infringement”. The courts have developed extremely complex procedures for determining this amount. It involves invasive examination of a company’s finances, hundreds of hours of depositions, and application of complex and controversial economic theories. One example case law requires detailed analysis of 17 different factors identified in a precedential case called Georgia Pacific. In the end the legal costs just to figure out what the damages are exceed a million dollars. The result is that the amount owed is very unpredictable and very costly to ascertain. This legislation offers a more cost effective and predictable approach to calculating the amount necessary to compensate an inventor for infringement of his patent.

RECOVERY OF LEGAL FEES

The current system is not suitable for resolving patent disputes when the amount at stake is no more than a few million dollars. Under the “efficient infringement” business model, such patents can be infringed without concern since litigation would cost the inventor more than the amount he could recover. To end this abuse, this bill requires a defendant that is found guilty of infringement to pay the damage caused plus the inventor’s legal fees that exceed ten percent of the damages.

CONCLUSION

Throughout our history America has led the world in innovation, driven largely by a simple yet profound promise to inventors of the exclusive right to their discoveries. Our founders authorized Congress – “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Without secure patent rights, inventors are starved of time and capital required to explore and develop new technologies. As inventors have been sidelined, the United States faces an escalating innovation crisis as we are forced to rely on outdated or imported technologies. Congress must act quickly to restore reliable patent rights for inventors.


[Draft – Revised July 21, 2018]

H.R. 6557

To amend title 35, United States Code, to restore patent rights to inventors, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

Mr. ROHRABACHER introduced the following bill; which was referred to the
Committee on the Judiciary

A BILL

To amend title 35, United States Code, to restore patent rights to inventors, and for other purposes.

SEC. 1.          SHORT TITLE.

This Act may be cited as the “Inventor Protection Act”.

SEC. 2.          FINDINGS.

(a)        The Congress finds the following:

(1)        independent inventors have contributed significantly to  innovation in the United States and their continued dedication to inventing and sharing solutions to modern technical challenges is essential for the United States to maintain leadership in the global economy;

(2)        independent inventors, not employees or investors, are the source of innovation intended by the Constitution (“securing to inventors”)  and the Patent Act (“Whoever invents or discovers…may obtain a patent therefore…);

(3)        recent changes to patent laws and procedures and Supreme Court decisions have adversely affected independent inventors such that the promise of Article 1, Section 8 of the Constitution of “securing for limited times to inventors the exclusive right to their discoveries” is no longer attainable;

(4)        independent inventors are denied the fundamental right to “exclude others” by the Supreme Court’s 2006 decision in eBay Inc. v. MercExchange, LLC;

(5)        independent inventors were stripped of the right to file suit in their own judicial district by the Supreme Court’s 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC;

(6)        issued patents to fail to secure to independent inventors their exclusive rights because the Patent Trial and Appeal Board declares 85% of granted patents to be invalid in post grant reviews, many patents are subjected to multiple post grant reviews, the cost of defending a patent challenged in a single post grant review can be hundreds of thousand of dollars, which is more than most independent inventors can afford;

(7)        infringement trials cost tens of millions of dollars and sometimes takes up to ten years to reach a final judgment after all appeals, making legal relief unattainable for independent inventors;

(8)        these obstacles have given rise to an “efficient infringement” business model whereby large corporations infringe patent rights held by independent inventors without concern for any legal consequences; and

(9)   patent protection has led to patient cures, positive changes to the standard of living for all people in the United States, and improvements to the agricultural, telecommunications, software, biotech, pharmaceutical and electronics industries, among others.

SEC. 3.          INVENTOR PROTECTIONS

(a)        PATENT RIGHTS FOR INVENTORS.—Part III of title 35, United States Code, is amended by adding at the end the following:

“CHAPTER 33—INVENTOR PROTECTIONS

“Sec.

“331. Definitions

“332. Protection from Administrative Proceedings

“333. Choice of Venue

“334. Expedited Judicial Proceedings

“335. Injunctive Relief

“336. Simplified Damages

“337. Recovery of Attorney Fees

“§ 331. Definitions

“INVENTOR OWNED PATENT.—the term “inventor owned patent” means a patent held entirely by the inventor of the claimed invention.

“§ 332. Protection from Administrative Proceedings

“Unless voluntarily waived by the inventor, no agency shall have the authority to reexamine, review, or otherwise make any determination with respect to the validity of an inventor owned patent.

“§ 333. Choice of Venue

“(a) The inventor may be bring a civil action involving an inventor owned patent in any district in which the defendant has committed acts of infringement or is otherwise subject to the court’s personal jurisdiction with respect to the civil action in question.

“(b) If the inventor is a citizen, a declaratory judgment action may only be brought in the district in which the inventor is domiciled or in a district in which the inventor consents to jurisdiction.

“(c) The court may not transfer a civil action involving an inventor owned patent to another district for convenience without consent of the inventor.

“§ 334. Expedited Judicial Proceedings

“(a) Unless voluntarily waived, an inventor asserting an inventor owned patent in a civil action under section 281 shall be entitled to an expedited and cost limited proceeding including—

“(1) a trial within twelve months of service of a complaint, with prioritization in the court’s docket as necessary;

“(2) a trial of no more than seven days in duration;

“(3) a limit of no more than ten discovery requests per side;

“(4) pleadings limited to 100,000 words per side; and

“(5) other such provisions as the court deems appropriate to ensure that relief is accessible to the inventor.

“§ 335. Injunctive Relief

“Upon a finding of infringement of an inventor owned patent, the court shall presume that further infringement of the patent would cause the inventor irreparable harm. This presumption may be overcome only by a showing of clear and convincing evidence by the infringing party that the inventor would not be irreparably harmed by further infringement of the patent. The inventor is not required to make or sell a product covered by the patent to show irreparable harm.

“§ 336. Simplified Damages

“(a) An inventor asserting an inventor owned patent in a civil action under section 281 may request in the pleadings relief under this section in lieu of section 284, and upon such request the provisions of this section shall apply to that civil action.

“(b) Upon a finding of infringement the court shall award the greater of the total profits or twenty-five percent of the sales for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

“(c) When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed upon determination that the infringement was willful. If the infringer is an expert in the field of the invention, the infringement shall be presumed to be willful. Increased damages under this paragraph shall not apply to provisional rights under section 154(d).

“§ 337. Recovery of Attorney Fees

“(a) An inventor who prevails in a civil action under section 281 shall be entitled to recover any attorney fees that exceed one tenth of the total damages awarded for infringement of an inventor owned patent.