The Republican member of the House Judiciary Committee was responding to an audience question about whether the Innovation Act needed provisions to protect universities and small inventors from its fee-shifting provisions. Issa said that universities should not be treated differently if their behaviour falls within the purview of the provisions. He also objected to putting them in the same category as small inventors.
“Universities should not have protections,” he argued. “Universities are often bullies. Universities are often participating with trolls. Universities are large inventors- they are wealthy, they have a huge amount. They are corporate America as much as General Motors.”
Sceptics of fee-shifting schemes designed to target non-practising entities have expressed concern that such proposals would sweep up research universities and labs since they also usually do not work their patents themselves.
Lay out your case
In particular, Issa argued that the issue is with the vagueness of the claims asserted by patent holders. He said that the patent system can only promote innovation when patents have clear and specific claims and patent holders plead with enough specificity. Universities, Issa suggested, often use ambiguous claims when asserting their infringement claims.
“If you’re a university and you just want to say, ‘here’s 50, 500 or 5,000 patents and give me royalties because you’re infringing on one or more of them’- shame on you,” he argued. “Tell us what it is that somebody is doing that caused you to send that demand. Tell us what the value of your patent is and what the claims are.”
In fact, he suggested that the innovation-driving purpose of patents is built around this process. In particular, if a company receives a demand letter that lays out with sufficient specificity the patent owner’s claims why the company is infringing, the company can then attempt to invent and innovate around the existing patent.
Not just the NPEs
Despite the focus on NPEs and plaintiffs who make demands based on vague claims- Issa says that the Innovation Act also targets defendants and third parties who use vague defences and baseless assertions. He pointed to a set of recent inter partes reviews, including two brought by IPNav’s Erich Spangenberg and hedge fund manager Kyle Bass, to challenge patents held by pharmaceutical companies. Though Bass claimed that his IPRs will help lower medical costs, critics including BIO president Jim Greenwood denounced the action as a “cynical short-selling strategy”. Issa appears to agree with Greenwood’s assessment.
“It’s inconceivable to most people who are not SEC lawyers to think that isn’t already illegal. But not only is it not illegal, but it’s already happening,” he warned. “No matter how frivolous the action is, you get what you want because the stock falls and you can unload the stock.”
Moving forward
Issa understandably declined to give a timeline for the Innovation Act, but he said that Bob Goodlatte, Chairman of the House Judiciary Committee, has been working closely with the Senate to help make sure that the bill coming out of the House of Representatives will not be rejected by the Senate. Issa said that he expected there will be movement in the House of Representatives just after the Easter break, with similar action from the Senate soon after that.
