Innovate Bigly?—Patent Reform Under @realDonaldTrump

Authored by R. Benjamin Cassady, Lionel M. Lavenue, and Michael Liu Su

According to recent press reports, President-elect Donald Trump has not spoken specifically on patents, and commentators do not know where a Trump Administration will take patents and intellectual property. Others have further suggested that there is no indication of what kind of patent legislation President-elect Trump and the new Republican Congress may want to propose. But, we beg to differ. As it turns out, many of the tweets on Twitter by President-elect Trump, while he was a candidate especially, provide plenty of hints as to the possible patent and intellectual property priorities in a Trump Administration.

@realDonaldTrump: "Without momentum, a lot of great ideas go nowhere."

The current Congress, the 114th Congress, started strong with its patent-reform initiatives, continuing the momentum from the previous Congress. Within the first six months of this Congressional term, members of the House and the Senate collectively introduced six bills on patent reform. They include: (1) the Innovation Act (H.R. 9) and its companion bill; (2) the Protecting American Talent and Entrepreneurship(PATENT) Act (S. 1137); (3) the Innovation Protection Act (H.R. 1832); (4) the Demand Letter Transparency (DLT) Act (H.R. 1896); (5) the Targeting Rogue and Opaque Letters (TROL) Act (H.R. 2045); and (6) the Support Technology and Research for Our Nation’s Growth (STRONG)Patents Act (S. 632).¹

The two most comprehensive bills—the Innovation Act and the PATENT Act—focus on curbing so-called "abusive NPE litigation practices" through various means. For example, the Innovation Act would make fee-shifting the default rule and always award the prevailing party reasonable fees and expenses, unless the nonprevailing party’s position and conduct were "reasonably justified" or "special circumstances make an award unjust." The PATENT Act, on the other hand, does not go so far as making fee-shifting the rule, but it would require a district court to determine, upon motion, whether a nonprevailing party’s position was "objectively reasonable in law and fact" and whether its conduct was "objectively reasonable."

Also, both bills—the Innovation Act and the PATENT Act—would require not only an identification of each patent and claim allegedly infringed, but also an element-by-element analysis of how the accused instrumentality meets all the claim limitations. For inter partes review and post-grant review, both bills would change the claim construction standards from "broadest reasonable interpretation" to "ordinary and customary meaning" and require that Patent Trial and Appeal Board judges consider claim constructions by district courts.

Another proposed reform bill, the STRONG Patents Act, seeks to "strengthen patents" by making them harder to invalidate. It would raise the bar for invalidity even farther than present, requiring a clear-and-convincing-evidence standard for challenging a patent in inter partes review and post-grant review, as opposed to the current preponderance-of-the-evidence standard. It would also limit the entities with standing to bring challenges before the PTAB. Under the STRONG Patents bill, an entity may petition the PTAB only if it has been sued for infringement or has standing to bring a declaratory-judgment action (i.e., an actual case or controversy exists).

The proposed DLT and TROL Acts both try to crack down on abusive use of demand letters, although the broader PATENT and STRONG bills include similar provisions. The proposed DLT and TROL Acts also would enable district courts to impose sanctions or reduced damages on those parties improperly sending demand letters. Failure to comply with the proposed TROL Act could even subject distributors of improper letters to penalties by the Federal Trade Commission.

As the Congressional term has progressed, and with the elections, the push for the all-encompassing reforms listed above gradually lost steam.²Instead, bills aimed at changing very specific aspects of patent law followed. For example, the Venue Equity and Non-Uniformity Elimination (VENUE) Act (S. 2733) seeks to limit the forums where plaintiffs may bring suit, and the Trade Protection Not Troll Protection (TPTP) Act (H.R. 4829) aims to prevent most NPEs from asserting patent infringement in the U.S. International Trade Commission (ITC).³

Thus, although the House and the Senate have collectively considered eight different patents bills in this term, none has become law. And, it is unlikely that any will pass the House and the Senate by the end of this term. So, what is likely to happen under President Trump?

@realDonaldTrump: "Be open to change—it’s another word for innovation."

