The Trade Protection Not Troll Protection Act was reintroduced into the US House of Representatives by members Tony Cárdenas and Blake Farenthold in a bid to exclude non-practicing entities (NPEs) from the International Trade Commission (ITC) in April. The legislation has been supported by a number of companies, including Google, Dell, Cisco and HP.
Among its proposed changes, the bill would give the ITC more flexibility to ensure an investigation is in the public interest at any time during the case, and codify the 100-day pilot project, introduced by the ITC in 2013, to expedite fact-finding and hearings.
While the act has the backing of large companies, others, including the American Innovators for Patent Reform, an industry group representing small patent owners, blasted the reintroduction of the bill, claiming that the anti-patent troll legislation is misguided and shows a fundamental lack of understanding of what a patent really is.
Mark Whitaker, partner at Morrison & Foerster, explains why the legislation is so controversial.
The Trade Protection Not Troll Protection Act has been reintroduced by US Congress. What would this legislation mean for patent owners?
While Congress should be commended for attempting to target the abusive behaviour of NPEs it is my view that the existing Section 337 of the 1930 Trade Protection Tariff Act framework already provides the ITC with a robust arsenal of tools in this area.
Congress intended the ITC to provide owners of IP rights with broad protections against a wide range of unfair acts of importation. Section 337 of the act was therefore intended to broadly cover unfair methods of competition.
As currently drafted, however, the Trade Protection Not Troll Protection Act could introduce a number of unintended consequences affecting myriad industries, companies and even academic institutions across the spectrum.
Doesn’t the NPE problem require a legislative solution?
NPE cases are not prevalent in practice. In 2014, only three Section 337 investigations were brought by NPEs that purchase patents strictly to monetise them. In 2015, just two cases were brought by NPEs in 2015 and in Q1 2016 only one such investigation has been filed.
The purpose behind the Trade Protection Not Troll Protection Act is to ensure that the resources of the ITC are focused on protecting genuine domestic industries.
Any future amendments to Section 337 should be exhaustively studied and considered so that they do not impose unintentional consequences to those beyond NPE cases.
Is the ITC still a suitable venue for handling patent disputes?
The ITC is an extremely effective forum for obtaining an order stopping importation of competing goods and the further distribution of such goods already imported into the US.
It is more difficult today to get a non-monetary remedy in district court after the eBay decision—and the requirement to show “irreparable harm”. ITC cases have no injury requirement and importation of a covered article or product demonstrates the harm.
Which venue do patent owners prefer?
Typically, patent cases in federal court that go to trial are done before a jury and many courts are not as well equipped as others to handle the often technical subject matter of the cases or have much experience litigating cases under the Patent Act. ITC cases are done just before an administrative law judge (ALJ) who has expertise in patent law subject matter.
Which sector typically uses the ITC and who could suffer from this reform?
Most cases seem to come from tech sector (chip technology, phones, software, etc), but a growing number of cases also come from mechanical arts, and life sciences.
If the act is passed as is, the tech sector will benefit, but could also be harmed if they license portions of their patent portfolios. Small inventors and universities will likely take the biggest hit.