SUBCOMMITTEE WILL DETERMINE THE FATE OF U.S. INNOVATION – PART 2: THE CHAIRMANSHIP

Chairmanship of the House of Representatives Judiciary Committee’s Subcommittee on the Courts, Intellectual Property and the Internet (IP Subcommittee) will change hands from the Democratic Party to the Republican Party in January of 2023. In Part 1 of this article, I discussed the important role of this Subcommittee in finding legislative corrective solutions to the harmful state of patent law in America.

The 118th Congress and its House IP Subcommittee will determine the fate of U.S. innovation by either fixing critical problems that were brought about by past misguided legislation and Supreme Court decisions—or by ignoring them and making things worse. It is important that the Chair of this Subcommittee be seen by all stakeholders as a fair “honest broker” and an impartial facilitator of balanced discourse on patent legislation.

THE IP SUBCOMMITTEE CHAIRMANSHIP CHOICE MUST GARNER BROAD SUPPORT

The Chair of the IP Subcommittee is the most powerful person on the subcommittee. The Chair sets the agenda, priorities, and can block legislation in committee. The Chair also has significant influence outside of committee with agencies like the US Patent and Trademark Office (USPTO) and the International Trade Commission (ITC).

Representative Darrell Issa (R-CA) has been the IP Subcommittee Chair in the past and is currently the Ranking Member of the Subcommittee. He is likely at the top of the Republican leadership’s list for becoming the next Chair. However, Issa’s record shows that he is most unsuited for the Chairmanship position, having offered one-sided legislation against patent rights and having been among the driving forces that gutted U.S. patent rights. Issa can never gain broad support or the trust of patent stakeholders necessary to protect or restore those rights.

Issa revealed his true colors and belief that patents are a hindrance rather than an engine for innovation and technological progress by introducing his PARTS Act in multiple Congresses (H.R.1879, 115th Congress ; H.R.1057, 114th Congress; H.R.1663, 113th Congress; and H.R.3889, 112th Congress). This repeatedly failed bill makes it not an act of infringement with respect to design patents if the purpose of such otherwise infringing article is to repair a motor vehicle to restore its appearance more than 30 months after the claimed component part is first offered for public sale as part of a motor vehicle. In other words, this bill essentially shortens certain design patents’ life to a 30 month term, destroying investments made by automobile manufacturers in their designs and in any exclusive repair distribution and quality control networks they established based on their patented designs. Without any public policy justification and in an utter disdain for patent rights, Issa would rather protect infringers through an outright repeal of patent rights.

The PARTS Act is but one example of how far Issa would go to dismantle long-established protections that Congress put in place. For example, he proposed to undermine the protections of US domestic industries that Congress enacted decades ago in Section 337 of the Tariff Act by introducing in the 117th Congress H.R.5902, the CLEAR Patents Act of 2021. The bill would stay patent proceedings in other federal agencies without mentioning the International Trade Commission (ITC) or the implications, making it look benign. But this legislation is very damaging to U.S. domestic industry, benefiting foreign companies including Chinese Communist Party (CCP)-controlled enterprises. ITC proceedings are intended to stop imports of products infringing on U.S. patents. The CLEAR Patents Act would stay ITC proceedings if a PTAB review is instituted on the same patent claim. These provisions would essentially allow infringers to block ITC proceedings against them and avert ITC exclusion orders (injunctions against importation). Infringers will be able to do so with the following further prejudices against patent owners: (a) replacing the infringers’ burden of proof in proving patent invalidity by clear and convincing evidence at the ITC with a more lax standard of preponderance of evidence at the PTAB; (b) stopping mid-course a speedy one-year proceeding to obtain an exclusion order at the ITC by starting a new PTAB proceeding that may take up to three years if appealed. Even if the patent survives the PTAB, the CLEAR Patents Act adds years to litigation during which the foreign enterprise can continue to import infringing products. In some cases, this would be enough time to run the U.S. entity out of business.

Issa’s anti-patent record begins in his early days in Congress during the 109th Congress (2005-2006) when he cosponsored H.R.2795, the Patent Reform Act of 2005. Every provision of this bill was aimed at undermining patent rights, including by (1) establishing Post Grant Opposition proceedings similar to those ultimately enacted in the AIA’s Post Grant Reviews; (2) moving the US patent system to the first to file system, repealing the American first‑to invent system and the one-year grace period; (3) providing for additional infringers’ defenses based on patentee’s prosecution conduct at the USPTO; (4) narrowing circumstances for treble damages for willful infringement, including by changing the standard of proof for willful infringement from preponderance of evidence to the higher standard of evidence in federal civil courts, clear and convincing evidence; (5) authorizing the USPTO Director to regulate limits on the filing of continuing applications; (6) making 18-month publication of new applications mandatory; and (7) providing for infringement defense based on prior user rights.

Thereafter, Issa was a major force in passing the AIA during the 112th Congress, legislation that enacted many of the anti-patent provisions of the failed Patent Reform Act of 2005 and doubled-down by including Inter Partes Reviews (IPR) that can be invoked at any time. Later, in the 114th Congress, Issa cosponsored H.R. 9, the so-called Innovation Act, which would have put the AIA’s harm to patent owners on “steroids.” The Innovation Act was biased against patent owners by (1) requiring heightened pleading standards for infringement actions while conspicuously avoiding such requirements for declaratory actions by infringers to invalidate patents; (2) fee shifting provision adverse to patent owners, that would result in a chilling effect on the ability of patentees with limited resources to enforce their patents under a de facto “loser pays” system; (3) a pass through to investors that amounted to piercing the corporate veil by collecting shifted fees from investors if the patent holder could not pay; (4) mandatory disclosure upon filing an infringement action, of assignees and licensees of the patent and any investors with financial interest in the patent, creating a chilling effect for investing in patented technology.

As one who truly believes that patents are a hindrance, who has demonstrated a very long history of extreme anti-patent positions when sponsoring his own legislation and cosponsoring others as well as other anti-patent initiatives and actions, Issa will not garner support and trust from the patent community if appointed Chair of the IP Subcommittee.

Therefore, he should not be appointed Chair of the IP Subcommittee.

It is time for new Republican leadership on the House IP Subcommittee. There are several Republican members of Congress currently on and off the Subcommittee who have substantial experience in intellectual property, and who can chair the Subcommittee and gain support and trust of patent stakeholders. This is an occasion where selecting a Chair based on his highest seniority on the Subcommittee would not serve the best interest of our innovation nation. The House IP Subcommittee must be reassembled under new leadership that can credibly tackle the challenges to undo the harm in patent law to inventors and startups.