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January 2017

Predicting Patent Policy Under the Trump Administration

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The America Invents Act (“AIA”), signed into law by President Obama on September 16, 2011, was the biggest legislative overhaul to the United States patent system since the Patent Act of 1952. Among other changes, the AIA moved the U.S. to a first-inventor-to-file patent system, created a variety of new post-grant validity proceedings, and eliminated “best-mode” as a litigation defense. The AIA received broad bi-partisan support in both Congressional chambers over the objections of the National Small Business Administration, which argued that the first-to-file provisions would favor “large incumbent corporations.”[1] Since its enactment, the AIA has already significantly changed the patent landscape for stakeholders and practitioners alike. For example, inter partes review proceedings have exploded in popularity and have drastically affected litigation strategy, arguably making it much more difficult for patent owners to enforce their patents.

More recently, several patent “reform” bills were introduced in the 113th (2013–2014) and 114th (2015–2016) Congress, which proposed, among other things, amendments to the AIA post-grant review system, changes to litigation pleading requirements, and restrictions on patent venue. While some of the proposals could be said to strengthen patent rights, overall, the basic tenor of these bills was to further increase hurdles for patent owners. President Obama even stressed the importance of further patent reform in his 2014 State of the Union Address and announced a variety of executive actions aimed at reducing litigation abuse.[2]

Had Hillary Clinton been elected president, she likely would have continued to advocate many of the same patent reform policies as the Obama

Administration. A portion of her campaign webpage outlined her positions on curbing abusive patent litigation.[3]

But Secretary Clinton was not elected president. And, unlike Ms. Clinton and President Obama, President Donald Trump has given almost no indication about his position on issues of patent policy. The anecdotal consensus, however, seems to be that the Trump administration will be more pro-patent than the low bar set by the Obama Administration, which was likely to have been followed by President Clinton. This consensus is based, in part, on Vice-President Mike Pence’s past pro-patent positions as Indiana Governor and on the House Judiciary Committee, as well as the pro-patent stance of many conservative think tanks with ties to the Trump transition team and key Republican members of Congress.

This article provides informed speculation on the Trump Administration’s potential positions on patent policy, especially as it contrasts with what patent practitioners were expecting from Ms. Clinton.

Contrasting Hillary Clinton’s IP Positions

Like President Obama, Hillary Clinton is a patent reform advocate. She supported the AIA and advocated additional targeted rule changes to curb continued “costly and abusive litigation.”[4] For example, she was an advocate of venue reform, requiring specificity in infringement complaints and demand letters, and increased transparency in patent ownership.[5] She also supported legislation that would allow the PTO to retain the fees it collects from patent applicants, ending the practice of fee diversion that strains the PTO’s ability to act competently and expeditiously on patent applications.[6]

Traditional Conservative Policies

It is difficult to pinpoint a single conservative policy on patent issues. On the one hand, patents are property, and conservatives traditionally favor strong personal property rights. On the other hand, tort reform is also an important conservative policy, and much of the current patent “reform” discussion relates to curbing “abusive” litigation tactics. However, the 2016 Republican Platform promulgated at its Presidential Convention focused on the former. It specifically enumerated that patents are “private property” protected by the Fifth Amendment, stressed that “[p]rotecting intellectual property is a national security concern,” noted that “the worst offenses against intellectual property rights come from abroad, especially China,” and “call[ed] for strong action . . . to enforce intellectual property laws against infringers, whether foreign or domestic.”[7]

President Trump’s Influences

President Trump has at least some experience with intellectual property. Much of his personal wealth is tied to the value of his various trademarks and the value of his own likeness, which he licenses and commercializes. A search of the PTO trademark database yields more than 100 different live U.S. trademarks owned by Donald Trump or his companies.  

