PATENT HARASSMENT CONCERN EXPRESSED IN LEGISLATIVE HISTORY
`
`Date & Cite
`
`Patent Harassment Section
`
`April 18, 2007 — Berman
`Introduction of Patent
`Reform Act (House)
`[153 Cong. Rec. E773—O5]
`
`April 18, 2007 — Comments
`by Senator Leahy on Patent
`Reform Act
`[153 Cong. Rec. S4678-O1]
`
`“Section 6 provides a needed change to the inter-partes
`reexamination procedure. Unfortunately, the inter-partes
`reexamination procedure is rarely used, but the changes we
`introduce should encourage third parties to make better use of
`the opportunity to request that the PTO Director reexamine an
`issued patent of questionable validity. Primarily though, Section
`6 creates a post-grant opposition procedure. In an effort to
`address the questionable quality of patents issued by the USPTO,
`the bill establishes a check on the quality of a patent immediately
`after it is granted, or in circumstances where a party can establish
`significant economic harm resulting from assertion of the patent.
`The post-grant procedure is designed to allow parties to
`challenge a granted patent through a expeditious and less costly
`alternative to litigation. Many have expressed concerns about
`the possibility of harassment of patent owners who want to
`assume guiet title over their invention. In an effort to address
`those concerns, the bill prohibits multiple bites at the apple
`by restricting the cancellation petitioner to opt for only one
`window one time. The bill also requires that the Director
`prescribe regulations for sanctions for abuse of process or
`harassment.”
`
`“Second, poor patent quality has been identified as a key element
`of the law that needs attention. After a patent is issued, a party
`seeking to challenge the validity and enforceability of the patent
`has two avenues under current law: by reexamination proceeding
`at the USPTO or by litigation in federal district court. The
`former is used sparingly and some see it as ineffective; the latter,
`district court litigation, can be unwieldy and expensive. S. 3818
`had created a new, post-grant review to provide an effective and
`efficient system for considering challenges to the validity of
`patents. The Patent Reform Act of 2007 has improved that
`system, and in particular, we have addressed concerns about
`misuse of the procedure. Post—grant review will include
`protections to avoid the possibility of misuse of the post-grant
`process. The Director is instructed to prescribe rules to
`prevent harassment or abuse, successive petitions are
`prohibited, and petitioners are barred from raising the same
`arguments in court.”
`
`April 18, 2007 — Comments
`by Senator Hatch on Patent
`Reform Act
`
`“The Patent Reform Act of 2007 includes provisions to improve
`patent quality. Many complaints about the current patent system
`deal with the number of suspect and over-broad patents that are
`
`DMC Exhibit 2123_0O1
`
`

`
`Date & Cite
`
`Patent Harassment Section
`
`[153 Cong. Rec. S4678—Ol]
`
`January 24, 2008 — Senate
`Minority Report
`[5 REP. 110-259, 69]
`
`issued. Because bad patents are generally of little value to
`productive companies, in many cases their value is maximized
`by using them as a basis for infringement suits against deep-
`pocket defendants. This bill institutes a robust post-grant review
`process so that third parties can challenge suspect patents in an
`administrative process, rather than through costly litigation. In
`the bill we introduced today, Section 6 has been tightened by
`
`including an anti-harassment provision to discourage
`companies from colluding and perpetually harassing one
`company. I am hopeful this will serve as a deterrent to those
`who seek to abuse post-grant review process.”
`
`At 69: “As one way to improve patent quality, the
`Committee is considering modification to the post grant
`review process, such as creating a brand new administrative
`system to review patents after their issuance or revising the
`current system. Such a process should serve to either solidify
`the patent's validity or to catch a patent that should have been
`rejected during the initial examination. The process should
`be timely and streamlined and should take issues off the table
`that cannot be resurrected in subsequent litigation, providing
`a cost effective alternative to litigation. To protect patent
`holders from harassment and abuse by a competitor or
`infringer, the system must be narrowly crafted with
`appropriate safeguards.”
`
`At 72: “The Committee also needs to further assess the
`
`experiences of foreign countries as they have tinkered with
`their post grant opposition systems. We know that countries
`like Japan, Korea, China, Taiwan and the European Union
`faced various hurdles as they implemented or reformed their
`post grant systems. In fact, some of the countries scrapped
`their system and revised it to avoid some of the same
`problems that U.S. companies warn of today. The risk of
`harassment is more than theoretical. ln the EU, Japan and
`other markets with a post-grant opposition system, U.S.
`patent holders have reported a pattern of practice where
`foreign competitors routinely use administrative opposition
`proceedings as a means of tying up issued patents in multiple
`challenges with the aim of depleting the useful life of the
`patent. News accounts in foreign markets have documented
`the eager interests of foreign competitors as they look
`forward to using the new post grant system in S. 1145 to gain
`a competitive business advantage against their U.S.
`competitors. Ifwe know other countries had problems in
`
`DMC Exhibit 2123_0O2
`
`

