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Senators Introduce VENUE Act as Last Stand on Patent Legislation This Congress

As Congress becomes further embroiled in election-year politics, especially a high-stakes standoff between the White House and the Senate Judiciary Committee over the President’s nomination to the Supreme Court, it appears ever more likely that 114th Congress will end in December 2016 without passing comprehensive patent legislation.  With the House and Senate patent bills on legislative life support, proponents have not given up on passing some patent bill this year.  On Thursday, Senators Jeff Flake (R-Ariz.), Cory Gardener (R-Colo.), and Mike Lee (R-Utah) introduced S. 2377, the Venue Equity and Non-Uniformity Elimination Act (“VENUE Act”), which would restrict where patent owners can file lawsuits to enforce their patents against infringers.

Just five years after Congress passed the most comprehensive patent legislation in half a century, the Leahy-Smith America Invents Act (“AIA”), supporters of legislation argue that further dramatic changes to the patent litigation system are necessary to curb abusive patent enforcement practices.  They say that substantially heightened pleading requirements, discovery limits, litigation stays, mandatory fee shifting, and now venue reform—are necessary to curb  lawsuits filed in plaintiff-friendly judicial districts, such as the Eastern District of Texas.

Patent owners, licensors, and other stakeholders—including individual inventors, research universities, R&D companies in technology and the life sciences, and venture capitalists— disagree that broad litigation reform is the answer.  They point out that neither chamber’s comprehensive bill, H.R. 9 (the “Innovation Act”) and S. 1137 (the “PATENT Act”), would curb bad faith demand letters and “reverse trolling,” such as abuses of post-grant review processes at the U.S. Patent and Trademark Office (USPTO) established by the AIA.  These stakeholders support targeted legislation narrowly tailored to stop these abuses, and other measures to reduce litigation by improving patent quality, such as fully funding the Patent Office.

Legislation is pending in both the House and Senate that would resolve these abuses and strengthen the patent system, without broad changes to litigation procedures.  In the House, the Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade has passed the TROL Act (H.R. 2045), which would clarify the Federal Trade Commission’s power to pursue senders of fraudulent and abusive patent demand letters and set a uniform national standard for bad faith demand letters.

In the Senate, the bipartisan bill S.632, the STRONG Patents Act, targets abusive demand letters, prevents abuse of post-grant challenges, and improves patent quality.  First, the STRONG Patents Act would—like the TROL Act—clarify the FTC’s authority over bad faith patent demand letters.  Second, it would restore balance to post-grant proceedings at the USPTO, including harmonizing claim construction standards between post-grant challenges and district courts, permitting patent owners to amend claims, presuming the validity of challenged patents, and requiring patent challengers to have standing.  Finally, the STRONG Patents Act would limit fee diversion from the USPTO and ensure that the agency has the resources it needs to issue high-quality patents.

Although H.R. 9  and S. 1137, were reported out of committee last summer, both have aroused considerable opposition from patent-dependent stakeholders,  and neither has advanced to a floor vote amid the controversy.

The future of the VENUE Act—and patent legislation generally—is still uncertain, but historically the Senate Judiciary Committee has not been receptive to changes to patent venue rules.  Regardless of whether the Judiciary Committee or the full Senate takes up the legislation, the VENUE Act is likely to be patent litigation reformers’ last stand until at least the next Congress.

© 2019 Covington & Burling LLP

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Holly Fechner, Public policy lawyer, Covington Burling
Partner

Named a top lobbyist by The Hill, Holly Fechner manages teams that handle public policy, government affairs and regulatory matters for clients. She provides comprehensive advocacy services, including strategic advice, substantive legal and regulatory expertise, and policy and message development. Ms. Fechner is a member of the firm’s Political Action Committee board of directors, co-chair of the Industries, Regulatory and Legislative practices...

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Bill Wichterman, Covington Burling, Public policy lawyer
Senior Advisor

Bill Wichterman is a non-lawyer Senior Advisor in Covington’s Public Policy practice.

Prior to joining Covington, Mr. Wichterman served as Special Assistant to President George W. Bush and as the President’s personal liaison to the conservative movement.  Before serving in the White House, he held a number of senior staff-level positions on Capitol Hill, including as Policy Advisor to Senate Majority Leader Bill Frist, and Chief of Staff to Congressman Joe Pitts and Congressman Bill Baker.

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Matthew S. Shapanka, Covington, regulatory and policy matters lawyer
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Matthew Shapanka represents and counsels corporate, political, and individual clients in criminal, regulatory, and policy matters before government agencies and Congress. He also advises candidates, companies, PACs, nonprofits, and high net worth individuals on compliance with federal and state campaign finance, election, and lobbying laws.

Prior to attending law school, Mr. Shapanka worked as a research analyst in the Massachusetts Recovery & Reinvestment Office, where he worked on all aspects of state-level policy, communications, and compliance for federal...

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