Although Trump does not seem to have any direct experience with patents, his campaign was built upon protectionist ideas, suggesting that he would strongly support injunctive relief and large awards against imported goods found to infringe U.S. patents owned by U.S.-based companies.[8] Indeed, many of his campaign positions mirror the reason why intellectual property enforcement at the International Trade Commission was created: “to keep foreign pirates out of American markets.”[9] Trump’s campaign website lends credence to the idea that he may seek to strengthen the ITC’s power.  In the context of trade secrets, he highlighted the need to “[u]se every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets,” and cited as a “key issue” that, “[a]ccording to the U.S. International Trade Commission, improved protection of America’s intellectual property in China would produce more than 2 million more jobs right here in the United States.”[10]

Perhaps Trump’s only specific public stance directly affecting specific patent rights concerns his outspoken objection to the Trans-Pacific Partnership (“TPP”) trade agreement.[11] The TPP is a 12-nation trade agreement negotiated by the Obama Administration, which includes several pro-patent positions.[12] For example, Article 18:37 arguably expands current patent subject-matter eligibility beyond that outlined in Alice and its progeny.[13] However, it seems unlikely that Trump’s opposition to the TPP has anything to do with its pro-patent stance, but rather that it is based on his anti-free trade positions.

Some of Trump’s family members have more direct experience with patent rights. For example, Trump’s eldest son and Executive Vice President of The Trump Organization, Donald J. Trump, Jr., has significant experience with patents and patent litigation. In 2011, Trump Jr. partnered with MacroSolve, a company (now known as Drone Aviation Corp.) that engaged in an aggressive enforcement campaign of a single software patent.[14] Trump Jr. wrote an editorial in The Daily Caller in 2012 in defense of “genuine” patent enforcement, in which he distinguished “trolls” who “hoard software patents with the sole intention of leveraging them for a quick payday” from companies who enforced “innovative” technology.[15] According to Trump Jr., “[n]ot 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.” MacroSolve filed 66 lawsuits between March 2011 and September 2013, mostly in sets of 5-10 lawsuits at a time.[16] Most of MacroSolve’s lawsuits settled or were dismissed quickly. 

Trump has also cited the achievements of his late uncle, John G. Trump, an MIT professor, inventor, scientist, and entrepreneur with 23 U.S. Patents to his credit.[17]

Mike Pence and Selected Cabinet Members and Advisors

President Trump’s patent policies may also be shaped by his Vice-President, cabinet, and advisors.

Vice President Mike Pence 

Pence served on the House Judiciary Committee for 10 of his 12 years in Congress and was previously a member of the Subcommittee on Courts, the Internet, and Intellectual Property. In connection with the ultimately-unsuccessful Patent Reform Act of 2007, he introduced an amendment to eliminate best mode as the basis for a post-grant challenge.[18] During later debate on the AIA, he emphasized his personal role in pushing for elimination of best mode as a litigation defense, and stressed that, while he was satisfied with the compromise, he would rather eliminate the requirement altogether.[19] Pence stated that the “best mode requirement of American law imposes extraordinary and unnecessary costs on inventors."[20] He also advocated for the PTO to be able to “retain the fees it collects to fund its operations."[21]

In July 2016, as Indiana Governor, Pence signed an Executive Order establishing the Indiana Economic Development Corporation as the entity responsible for coordinating all efforts on behalf of the State of Indiana to accelerate innovation and entrepreneurship. The Order specifically recognized that increased innovation promotes vibrant communities, economic growth, higher wages, and job creation.[22]

It seems, then, that the Vice-President is generally pro-patent and believes himself to understand some of the details of patent policy, including the concerns of small inventors. The views of three other members of the Trump transition team seem to be even more staunchly pro-patent.[23]

Ken Blackwell 

Ken Blackwell has been tapped as domestic advisor to Trump’s transition team. He has consistently argued against patent reform and in favor of stronger patent rights. In 2014, he authored “The Conservative Case Against Patent Reform,” criticizing the then “new Republican majority” for the “mind-boggling” decision to prioritize patent reform.[24] According to Blackwell, “Patent reform is another example of crony capitalism” and “[t]he protection of property rights is one of the most fundamental conservative principles and we cannot surrender them to deal with a supposed litigation crisis that does not exist.”[25] He continued his assault on patent reform in 2015 (particularly Rep. Goodlatte’s Innovation Act, discussed below), calling it “horrible policy” and “horrible politics for the GOP.”[26] And, he lauded leading conservative groups such as the Club for Growth, the American Conservative Union, Heritage Action, and Eagle Forum for criticizing patent reform legislation.[27]

