|
Patent
Reform Bill Implications
|
||||||||||||
by Robert Ambrogi
BullsEye Bulletin: April 2010
IMS ExpertServices™ is the legal industry's premier full-service
expert witness provider.
Long-debated legislation to overhaul the nation's patent system could
be headed soon to a vote by the full U.S. Senate, after the Senate
Judiciary Committee announced bipartisan agreement on a compromise
bill.
Included
in the bill are key provisions that could directly impact the use of
expert witnesses in patent cases.
Most notably, the bill would require judges
to be more watchful gatekeepers in advance of trials, screening out
unfounded theories of damages. It also would allow them to break trials
into sequences, hearing evidence on damages only after the patent's
validity and infringement are established.
This judicial gatekeeping is unlikely to differ
significantly from the gatekeeping function judges already perform
with regard to expert evidence under Daubert,
lawyers say. However, greater judicial scrutiny of damages could result
in greater demand for damages experts and an increase in pretrial hearings
pertaining to damages.
The bill would also create a post-grant review
procedure for challenging the validity of a patent in a proceeding
before an administrative patent judge of the renamed Patent Trial and
Appeal Board. It would abolish inter
partes reexamination by patent examiners and substitute a procedure
for inter partes review before the PTAB. Both of these changes could
result in a greater need for expert testimony.
What many consider to
be the bill's most dramatic change – converting
first-to-invent to a first-to-file rule – would have little impact on
the use of expert witnesses, lawyers say. However, a corollary change,
the elimination of interference proceedings, would eliminate the need for expert
testimony there.
A Compromise Bill
The Judiciary Committee announced the compromise bill March 4. With
the bipartisan backing of Democratic senators Patrick Leahy (D-Vt.),
Ted Kaufman (D-Del.) and Chuck Schumer (D-N.Y.), and Republican senators Orrin
Hatch (R-Utah), Jon Kyl (R-Ariz.) and Jeff Sessions (R-Ala.), the bill is expected
to move swiftly to a Senate vote.
If enacted, the bill would represent the most
sweeping changes to the nation's patent system in more than 50 years. Among
its major changes to the patent system, the bill would:
- Transition the U.S. from a first-to-invent to a first-to-file system, which would bring it in line with the practice in most other countries.
- Create an entirely new system of post-grant review designed to weed out patents that should not have been issued.
- Allow third parties to comment on pending patent applications and speak to the relevance of prior art.
"With this agreement, we are closer than ever to advancing patent reform legislation through the Senate," Sen. Leahy said in announcing this so-called Managers' Amendment to the Patent Reform Act (S. 515).
A New Gatekeeping Role
With regard to the use of expert witnesses, the bill's most dramatic changes
involve the assessment of damages for patent infringement.
The bill
would provide judges with a more robust gatekeeping role. Judges
would be required, in advance of trial, to assess the legal validity
of the specific damages theories and jury instructions sought by the parties.
Specifically,
the bill would require judges to "identify the methodologies
and factors that are relevant to the determination of damages" and
to consider only those methodologies and factors in making their
decisions.
To that end, the bill would require:
- Parties to disclose before trial the legal and factual bases they propose for determining damages.
- Judges to consider, in response to a motion or on their own initiative, the legal sufficiency of damages evidence before allowing its introduction.
- Judges to make on-the-record findings of the "methodologies and factors as to which there is a legally sufficient evidentiary basis."
The bill further provides that any party to a patent-infringement case
may request that the trial be sequenced. If such a request is made,
the judge or jury would first decide questions involving the patent's
infringement and validity. Only then would the issues of damages
and willfulness be tried to the judge or jury.
With regard to the issue of willfulness,
the bill would raise the bar by requiring clear and convincing evidence
that the infringer acted with objective recklessness. "An accused
infringer's conduct was objectively reckless if the infringer was
acting despite an objectively high likelihood that his actions constituted
infringement of a valid patent, and this objectively-defined risk
was either known or so obvious that it should have been known to the accused
infringer," the
bill states.
Evidence that the infringer had knowledge of an infringed
patent is not, of itself, sufficient to prove willfulness, the bill
says.
The Act's Impact on
Experts
In requiring judges to play this gatekeeping role regarding damages,
does the Patent Reform Act foretell stricter standards with regard
to the use of expert witnesses? One law professor thinks not. In
testimony submitted to Congress, Georgetown University Law Center
Prof. John R. Thomas argued that these proposed reforms only underscore
evidentiary standards that litigators already must follow in using
expert testimony.
"Federal Rule of Evidence 702 currently requires expert testimony
to be based upon sufficient facts or data and the product of reliable
principles and methods," Thomas said. "Further, these principles
and methods must be applied reliably to the facts of the case."
In
other words, theories of damages – to the extent they involve
expert testimony – are already subject to a gatekeeping process. "Accused
infringers may file Daubert motions to exclude expert testimony
that fails to meet standards of relevancy and reliability," Thomas
noted.
Edward M. O'Toole, a patent litigator with the intellectual
property firm McCracken & Frank in Chicago, offered a similar opinion. "I
don’t think the Patent Reform Act, as currently worded, will affect
the role of damages experts."
Federal rules already require litigants
to identify expert witnesses and submit an expert's report in advance
of trial, and experts are already subject to being deposed by opposing
parties, O'Toole noted.
"In most jurisdictions I have been in, these
pretrial activities control what will be allowed into evidence
at trial," he
said. "In
other words, Daubert, as expanded, will still be the test."
But
while the act might not change the role of the expert, it could
lead to an increase in the demand for experts in the fields of
economics, finance and accounting. With judges required to engage in
stricter scrutiny of damages claims and to conduct that scrutiny in advance
of trial, there is likely to be an increase in damages contests and an
increase in pretrial hearings related to damages.
Simply put, if the Patent
Reform Act becomes law, damages experts will be more critical to
patent litigation than ever before.
Administrative Proceedings
The act's proposed post-grant review process could result in a
greater need for expert witnesses in those proceedings, but the greater
demand for experts is likely to come under the revamped inter partes process,
says Robert Ashbrook, a patent lawyer at Dechert LLP in Philadelphia.
Both procedures expressly allow introduction of expert opinions,
but the post-grant review process limits discovery to factual issues,
while there is no such limit for the new inter partes reexamination.
"Using
the new inter partes reexam procedure, an accused
infringer can litigate validity before the PTAB and get a determination
in a year – by which time the patentee's corresponding infringement
suit in district court might not even be through discovery," notes
Ashbrook. "That speed advantage might make the new inter partes reexam
quite popular with defendants, and as a result bring about more
expert work."
While the change to a first-to-file rule is unlikely
to have any major impact on the use of experts, the corollary
elimination of interference proceedings would. "Experts who testify
in interference matters would no longer be needed," said Judith Szepesi,
a patent attorney at Blakely, Sokoloff, Taylor & Zafman in San Francisco.
All
in all, it appears that the Patent Reform Act would increase the
need for experts in some proceedings, reduce the need for them in other
proceedings, and perhaps give more prominence to experts in determining
damages for infringement.
IMS Expert Services is the premier expert
witness and litigation consultant search firm in the legal
industry. IMS is focused exclusively on providing custom expert
witness search services. We are proud to be the choice of over
95 of the AmLaw Top 100.
Call us at 877-838-8464.
View All Articles | Newsletter
Signup | Contact Us
 Our Contact :Phone: 877-838-8464 |
Copyright
2010 IMS ExpertsServices All Rights Reserved |