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Ahead of the Curve Auto Supplier Blog

October 09, 2019

STRONGER or Not? Reviewing Potential Implications to Auto Suppliers

Patent reform has been a popular topic on Capitol Hill over the past several months with the leading STRONGER (Support Technology and Research for Our Nation’s Growth and Economic Resilience) bill meandering its way through Congress and identical bills pending in both houses.

As its name suggests, the bill is intended to strengthen the power of a patent by shifting the balance between patent holders and accused infringers in several significant ways. The most notable changes from the current America Invents Act to STRONGER include the following:

Inter Partes Review (IPR) and Post Grant Review (PGR)
  • Petitioners will be required to have standing to file a PGR or an IPR. In other words, petitioners must have been sued for patent infringement or be subject to an action that would give rise to declaratory judgment jurisdiction.
  • Institution standards of a PGR or an IPR by the Patent Trial and Appeal Board (PTAB) will shift from "preponderance of evidence" to a stricter "clear and convincing" benchmark. 
  • STRONGER will limit multiple challenges to enforceability of a patent.
Injunctive Relief
  • Permanent injunctions will be easier to obtain under STRONGER for patent owners who prove both validity and infringement of a patent.
Fee Diversion
  • STRONGER will eliminate fee diversion at the U.S. Patent and Trademark Office (USPTO) in an effort to provide more funding for examination of patent applications. According to Congress, recent studies show that patent examiners spend an average of 19 hours examining a single patent application, a statistic that hasn’t changed in about 20 years.
Interestingly, Congress has chosen to “strengthen” patents by mainly limiting the tools to challenge existing patents rather than focusing on strategies to improve the quality of patents. While the elimination of fee diversion may provide more resources to the USPTO, it is unclear whether this action alone will result in improvements to patent application examination practices. Compared to the America Invents Act, STRONGER, as proposed, makes it exponentially more difficult to challenge existing patents. This may not sit well with the country's manufacturers.

Heavyweights from the auto industry (General Motors, Toyota) and Silicon Valley (Google, Facebook) joined UNITED for Patent Reform, a coalition of about 80 businesses from all industries and sizes that have express their STRONGER concerns. Their September 10, 2019 letter to ranking members of the Senate Judiciary Committee read, in part, "IPR has proven to be successful...and by dismantling it and allowing licensing demands and litigation on poor quality patents would continue to drain precious resources away from job creation and development of new products and services."

A group of notable law professors echoed this idea in their letter to Congress suggesting IPR “has proven to be a robust and efficient check on patent validity, and has had a positive impact across industries, including high-tech, Main Street and pharmaceuticals, where invalid patents can keep drug prices high."

Although it's still too early to know if STRONGER has sufficient support to become law, these proposed changes could have an enormous impact on the patent system we know today, especially in the automotive industry where patent filings have sharply increased since 2009.

The rise in auto-related patents is far from circumstantial. Virtually every part of the driving experience is undergoing significant, technology-enabled changes ranging from who drives the car (connected, automated and autonomous tech), to how the car is powered (hybrid, full electric, fuel cell) to how humans interact with it (augmented and virtual reality, AI, control systems, infotainment).

At the same time, the proliferation of competing technologies will likely require some consolidated standardization in an industry that has traditionally emphasized, if not fiercely defended, its independence. Although many argue that a one-size-fits-all system would increase ease of large scale implementation, others speculate that it could be a killer for continued innovation.

Further, as we described back in May of this year Just How "Free" are Royalty-free Patents?, some OEMs are making “limited enforcement” pledges for the use of their patented technology by third parties. This activity may lead to an increase in cooperation between companies to promote standardization of certain technologies thereby resulting in a decrease in desire for these companies to enforce their patents. Exactly how STRONGER would play out in this evolving automotive landscape is yet to be seen, in part because of the current wave of technological changes taking place.

For automotive suppliers, the impact of STRONGER will likely depend on their current and future business strategies. If STRONGER is passed, we recommend automotive suppliers review their procedures for “clearing” products before release to the market, since an infringement claim by another party may be more difficult to overcome down the road.

Finally, although the STRONGER Patents Act clearly favors enforceability of a granted patent, it deserves to be mentioned that "strong" patents have always been obtainable by companies that follow best practices, such as:

  • Performing prior art searches as part of the patent application preparation process to gain an understanding of the prior art.
  • Including exemplary embodiments and experimental data in patent applications, if applicable, to distinguish inventions from the prior art.
  • Preparing thorough patent applications even when filing the applications as provisional.
Our intellectual property attorneys in the Automotive Industry Group at Warner stand ready to help clients, regardless of which regulations rule the day.
 

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