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Patent Small Claims Pitch, Long Dormant, Revived by Agency

May 25, 2022, 9:20 AM

The US Patent and Trademark Office has resurrected the decades-old notion of establishing a small claims patent court, as a similar board focused on lower-dollar copyright disputes comes closer to opening its doors.

The patent agency is accepting until July 5 public input on the need for such a tribunal, practical and procedural issues that should be weighed, and other legal considerations. If the PTO moves forward with the idea, however, the tribunal will bear little resemblance to its copyright counterpart, which could begin hearing cases in June, attorneys say.

The Copyright Claims Board is expected to provide a less complicated legal process that’s accessible to individuals who may choose not to be represented by attorneys, said Terrica Carrington, vice president of legal policy and copyright counsel at the Copyright Alliance.

Patent attorneys, however, say a similar set up might not necessarily be feasible.

“It’s just a different beast altogether,” said Michael Cuviello, a patent attorney with Banner Witcoff Ltd., noting that patent claims—even those on the smaller side—could involve technical complexities that make it difficult for patent owners to represent themselves.

After last broaching the subject in 2012, the patent office earlier this month said it’s asked the Administrative Conference of the United States to conduct an independent study of issues associated with and options for designing a small claims patent court.

“It’s not a new idea. I think it’s been talked about since the ‘80s. It seems to pop up every 10 years or so,” Cuviello said.

Cutting Cost

The design of a small claims patent court will go a long way toward determining whether the idea can become reality.

In announcing the small claims study, the patent office posed multiple questions for public comment. These include whether the body should exist within the federal court system or as an administrative forum; whether it should be mandatory or voluntary; how discovery and other legal processes should play out; and what remedies would be available.

Reducing litigation costs would also be a primary concern for attorneys.

There are benefits for plaintiffs and defendants to have a forum for smaller claims, Cuviello said. For example, it’s “less attractive” for a plaintiff to bring a $2 million lawsuit in federal district court if it would cost $1 million to bring and maintain that litigation.

One big question mark centers on where a possible small claims tribunal will set its monetary threshold for hearing patent cases. The Copyright Claims Board, for example, has a $30,000 cap on disputes.

“You might be looking at a $5 million ceiling now,” Cuviello said. “So really, what is a small claims court? You know, we’re still talking $5 million dollars, it’s not that small.”

A small claims body also could potentially cut litigation costs by limiting discovery, the pre-trial process for obtaining evidence, attorneys said.

“Patent litigation is very expensive, and it is clearly the case that in many, perhaps most but at least many, litigations, one party has a hell of a lot more money than the other party,” said Chico Gholz, a senior counsel at Oblon, McClelland, Maier & Neustadt LLP.

“Once you get into litigation, you’re trying to win for your client. And one of the tools that is available to do that is to smother the other side” with discovery requests, he said.

Other Merits

Lawyers and academics see other merits in a small claims body.

“For one thing, you’d be trying it before people who understand what you’re talking about. Boy, that is a huge difference,” Gholz said. “If you’re trying to litigate that matters before Article III judges, the great majority of them do not understand what patents are.”

Additionally, a small claims patent board could help with a perceived under-enforcement of patents, said Amy Semet, an intellectual property professor at the University of Buffalo School of law. There is a belief that “people that are individual inventors don’t have necessarily a forum to have their claims adjudicated,” Semet said, and a small claims patent board is seen as a way to resolve this issue.

The tribunal could be a venue for infringement claims that don’t involve monetary damages, too.

“Some patentees are not necessarily interested in the money per se, said Semet. “They’re interested in getting an injunction to preclude a competitor or an alleged infringer from practicing the invention. Sometimes that’s more important to the patentee than the actual dollar amount.”

Still, some are skeptical of the need for a new body, seeing a path to addressing cost and other concerns through the traditional court system instead.

“I think it’s pretty speculative whether we’ll ever see a small claims court,” said Cuviello. “I could see more likely revisions and modifications to district court, to handle small claims, than actually setting up a special court here. But one never knows.”

To contact the reporter on this story: Riddhi Setty in Washington at rsetty@bloombergindustry.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com