Will US Innovation Act Really Bring In The Desired Changes to US Patent System?
One significant provision of the US Innovation Act is the fee-shifting provision, which proposes to amend 35 U.S.C. § 285. But there are concerns whether it will really serve the desired purpose. Under current law § 285, patent lawsuits follow the American system in which each side pays its own legal fees. However, if the Innovation Act flips current § 285, it implies that the court must award reasonable attorney fees and expenses to the prevailing party in patent cases, “unless the court finds that the position of the non-prevailing party or parties was substantially justified or that special circumstances make an award unjust.” And although this provision is supposed to deter parties from filing frivolous lawsuits, but it is not clear that it will accomplish this purpose. Though there are many concerns, following are some of the more important ones –
1. How to justify (by standard means) that which party is the prevailing party? For e.g., if a plaintiff prevails on one claim, but the jury find non-infringement on another? Are both parties prevailing parties or not? Thus, courts will undoubtedly struggle with interpreting these standards and deciding who, exactly, “deserves” to pay and who does not.
2. To be a prevailing party requires a judgment by the court and it never comes towards the beginning of litigation, so a defendant will have to still incur significant costs to get to the point at which it has a chance to recover its fees.
3. Lastly, there is concern for traditional competitor vs. competitor lawsuits. If the rules are amended, it will create additional pressures that are more likely to be borne by defendants, who have no control over whether they are sued, than by plaintiffs, who can have significant control over when they sue and which patents/claims they sue on.
Note that, the Innovation Act passed the House by a vote of 325–91 and is pending in the Senate, which has said that it will fast track passage of it.