Consistent with his status (and his promotion of himself) as a successful businessman, President-elect Trump has generally taken a pro-business, pro-innovation stances in public statements. His proposed policies include significantly reducing corporate taxes and regulations and strengthening trade enforcement.⁴Although he has not always taken explicit positions on federal research and development funding, technology transfer and commercialization, or supporting startups,⁵he has tweeted extensively on innovation and praised innovation as essential for businesses to strive.

Examples of his tweets on innovation are quite telling as to his view, which include:

• "Entrepreneurs: Ask yourself: What can I provide that does not yet exist? Be open to new ideas. Be innovative!" (May 29, 2015)
• "Entrepreneurs: Don’t be confined by expectations. There are no exact rules for negotiation— try to remain flexible and open to new ideas." (April 13, 2015)
• "Entrepreneurs: Business is a creative endeavor. Being innovative = being open to new ideas. Keep an open mind!" (Jan. 9, 2015)
• "Remain open to new ideas. That’s where innovation begins." (Aug. 6, 2014)
• "Keep an open mind—business is a creative endeavor. Strive for innovative ideas." (Aug. 16, 2013)
• "Keep stimulating your mind with big ideas. Be a collector of big ideas. Constantly fill your mind with new information." (June 25, 2013)
• "It’s important to remain open to new ideas and new information. Keep your door open every day to something innovative and energizing." (May 23, 2013)
• "Look for good ideas outside of your own areas of expertise. Find innovations, approaches, and practices that you could adapt in your field." (April 3, 2013)
• "Take the time to be thorough in whatever you undertake. Remain open to new ideas. Remain fluid, not fixed, in your expectations." (March 29, 2013)
• "Being open to change could lead you into a fortunate situation and open the door to innovation." (July 30, 2013)
• "You’ve got something unique to offer—find out what it is. Ask yourself: What can I provide that does not yet exist? Innovation can follow." (Feb. 13, 2013)
• "Be aware of things that seem inexplicable because they can be a big step towards innovation." (July 13, 2009)

With an approach that links innovation to success, the President-elect may be unlikely to be sympathetic towards claims of victimhood from so-called "abusive NPE litigation practices." Instead, as noted below, his thoughts may be more aligned with reframing the issue—not as nonpracticing entities versus the targets of NPEs, but innovators versus those are claimed to use the innovations.

Notably, the President-elect has been known to include his family members amongst his close circle of advisors, and their experiences and viewpoints may not only influence his positions but may help define it. For example, a few years ago, Donald Trump Jr. was involved in a patent litigation dispute involving one of his companies.⁶Accordingly to Trump Jr., his company "merely asserted its own intellectual property" but was accused of being a "troll."⁷He rebutted: "Not every company that brings suit for software patent infringement is an exploiter. Some are genuine tech innovators with a real historical and financial investment in their ideas. To conflate these two situations, as many opponents of software patent litigation do routinely, unfairly maligns companies that deserve to reap the fruits of their labor."⁸

It is yet to be determined how the President-elect may be influenced by those with whom his party is aligned, such as Senator Mike Lee, who has reportedly been on Trump’s list of potential U.S. Supreme Court nominees, notwithstanding Senator Lee’s refusal to endorse during the campaign. Senator Lee is a cosponsor of the PATENT Act, advocating for reform to curb "abusive tactics" that "are harming innovation and our economy," with the goal of "help[ing] small businesses."⁹At least on the surface, the views of Trump Jr. and Senator Lee appear at odds, but the President-elect has been mending fences, so the PATENT Act is up in the air.

@realDonaldTrump: "Washington should move on legislation."

Therefore, given the long list of priorities by the President-elect (and patent reform not being one of them), it seems that comprehensive patent form legislation is not likely to pass soon. The President-elect’s positions on bolstering innovation and protecting it will instead likely translate into stronger patent rights—but not necessarily new legislation directed to patents.

