Richard Lloyd

Patent policy has not been in the US Congress’s spotlight much of late. True, the STRONGER Patents Act was introduced in the Senate last month, but few expect that bill to get much traction and it’s a far cry from the period between 2013 and 2015 when there was a flurry of new bills. With last year’s election and the controversies of the first months of the current administration keeping legislators busy, patent reform has slipped down the agenda.

But it was back in focus yesterday as the subcommittee on courts, IP and the internet, which is a part of the House of Representatives’ Judiciary Committee, held a hearing on “the impact of bad patents on American businesses”.

These committee get-togethers can be fairly dull affairs that don’t generate much news. However, there were a couple of interesting elements to yesterday’s hearing which are worth covering.

First up there is clearly controversy brewing over a recent decision from Judge Gilstrap in the Eastern District of Texas, which was highlighted by subcommittee chairman Darrell Issa in his opening comments. The ruling concerns venue, a hot topic in US patent circles at the moment thanks to the Supreme Court’s recent ruling in TC Heartland which placed stricter limits on where patent owners can file infringement lawsuits.

In a ruling earlier this week in a case between Raytheon and Cray Inc, Gilstrap revealed a four stage test to determine whether a defendant has “a regular and established place of business” in East Texas and can therefore be sued there. That is the part of the statute concerning venue that is still open to interpretation following TC Heartland and which has led some to insist that more still needs to be done to reform venue laws. You can see a nice summary of the decision here.

Issa and others clearly regard Gilstrap’s decision as a way of circumventing SCOTUS’s decision and ensuring that the Eastern District continues to hold onto a big chunk of patent infringement suits. It’s fair to say that the California Congressman aimed both barrels at America’s busiest patent judge. “It does not serve justice and is in fact an act that I find reprehensible by that judge,” Issa commented on the decision. “It is not common for a member of Congress to call out an individual judge or district but after a long period of enrichment of a community by judges who consider that community’s wellbeing part of their goal, I can reach no other conclusion.”

Multi-factor tests in patent suits don’t have a great record of surviving scrutiny by higher courts so it will be interesting to see what the Federal Circuit has to say on the matter. Failing that, the strength of Issa’s comments indicate that there might be appetite in Congress to clear up any uncertainty in the venue statute.

The second point to highlight from the hearing came courtesy of Julie Samuels, President of the Board of Directors of tech advocacy group Engine, who was called as one of the witnesses to give evidence. Samuels was there to represent start-ups and small tech businesses, but her views also tally with the perspective of many of the largest players in Silicon Valley.   

In her opening statement Samuels laid out the now familiar threat that “trolls” armed with low quality patents pose to smaller companies. But she also struck an optimistic tone claiming that changes in the law around patent eligible subject matter following the Supreme Court’s decision in Alice and the rise of inter partes reviews are helping to improve things.

In her concluding comments she turned to what changes needed to be made to rid the system of bad patents. “For right now I would actually say nothing,” she remarked. “Advances like Alice and IPR alone won’t weed out all the bad patents that exist but they’re doing important work to right the ship. The law may move slowly but for innovators and entrepreneurs across the country it is moving in the right direction.”

That reflects an interesting shift among those who have, in recent years, been pushing hardest for the kind of broad-based reform proposed by bills such as the Innovation Act. In 2015 Samuels wrote an op-ed in the Washington Post which lamented the fact that legislative action had not focused on improving patent quality. Today, thanks to Alice and IPR, she says that Congressional action is not necessary to help get rid of weak patents.

This doesn’t mean that the tech community is simply withdrawing from the patent reform debate — the recent creation of a new advocacy group shows that — but it’s interesting to see that their focus on Capitol Hill is increasingly about playing defence to protect the IPR process and changes in 101 from some sectors that are pushing for change.