May 27, 2015

“The Ups and Downs of the Innovation Act of 2015,” IP Watchdog, May 27, 2015

The Innovation Act of 2015 – essentially the same bill that was left for dead in the Senate in 2014 – is currently pending again in the House, and, by many accounts, is likely to pass both the House and the Senate in 2015. The Innovation Act includes provisions aimed at reducing costs associated with substantively meritless patent cases, including, among others: (i) heightened pleading requirements, (ii) limits on discovery until after a claim construction ruling, and (iii) a presumptive award of attorneys’ fees to the prevailing party, including possible “joinder” of “interested parties.” While existing pleading requirements and discovery in patent litigation are both areas that are in need of modification, the specific proposals of the Innovation Act fail to strike the right balance in view of real world considerations. The proposed presumptive award of attorneys’ fees and joinder provisions, on the other hand, threaten to significantly erode the value of patents as a vehicle for protecting and encouraging innovation.

Heightened Pleading Requirements

Requiring more specific pleading in patent complaints is long overdue, but the proposed requirements go too far. If not for Fed. R. Civ. P. 84 and associated Form 18, the Supreme Court’s decisions in Twombly and Iqbal would have required more specific pleading in patent cases years ago. The Supreme Court recently approved the elimination of Rule 84 (and Form 18), to take effect on December 1, 2015, thereafter requiring complaints for direct patent infringement to satisfy the Twombly/Iqbal “plausibility” standard. But the Innovation Act would require a level of pleading beyond the “plausibility” standard of Twombly and Iqbal, namely that patent complaints include a claim chart illustrating the theory of infringement for each asserted claim against each accused product. This requirement is unduly onerous for plaintiffs because it fails to recognize that, while a plaintiff must satisfy his/her pre-filing due diligence with respect to infringement, the full extent of the infringement may be difficult to determine solely from publicly-available information and without formal discovery where there are multiple infringing products and/or many dependent claims. Requiring a complaint to include a detailed claim chart for each asserted independent claim would strike the right balance between the justified need for a detailed complaint and the burden to a plaintiff of developing its full infringement case for every claim solely from publicly-available information.

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