Wilbur Ross

As Trump’s nominee to head the Commerce Department, Wilbur Ross will have authority over the U.S. Patent and Trademark Office.[28] In an editorial in the Washington Post, Ross, along with Peter Navarro, senior policy advisor to the Trump campaign, argued that Trump would “crack[] down on currency manipulation, intellectual property theft and other mercantilist cheating.”[29] Moreover, in an interview with CNBC, he argued for a “zero tolerance” policy on intellectual property theft.[30]

Stephen Bannon

Stephen Bannon has been hired as Trump’s chief strategist. He is a founding member of Breitbart News, which has published several articles advocating for a stronger patent system. For example, Breitbart published an article by Daniel Schneider, executive director of the American Conservative Union, opining that “[m]aintaining a strong economy and a strong patent system are directly related to our ability to provide a robust national defense and military strength.”[31] Breitbart also published an article by James Edwards, patent policy advisory to Eagle Forum (see below), stating that inter partes review (IPR) proceedings are a “killing field for patents” and are set up with an “antiproperty-right” bias.[32]

Patent Bills from the 114th Congress; Changes in the 115th Congress

The 114th Congress introduced a number of patent-related bills, none of which passed a Chamber.[33] At a high-level, the provisions of two representative bills from the 114th Congress are set out as follows:

Issue

Innovation Act (H.R. 9)

STRONG Patents Act (S. 632)

Financial Incentives

Loser pays with potential to go after shell entity’s owners and investors for attorneys’ fees.

N/A

Post-grant proceedings

N/A

Eliminate broadest-reasonable interpretation claim construction standard;

Ease patent owner amendment standards;

Heighten petitioner’s burden of proof; and

Mandate different PTAB panels for institution and final decision.

Transparency

Plaintiff to disclose all licenses, investors, and parent entities.

N/A

Divided Infringement

N/A

For contributory infringement, “it shall not be a requirement that the steps of the patented process be practiced by a single entity.”

Heightened pleading requirements

Requires identification of asserted claims, accused products, and licensing commitments (e.g., RAND).

Eliminate Form 18 (which has now already been done).

Discovery limitations

Limitations on discovery pre-claim construction.

N/A

Other provisions

Automatic customer stay; and

Curb abusive demand letters.

Curb abusive demand letters.


The Innovation Act was originally introduced in the 113th Congress as H.R. 3309. It passed the House by a bi-partisan vote, but died in the Senate. A tally of the votes for and against that bill is shown in the Figure below:
 



The Republicans continue to hold a majority in both the House and the Senate. The House Judiciary Committee in the 115th Session of Congress will continue to be chaired by Rep. Bob Goodlatte (R-VA) with Rep. John Conyers (D-MI) as ranking member. Goodlatte was the sponsor of the pro-reform Innovation Act, outlined above, which previously passed the House.  In addition, Rep. Darrell Issa (R-CA) is expected to continue chairing the Subcommittee on Courts, Intellectual Property, and the Internet, while Rep. Jerry Nadler (D-NY) is expected to continue as the subcommittee’s ranking member.[34] Reps. Issa and Nadler were co-sponsors of the Innovation Act.  Rep. Issa has been a very outspoken advocate of further patent reform, at times using the term “plaintiff” and “troll” interchangeably, and openly criticizing the current practice at the International Trade Commission of allowing non-practicing entities to rely on activities of domestic licensees to satisfy the domestic industry requirement.[35]

The Senate Judiciary Committee will continue to be chaired by Sen. Chuck Grassley (R-IA).  Sen. Dianne Feinstein (D-CA) is now the ranking member, replacing Sen. Pat Leahy (D-VT).  Sen. Leahy was a co-sponsor of the Patent Act, a Senate bill (S. 1137) proposing pro-defendant changes somewhat similar to those in the Innovation Act. 

All members of Congress listed above voted for the AIA. 

Of the co-sponsors for patent bills introduced in the 114th Congress, five have left Congress (Mike Honda was a co-sponsor of two bills); note, none of the members who left was the main sponsor of any patent legislative bill. Four of the twenty-eight sponsors of the Innovation Act, H.R. 9, are no longer in Congress. One of the six co-sponsors of the STRONG Patents Act, S. 632, is no longer in Congress. 

