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PublishedNovember 30, 2022

Congress Can Find Common Ground on Transparency

Postmortems from the November 8th elections are in full swing with pundits and operatives making bold claims about what the results mean for Democrats, Republicans, and the country. The dust still hasn’t totally settled, but one thing is crystal clear: both chambers of Congress will be controlled by the slimmest of margins. 

The American people cannot afford to have a divided Congress result in gridlock. We need lawmakers to find common ground and enact bipartisan solutions to incentivize economic growth, drive innovation, and bring down costs for consumers. 

Patent reform has long been a bipartisan issue and should be considered seriously as a priority for the 118th Congress. As I have discussed previously, the last major update to United States patent law, the America Invents Act, was an overwhelmingly bipartisan bill – getting 89 votes in the Senate and 304 votes in the House. 

Improving our patent system remains a bipartisan cause today, and Congress can enact meaningful change without taking on something as large as the America Invents Act. One smaller, but critically important, area for progress is bringing commonsense transparency measures to a patent system that is in dire need of it. 

When the U.S. Patent and Trademark Office (USPTO) grants a patent, it has implications for more than just the grantee. A patent is a government-granted monopoly, meaning that when the USPTO gives a patent to one party, the government is inherently restricting the activities of all other Americans and those who want to do businesses in the United States. This tradeoff is well worth it given how instrumental patent rights are for encouraging innovation and economic growth. But patents’ far-reaching consequences for the American public also mean that there should be basic disclosure measures in place.

There is a shocking public information void in patent record keeping. As it currently stands, there is no public record of who owns patents or when ownership changes hands. This becomes even more alarming when you consider that more than half of all U.S. patents granted are the result of an application with a foreign origin. 

A bipartisan framework has already been put forward in Congress that would remedy this situation. The Pride in Patent Ownership Act would require patent owners to disclose their identity to the Patent Office when a patent is issued and whenever it changes hands, giving the public easy access to information that they are entitled to. 

In addition to providing the public with basic information about patent ownership, Congress should also come together to establish commonsense safeguards for third party litigation funding (TPLF). In the current environment where, at minimum, almost 25% of all patent litigation is funded by third parties, and TPLF for patent litigation is a rapidly growing industry, greater transparency is crucial to cut down on costly patent litigation abuse.

Individual legal jurisdictions have taken positive steps toward requiring disclosures, but nothing resembling universal safeguards have been put in place. In many cases, defendants, juries, and even judges don’t have access to information about who is funding litigation and what conditions are tied to the funding. The ability for litigation funders to operate from the shadows encourages bad behavior and makes investments in frivolous litigation more appealing. 

Undisclosed TPLF undermines the basic incentive structures in our legal system, and in many cases it has negative consequences for both plaintiffs and defendants. The U.S. Chamber of Commerce Institute for Legal Reform recently released a report that assesses the risk TPLF poses for U.S. national and economic security. The Chamber details a number of ways TPLF can be leveraged against American interests, including foreign governments and entities dictating the strategy and outcomes of U.S. civil disputes, damaging the reputation and extracting resources from influential American companies, and using litigation to uncover sensitive information from competitors. The Institute for Legal Reform goes on to point out that TPLF in patent litigation can be a particularly effective means for foreign competitors to drain time and resources from U.S. companies. 

Again, there is already a bill that Congress can build upon and expand to enact robust TPLF transparency measures. Senator Grassley’s and Congressman Issa’s Litigation Funding Transparency Act, introduced in 2021, would require disclosure of TPLF agreements for all class action lawsuits filed in federal courts, and for any claim that is aggregated into a federal multidistrict litigation. Expanding the principles of this legislation to apply to all civil litigation would establish a baseline level of transparency, benefitting plaintiffs and defendants alike and cutting down on investor groups exploiting patent infringement litigation for financial gain.

It is always difficult to operate in a divided Congress, but partisanship should not get in the way of progress. Transparency and accountability are values held by both Republicans and Democrats, and are grounds on which consensus should be able to be built. Creating an accessible public record of patent ownership and establishing basic TPLF disclosure mandates are two initiatives that, if prioritized by the 118th Congress, would have a meaningful impact on cutting waste and abuse and incentivizing innovation and growth. Let’s get it done. 

Representative Bob Goodlatte

Bob Goodlatte is an American politician, attorney, and lobbyist who served in the United States House of Representatives representing Virginia’s 6th congressional district for 13 terms, including as Chair of the House Judiciary Committee.  Representative Goodlatte was involved with a significant amount of patent reform legislation during his time in office, including being a leading force in passage of the America Invents Act.

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