`
`Date & Cite
`
`Patent Harassment Section
`
`May 12, 2009 — Patent
`Reform Act of 2009 — Senate
`Report by Committee on the
`Judiciary
`
`their reform efforts, why wouldn't we take the time available
`to us to more thoroughly study the issue to make sure we
`don't repeat their mistakes?”
`
`Senator Leahy, at 18: [Earlier paragraphs discuss post-grant
`review] “The Committee recognizes the importance of guiet
`title to patent owners to ensure continued investment
`resources. While this amendment is intended to remove current
`disincentives to current administrative processes, the changes
`made by it are not to be used as tools for harassment or a
`means to prevent market entry through repeated litigation
`and administrative attacks on the validity of a patent. Doing
`so would frustrate the purpose of the section as providing quick
`and cost effective alternatives to litigation. Further, such activity
`would divert resources from the research and development of
`inventions. As such, the Committee intends for the USPTO to
`
`address potential abuses and current inefficiencies under its
`expanded procedural authority.” [notes similar quote appears in
`House Report, 20]], below]
`
`February 11, 2011 — Hearing 9 Testimony from Senator Reed, p. 49-50:
`Transcript, House Judiciary
`0 Mr. REED. Well, thank you very much, Mr. Chairman. I
`Committee
`appreciate all of the testimony I’ve heard here today. And I
`am just a country lawyer, and a lot of times I’ll say a lot of
`the problems here, blame it on the lawyers. And one thing
`that’ s been brought to my attention that I am greatly
`concerned about is law firms, such as a group called the
`Patent Assassins. I don’t know if you’ve heard of them. But
`some advertising came into my office where they specialize
`in going through and attacking legitimate patents, in my
`opinion, through the reexamination post-grant review
`process. And I’m concerned about that because in their
`materials they talk a lot about, well, we have the expertise,
`we have the specialty to tie these legitimate patents up. 1y
`don’t use the term “legitimate patents,” obviously, but
`tie these up and we can attack it through the PTO Office.
`And to me that’s just a symbol of something that
`demonstrates commitment to frivolous action that’s going
`to abuse the process. So I am concerned about, in
`particular, the post-grant review proposals that are in the
`Senate bill or the I-Iouse bill. And, Judge, with all due
`respect, you’re the gentleman Iwas most eager to listen to
`today—with respect to these folks, too, over here—because
`you’re 22 years on the bench. What are your thoughts on
`
`DMC Exhibit 2123_0O3
`
`

`
`Date & Cite
`
`Patent Harassment Section
`
`that?
`
`Judge MICHEL. Congressman, the challenger is always
`going to say, ‘ ‘the patent is obviously bad. My people told
`me so. This is not an abusive challenge. This is a solid
`challenge and Ithink I’m going to win.” The other side is
`going to say “no, this is a frivolous challenge that’s
`needlessly delaying court litigation and keeping things open
`in terms of do I own a right or not,” as Mr. Horton said. So
`obviously what you need is some kind of mechanism in
`trying to separate the wheat from the chaff. That’s why I
`think it’s so important to have a meaningful threshold. And
`the threshold suggested in some of the recent proposals—and
`I believe it’s still in the current Senate proposal—is that there
`has to be a likelihood shown in order to start the proceeding
`that at least one claim of the patent is invalid. That seems to
`me to be a pretty good threshold. But if you’ve no
`threshold, it is wide open to abuse and I think it will
`happen. Look, the reality is lawyers, litigators, get paid to
`get advantage for their client any way they can, and they’re
`very tempted to press the limits. That’s the nature of the
`litigation system. It’s true in the courthouse, it’s true in the
`Patent Office. So in both the courthouse and the Patent
`
`Office, you have to have meaningful thresholds to prevent
`abuse; because otherwise, sure as can be, it will happen.
`
`Mr. REED. And because I was also interested in your
`testimony about in the courts. You seem to be comfortable
`that the courts are using tools to sanction frivolous behavior:
`Are any of those tools available to the administrative
`process to the Patent Office that may be applicable to be
`applied there to make sure this abuse doesn’t occur in the
`administrative process?
`
`Judge MICHEL. I don’t think so. The Patent Office is quite
`handicapped. They don’t have subpoena power, so you can’t
`force the production of witnesses or documents, except
`what’ s pretty much volunteered by the parties. And they, of
`course, can disbar lawyers if they lie, cheat, and steal or do
`something blatant and prevent them from practicing in the
`Patent Office in the future. But realistically, their power to
`prevent frivolous filings is nil. So the question then is can
`they screen them out by declining to move forward with the
`proceeding because the threshold is not met.
`
`Mr. REED. I appreciate that. Mr. Horton.
`
`February 28, 2011 —
`
`0
`
`S952: (statement by Sen. Chuck Grassley): “In addition, the
`
`DMC Exhibit 2123_0O4
`
`