In sum, if Trump exerts no influence on Congress, it seems likely that neither the “pro-reform” House bill nor the “pro-patent” Senate bill will go anywhere soon. However, if he chooses—consistent with the above discussion of his and his team’s patent views—to push the latter one, there may be room for bi-partisan compromise to get it passed.

Conservative Think Tanks on Patent Policy; Summary of Positions

Heritage Foundation

Politico has written that the “Heritage Foundation has emerged as one of the most influential forces shaping President Donald Trump’s transition team.”[36] Historically, the Heritage Foundation has taken mostly pro-patent positions. The Foundation believes in a balanced approach to patent litigation reform that does not “water down patent rights” and empowers Judges to employ sanctions and bond requirements to deter abusive litigants of all types.[37] The Foundation has cautioned against sweeping patent reform that would further weaken the patent system, such as the Innovation Act and the Patent Act. The Foundation released this statement about the Innovation Act:

Patent rights are delicate and complicated, but the strength of the American patent is a critical component of economic growth.  Rushed reforms, especially in the aftermath of a massive overhaul, are likely to produce unintended consequences like the weakening of patent rights. The House should give the system time to adjust to the 2011 reforms before moving forward on another set of transformational reforms.  Heritage Action opposes H.R. 9. The bill should not come to the floor.[38]

American Conservative Union

Like the Heritage Foundation, the American Conservative Union (“ACU”) is opposed to sweeping patent-weakening reform, as set out in the Innovation Act and the PATENT Act. Dan Schneider, the Executive Director of the ACU, has co-authored an article with Maureen Ohlhausen, Republican Commissioner at the Federal Trade Commission, criticizing a “movement . . . to weaken intellectual property rights” or “abolish patents altogether.”[39] According to Schneider and Ohlhausen, America “became the world’s superpower due to its unsurpassed economic growth-fueled in no small part by strong intellectual property rights.” Ohlausen has separately commented at an ACU-sponsored conference that China is “trying to drive down input costs, IP is an input cost, so they’re trying to lower that . . .” 

The ACU has warned Congress that it would start scoring members on how they voted on the Innovation Act.[40] Instead of the Innovation Act, the ACU has endorsed less sweeping, more focused legislation, such as the TROL Act, which previously made it through the House Energy and Commerce Committee and addresses the matter of abusive demand letter practices.

Connecting the Dots and Predicting Trump’s Patent Policy

Whereas the Obama Administration and the Clinton campaign were clearly in favor of continued patent reform, including the proposals set out in the Innovation Act, Trump’s personal and professional ties suggest a pro-patent stance: many key advisors are on the record as staunch patent supporters; Trump’s son has experience monetizing patents; his uncle was awarded nearly two-dozen patents; leading conservative think tanks have come out in favor of stronger patent rights; and Trump himself seems to understand the value of intellectual property (at least in the context of branding). Couple these ties with his frequently-espoused protectionist views and there is reason to believe that the patent reform tides may be turning.  

To the extent that there is any patent reform during Trump’s presidency, we expect that it will be along the lines of the above-discussed generally pro-patent Senate bill—although perhaps with pre-claim construction limitations on discovery, venue-reform provisions, and/or limitations on demand letters added from the House bill to get it passed.[41]

Most likely, however, we won’t see any legislative changes to the patent laws in the near term. Congress is now pre-occupied with other more “pressing” issues—hearings on Trump’s cabinet appointees and a forthcoming Supreme Court justice nominee, as well as reported attempts to repeal and replace the Affordable Care Act. Given the direction that patent reform may have taken had Hillary Clinton been elected president, inaction and gridlock may still be welcome relief for some patent owners.

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[1] National Small Business Association, Senate Approves Harmful Patent Reform Bill (Mar. 8, 2011), available at https://www.nsba.biz/content/3821.shtml.

[2] The White House, Fact Sheet – Executive Actions: Answering the President’s Call to Strengthen Our Patent System and Foster Innovation (Feb. 20, 2014), available at https://www.whitehouse.gov/the-press-office/2014/02/20/fact-sheet-executive-actions-answering-president-s-call-strengthen-our-p.

