Thoughts on Unintended Consequences of Proposed Patent Law Changes – IPWatchdog.com

No limitation of defense or damages has ever addressed the intricacies of registering property at the USPTO. It would be a radical change in patent law.

Senators Leahy and Tillis proposed another patent law amendment for the Endless Frontiers Act (SA 2060). SA 2060 rewrites and expands an earlier amendment which, in its old form, had at least something to do with the subject of the FTA (strengthening our competitiveness with China). The old version would have required foreign patent holders to become “transparent” in their ownership interests, by penalizing failure to register their transfers of ownership with the USPTO. The new version obviously reflects the realization that such an exclusion would violate international law. It now imposes the same burden on everyone. Since it would affect everyone, this new amendment evolved outside the original purpose of the EFA.

SA 2060 would also be a stunning expansion of the power of willful, tried infringers to avoid liability for their infringements against patentees. The patent holders most likely to fall prey to SA 2060 are individual inventors and small businesses. SA 2060 basically says that if the documents for a transfer of ownership are not properly processed within a short period of 90 days from the date of a transfer (i.e. if it is not ” registered” with the USPTO), then every counterfeiter that our legal system has determined “the worst of the worst” will get away with it. As a penalty for non-registration, a jury’s finding of will could never lead to increased damages to punish that will. The words of SA 2060 put it this way: for the period that the documents are not perfect, “no party may recover, for infringement of this patent in any action, increased damages under Section 284” .

It has been said that transparency in ownership of rights is a good thing, and who could argue against a little push to increase transparency in ownership of patents? Yes, transparency is a good thing. The same applies to penalties for intentional and deliberate violations. The problem with SA 2060 is that it fails to realize that the real need for transparency is already met in the existing law.

[[Advertisement]]

First, in the rare case where a patent holder has not registered a transfer to himself with the USPTO, that patent holder will still have to prove his status each time he files a patent infringement action. The applicant does this by producing the transfer documents. When it really matters – when filing a lawsuit – ownership interests are always transparent. They must be to meet the requirements of the Federal Court.

Second, the law already encourages transparency. The great irony of SA 2060 is that registration has a long tradition as an action taken to protect the transferee, not to create traps for an imprudent transferee. Just as in real estate law, recording ownership of the intangible property embodied in a patent protects the new owner by notifying the world of the transfer, preventing another (by fraud or otherwise) from becoming “a bona fide holder without notice”. . .” Registration avoids the nightmare scenario of the same owner selling the same property twice, resulting in the second assignee with quiet title. As such, there are already incentives for patent holders to take advantage of free registration of transfers at the USPTO. General property law already encourages the same “transparency” sought by SA 2060, just without the baffling windfalls and rewards for violators deemed unethical.

No limitation of defense or damages has ever addressed the intricacies of registering property at the USPTO. It would be a radical change in patent law. Something this drastic at least would have to rise or fall based on thorough and thoughtful legislative debate, investigation and committee work, including testimony from experts in real estate law and the practice of patents.

Imagine if you owned a home and every time you called the police about a trespasser on your lawn or on your property, the police checked the county records. And then imagine the police and prosecutors being forced to give the trespasser a boon if the conveyancing records weren’t absolutely flawless – say it only allowed tickets and fines when the law would otherwise allow felony charges and imprisonment. It is beyond imagination why anyone would think this is a good idea.

Image by Robert P. Greenspoon