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Focus on Life Sciences: White House Task Force Releases Patent Initiatives

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On Tuesday, June 4, 2013, the White House issued an initiative on patent issues designed to facilitate continued innovation and help ensure the continued development and delivery of high-quality patents in the United States.
June 13, 2013

On Tuesday, June 4, 2013, the White House issued an initiative on patent issues designed to facilitate continued innovation and help ensure the continued development and delivery of high-quality patents in the United States.

The initiatives are a response to Patent Assertion Entities ("PAEs") which are companies designed to assemble a portfolio of patents and then license them or litigate them. PAEs are also referred to as "patent trolls" because a good portion of these entities focus solely on litigating or threatening litigation against firms who may be utilizing a technology covered by a patent in the patent troll's portfolio.

While PAEs can provide economically desirable outcomes (e.g., expanding markets for technology and facilitating technology transfer and diffusion through legitimate licensing activities), it is argued that patent trolls have a negative impact on innovation and research and development. For example, Catherine Tucker of MIT researched this issue. She found that litigation initiated by patent trolls against medical imaging software developers resulted in a decline in innovation and improvements to the technology being litigated. Ms. Tucker concludes that firms involved in litigation face increases in the risk of continued development of the litigated technology. 1

The White House initiatives are designed to realign incentives and risks in order to spur and protect research and development efforts of innovative entities within the economy. The proposals are encompassed in seven recommendations for Congress to pursue through legislation and five actions implemented through the Executive Branch. The legislative recommendations are: 2

"Requiring patentees and applicants to disclose 'Real Party-in-interest'" – Designed to increase transparency by requiring full disclosure of ownership by parties filing law suits and issuing patent infringement demand letters.

"Permit more discretion in awarding fees to prevailing parties in patent cases" – Intended to realign incentives by shifting more of the litigation risk to the filing party and therefore reduce patent trolls' abuse of the U.S. judicial system.

"Expand the [U.S. Patent and Trademark Office's ("PTO's")] transitional program" – Designed to create a higher standard for business method patents (business method patents cover a process rather than an item like a machine or component part). This is intended to reduce the prevalence of overly broad business method patents that make it easy for patent trolls to cast a wide net. This recommendation may lower the incentive for patent trolls to litigate and reduce the risk of litigation against innovative entities.

"Protect off-the-shelf use by consumers and businesses" – Intended to increase the protections from litigation of consumers and businesses that purchase a product "off-the-shelf" and use it strictly for its intended use.

"Change the [U.S. International Trade Commission ("ITC")] standard for obtaining an injunction" – Designed to increase consistency in the standards applied at the ITC and in district courts.

"Use demand letter transparency to help curb abusive suits" – Designed to increase transparency and disclosure in patent litigation by incentivizing filing of public demand letters to make them searchable by the public.

"Ensure the ITC has adequate flexibility in hiring" – Intended to assist the ITC in hiring Administrative Law Judges, helping ensure that the proper resources are in place at the ITC.

The five executive actions are: 3

"Making "Real Party-in-interest" the New Default" – The PTO will begin a process to require patent applicants and owners to regularly update ownership information when involved in proceedings before the PTO. This action is intended to increase the transparency of entities filing litigation and give defendants a clearer picture of the entities filing claims against them.

"Tightening Functional Claiming" – Aims to have the PTO increase the scrutiny of patent applications and reviews with the goal of reducing the prevalence of overly broad claims within a patent. By limiting overly broad claims, the ability to file abusive litigation is also limited by reducing the size of a patent troll's potential litigation market.

"Empowering Downstream Users" – Enables the PTO to provide education and outreach materials to product end-users (who use legitimately purchased products for intended use) who face patent litigation. Intended to provide these end-users with the information necessary to challenge demands from patent trolls.

"Expanding Dedicated Outreach and Study" – Continues existing outreach efforts to ensure that more progress is made in those areas critical to U.S. innovation.

"Strengthen Enforcement Process of Exclusion Orders" – Starts an initiative to ensure that the processes for enforcing exclusion orders (regarding imported products) is transparent, effective, and efficient.

The goal of these initiatives is to reduce economically harmful litigation initiated by patent trolls while maintaining the intellectual property protections critical to innovation. The measures are intended to increase transparency within the system and reduce the incentive to litigate. The desired outcome is a reduction in the risks and expenses facing innovators and an increase in the level of research and development activity.

These issues are particularly relevant to IP intensive life science entities. In addition, the increasing utilization of technology and data analytics within the life science industries to facilitate research and development means that these patent issues will continue to be of high importance.

  1. Catherine Tucker. "Patent Trolls and Technology Diffusion." March 2013.
  2. The White House – Office of the Press Secretary. "Fact Sheet: White House Task Force on High-Tech Patent Issues." June 4, 2013.
  3. The White House – Office of the Press Secretary. "Fact Sheet: White House Task Force on High-Tech Patent Issues." June 4, 2013.

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