[3] Hillary Clinton’s Initiative on Technology & Innovation (June 27, 2016), available at https://www.hillaryclinton.com/briefing/factsheets/2016/06/27/hillary-clintons-initiative-on-technology-innovation/.

[4] Hillary Clinton’s Initiative on Technology & Innovation (June 27, 2016), available at https://www.hillaryclinton.com/briefing/factsheets/2016/06/27/hillary-clintons-initiative-on-technology-innovation/.

[5] Id.

[6] Id.

[7] Republican Platform 2016, available at https://prod-cdn-static.gop.com/media/documents/DRAFT_12_FINAL[1]-ben_1468872234.pdf.

[8] Trump has accused China of “massive theft of intellectual property,” which also suggests a willingness to strengthen U.S. patent rights and trade secret protection.  See, e.g., Trump Says U.S.-China Relationship Must Improve (Dec. 8, 2016), available at http://www.reuters.com/article/us-usa-trump-china-idUSKBN13Y085.

[9] Colleen Chien, Patent Holdup, the ITC, and the Public Interest, 98 CORNELL L. REV. 1 (2012); see also, e.g., Mark Modak-Truran, Section 337 and GATT and the Akzo Controversy: A Pre- and Post-Omnibus Trade and Competitive Act Analysis, 9 NW. J. Int’l L. & Bus. 38 (1988–89) (“Section 337 . . . protects intellectual property rights from international pirating . . . .”).

[10] Trade Policies on Donald J. Trump Campaign Website.

[11] Ana Swanson, Trump Just Announced He’d Abandon The TPP On Day One. This Is What Happens Next., the Wash. Post: Wonkblog (Nov. 22, 2016), https://www.washingtonpost.com/news/wonk/wp/2016/11/22/trump-just-announced-hed-abandon-the-tpp-on-day-one-this-is-what-happens-next/?utm_term=.89b7ceb8e2b7.

[12] The TPP is comprised of the following countries: Australia, Canada, Japan, Malaysia, Mexico, Peru, United States, Vietnam, Chile, Brunei, Singapore, and New Zealand.  Japan is the only country so far to ratify the treaty.

[13] Article 18:37 of the TPP, entitled Patentable Subject Matter, states in relevant part: 

     1. Subject to paragraphs 3 and 4, each Party shall make patents available for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step and is capable of industrial application.

     2. Subject to paragraphs 3 and 4 and consistent with paragraph 1, each Party confirms that patents are available for inventions claimed as at least one of the following: new uses of a known product, new methods of using a known product, or new processes of using a known product. A Party may limit those new processes to those that do not claim the use of the product as such.

[14] Trump’s pick for National Security Advisor, Michael Flynn, sat on the Drone board, at least as of the time that he was selected by Trump. See Press Release, Drone Aviation Corp., Lieutenant General Michael T. Flynn Appointed Vice Chairman of Drone Aviation (May 4, 2016), available at http://ir.droneaviationcorp.com/press-releases/detail/291/lieutenant-general-michael-t-flynn-appointed-vice-chairman.

[15] Donald J. Trump, Jr., Defending Innovation in America, The Daily Caller (May 1, 2012), http://dailycaller.com/2012/05/01/defending-innovation-in-america/.

[16] Source: Docket Navigator.

[17] See, e.g., Amy Davidson, Donald Trump’s Nuclear Uncle, The New Yorker (Apr. 8, 2016), http://www.newyorker.com/news/amy-davidson/donald-trumps-nuclear-uncle.

[18] 153 Cong. Rec. H10,303 (daily ed. Sept. 7, 2007), available at https://www.congress.gov/amendment/110th-congress/house-amendment/793/text.  Pence had previously introduced an amendment to the Patent Reform Act to eliminate best mode as a litigation defense.

[19] Cong. Rec. E1174 (June 23, 2011), available at https://www.uspto.gov/sites/default/files/aia_implementation/20110623-pence_rmrks_eE1174.pdf.

[20] Id.

[21] Id.

[22] Exec. Order No. 16-03, State of Indiana, Indiana Register (Oct. 5, 2016), available at http://www.in.gov/legislative/iac/20161005-IR-GOV160451EOA.xml.pdf.