As a first data point, there is Donald Trump Jr.’s opinion that the anti-"troll" climate may hurt "genuine tech innovators" that seek patent enforcement may reduce the President-elect’s desire to promote patent reform targeting NPEs. And, as a second data point, Vice President-elect Mike Pence is "99 percent align[ed]" with the American Conservative Union, which generally opposes sweeping patent reform.¹⁰¹¹Thus, in the upcoming year, with the litany of other priorities, Congress will likely be preoccupied by issues at the top of Trump’s agenda, such as trade, immigration, healthcare and taxes, and it is unlikely to focus on patent reform per se.

But, there are still possible avenues of legislation that addresses patents and intellectual properly. The President-elect’s "America First" theme, and his promise to stop intellectual property theft, could lead to the strengthening of the International Trade Commission (ITC). The Trump Administration and Congress may view the ITC as one option to not only protect U.S. innovation but to thwart the importation of foreign infringing goods into the U.S. market. To accomplish this goal, Congress could even adjust the agency’s domestic industry requirement and/or its power to issue exclusion orders. Thus, although patent reform legislation may very likely be put on hold, a shift in the focus of legislative changes to patent law could occur.¹²

@realDonaldTrump: "America needs strong leadership. Politicians can talk but they don’t get things done."

Thus, candidate Trump talked and/or tweeted a lot about innovation and intellectual property. These tweets may give some insight into his views about promoting and protecting U.S. intellectual property. Although there are few concrete examples of specific provisions that pertain to patents and intellectual property, there are certainly many indicators that intellectual property will be a focus of the new Trump Administration. Clearly, the framework of the proposals is yet to be written, but the President-elect has certainly opined, frequently, on the importance of intellectual property.

Endnotes

¹For a detailed discussion of these six bills, see A Review Of Patent Bills In The 114th Congress, Lionel Lavenue et al., Law360(http://www.law360.com/articles/664670/a-review-of-patent-bills-in-the-114th-congress).

²See 2015 Is Almost Over—What Happened To Patent Reform?, Lionel Lavenue et al., Law360

(http://www.law360.com/articles/738706/2015-is-almost-over-what-happened-to-patent-reform).

³For a detailed discussion of these two bills, see Patent Reform Beyond The Innovation Act: The VENUE Act, Lionel Lavenue et al., Law360(http://www.law360.com/articles/788794/patent-reform-beyond-the-innovation-act-the-venue-act); Patent Reform Beyond The Innovation Act: The TPTP Act, Lionel Lavenue et al., Law360 (http://www.law360.com/articles/788810/patent-reform-beyond-the-innovation-act-the-tptp-act).

⁴President-Elect Trump’s Positions on Technology and Innovation Policy, Information Technology & Innovation Foundation(http://www2.itif.org/2016-trump-on-tech.pdf).

⁵Id.

⁶Patent Chaser MacroSolve Has A Trump Card: A Deal With Donald Trump, Ingrid Lunden, Gigaom(https://gigaom.com/2011/10/11/419-patent-chaser-macrosolve-has-a-trump-card-a-deal-with-donald-trump/).

⁷Defending innovation in America, Donald J. Trump, Jr., The Daily Caller (http://dailycaller.com/2012/05/01/defending-innovation-in-america/).

⁸Id.

⁹Senators Aim to End Patent Abuses that Cost U.S. Economy Billions of Dollars Every Year, Press Release by Sen. Mike Lee(http://www.lee.senate.gov/public/index.cfm/2015/4/senators-aim-to-end-patent-abuses-that-cost-u-s-economy-billions-of-dollars-every-year).

¹⁰Mike Pence the most conservative nominee in 50 years—Tim Kaine deemed 'left' of Obama, Clinton, Jennifer Harper, The Washington Times (http://www.washingtontimes.com/news/2016/oct/3/mike-pence-the-most-conservative-nominee-of-all-ac/).

¹¹Patent Reform Could Put American Innovation At Risk, Charles J. Cooper, The Washington Times (http://www.washingtontimes.com/news/2015/mar/14/in-three-great-phases-americas-economy-has-been-tr/)

(http://conservative.org/patent-reform-could-put-american-innovation-at-risk/).

¹²See, e.g., USPTO Director Urges Trump To Remember Importance Of IP, Ryan Davis, Law360 http://www.law360.com/ip/articles/862678/uspto-director-urges-trump-to-remember-importance-of-ip).