`
`Date & Cite
`
`Patent Harassment Section
`
`Congressional Record
`(Senate) [157 Cong. Rec.
`S936-02]
`
`March 1, 2011 —
`Congressional Record
`(Senate)
`[157 Cong. Rec. S1034—02]
`
`March 8, 2011 —
`Congressional Record
`(Senate)
`[157 Cong. Rec. S1360—O2]
`
`April 14, 2011 — Markup of
`H.R. 1249, America Invents
`Act, House of
`
`Representatives Committee
`on the Judiciary
`
`bill would improve the current inter partes administrative
`process for challenging the validity of a patent. It would
`establish an adversarial inter partes review, with a higher
`threshold for initiating a proceeding and procedural
`safeguards to prevent a challenger from using the process
`to harass patent owners.”
`S952: (statement by Sen. Chuck Grassley): “The bill would
`significantly reduce the ability to use post-grant procedures
`for abusive serial challenges to patents.”
`
`S 1041 (statement by Senator Kyl): “The 2009 Minority Report
`also recommended that the bill restrict serial administrative
`
`challenges to patents and require coordination of these
`proceedings with litigation.”
`
`S1374 (Senator Kyl): “Section 5 of the bill has been substantially
`reorganized and modified since the 2009 bill. In general, the
`changes to this part of the bill aim to make inter partes and post-
`grant review into systems that the Patent Office is confident that
`it will be able to administer. The changes also impose
`procedural limits on post-grant administrative proceedings
`that will prevent abuse of these proceedings for purposes of
`harassment or delay.”
`
`(Chairman Smith): 1436-1439, p. 72: “The inter partes
`proceeding in HR 1249 has been carefully written to balance
`the need to encourage its use while at same time preventing
`the serial harassment of patent holders.”
`
`(Chairman Smith): 1831-1834, p. 91: “The program forces
`the party to make a decision, and if you decide to initiate
`inter partes, you need to bring in your A game. Inter partes
`review is not meant to simply be a program that you can
`use to harass a patent owner. For it to truly be a
`meaningful and cheaper alternative to litigation, we must
`maintain the higher threshold.”
`
`June 1, 2011 — House of
`Representatives Report re
`AIA
`
`S46-48: [Earlier paragraphs discuss post-grant review] “1
`Committee recognizes the importance of guiet title to patent
`owners to ensure continued investment resources. While this
`
`[H.R. Rep. No. 112-98, pt. 1,
`(2011)]
`
`amendment is intended to remove current disincentives to
`
`current administrative processes, the changes made by it are
`not to be used as tools for harassment or a means to prevent
`market entry through repeated litigation and administrative
`attacks on the validity of a patent. Doing so would frustrate
`
`DMC Exhibit 2123_005
`
`

`
`Date & Cite
`
`Patent Harassment Section
`
`the purpose of the section as providing guick and cost
`effective alternatives to litigation. Further, such activitv_
`would divert resources from the research and development
`of inventions. As such, the Committee intends for the
`USPTO to address potential abuses and current inefficiencies
`under its expanded procedural authority.”
`
`S5326 (Senator Leahy): “The bill will also improve upon the
`current system for challenging the validity of a patent at the
`PTO. The current inter partes reexamination process has
`been criticized for being too easy to initiate and used to
`harass legitimate patent owners, while being too lengthy and
`unwieldy to actually serve as an alternative to litigation when
`users are confronted with patents of dubious validity.”
`
`September 6, 2011 —
`Congressional Record
`(Senate)
`[157 Cong. Rec. S5322—O3]
`
`DMC Exhibit 2123_0O6