[23] The other members of the Trump transition team (1) do not have a role likely to shape patent policy, and/or (2) to the authors’ knowledge, have not clearly articulated their stance on patent policy.

[24] Ken Blackwell, The Conservative Case Against Patent Reform, The Daily Caller (Dec. 4, 2014), http://dailycaller.com/2014/12/04/the-conservative-case-against-patent-reform/.

[25] Id.

[26]  Ken Blackwell, Patent Politics Going Bad For GOP, The Hill (July 23, 2015), http://thehill.com/blogs/congress-blog/politics/248859-patent-politics-going-bad-for-gop.

[27] Id.

[28] At the time of this article, there are unconfirmed reports that current USPTO director Michelle Lee will remain in her position, at least temporarily.

[29] Wilbur Ross and Peter Navarro, How Trump Would Stimulate the U.S. Economy, the Wash. Post (Sept. 23, 2016), https://www.washingtonpost.com/opinions/how-trump-would-stimulate-the-us-economy/2016/09/23/b889458e-80ef-11e6-b002-307601806392_story.html?utm_term=.61db89ab7ee9.

[30] Wilbur Ross and Peter Navarro, We Need a Tough Negotiator Like Trump to Fix US Trade Policy, CNBC (July 29, 2016), http://www.cnbc.com/2016/07/29/we-need-a-tough-negotiator-like-trump-to-fix-us-trade-policy-commentary.html.

[31] Dan Schneider, Protect America By Preserving Patent System, Breitbart (Sept. 4, 2015), http://www.breitbart.com/big-government/2015/09/04/protect-america-by-preserving-patent-system/.

[32] James Edwards, Time to Restore Patent Property Rights, Breitbart (Dec. 20, 2015), http://www.breitbart.com/big-government/2015/12/30/time-restore-patent-property-rights/.

[33] The STRONG Patents Act was introduced by Senator Coons in the 114th Congress on March 3, 2015.  It never came to a vote.  Other proposed legislation from the 114th Congress includes the Patent Act (S. 1137), the Senate version of the Innovation Act, which proposed similar changes, as well as more targeted bills such as the VENUE Act (S. 2733), Trade Protection not Troll Protection Act (H.R. 4829), the TROL Act (H.R. 2405), and the Demand Letter Transparency Act of 2015 (H.R. 1896).  Only the STRONG Patents Act can reasonably be viewed as strengthening patent rights.

[34] One Republican member of the subcommittee has left Congress, leaving it currently composed of 13 Republicans and 12 Democrats.

[35] See opening testimony starting at approximately 18:25, available at https://judiciary.house.gov/hearing/international-trade-commission-patent-litigation/.

[36] The Heritage Foundation is also closely linked to Ken Blackwell, who has been an outspoken critic of further patent reform.  See, e.g., Katie Glueck, Trump’s Shadow Transition Team, Politico (Nov. 22, 2016), http://www.politico.com/story/2016/11/trump-transition-heritage-foundation-231722.

[37] John Malcolm and Andrew Kloster, A Balanced Approach to Patent Reform: Addressing the Patent-Troll Problem without Stifling Innovation, The Heritage Foundation (Jan. 2014), http://www.heritage.org/research/reports/2014/01/a-balanced-approach-to-patent-reform-addressing-the-patent-troll-problem-without-stifling-innovation.

[38] Press Release, Heritage Action For America, Heritage Action Opposes House Patent Bill (H.R. 9) (July 20, 2015), available at http://heritageaction.com/press-releases/heritage-action-opposes-house-patent-bill-h-r-9/.

[39] Maureen K. Ohlhausen and Dan Schneider, Intellectual Property and the National Security Issue, The Am. Conservative Union (Dec. 2, 2015), http://conservative.org/intellectual-property-and-the-national-security-issue/.

[40] Josh Peterson, ACU Panel Warns Weak Patent Law Could Harm National Security, The Am. Conservative Union (Sept. 16, 2015), http://conservative.org/acu-panel-warns-weak-patent-law-could-harm-national-security/.

[41] At the time of this article, the Supreme Court has agreed to hear a case, TC Heartland LLC v. Kraft Foods Group Brands LLC, which could moot the need for previously-proposed venue legislation.

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