USPTO Refloats "Small Claims" Patent Court Concept

In nearly all U.S. state court systems, a “small claims” court has jurisdiction over petty civil disputes. Small claim courts exercise jurisdiction limited by subject matter or amount in controversy, or both.  For example, in New York, the small claims court handles commercial and consumer disputes involving $5,000 or less. In California state small claims courts, individuals can bring claims for up to $10,000, although claims by businesses are capped at $5,000. Generally, small claims procedures are marked by rapid timetables, lack of discovery, absence of juries, limited rights to appeal, and unavailability of injunctions and other equitable remedies. Most small court systems stress mediation as a way to resolve as many disputes as possible prior to trial. Parties frequently represent themselves without counsel.

Although the U.S. federal court system lacks any small claims procedure, the U.S. Patent and Trademark Office is floating the possibility of instituting a “small claims” court for certain patent disputes. Although the concept has been a topic of on-and-off discussion for several years, the USPTO currently is accepting public comments through March 18, 2013. The USPTO’s Request For Comments announcement is available HERE.

Although most companies experienced in traditional patent litigation might view a quick, efficient, and inexpensive forum to resolve patent disputes as a godsend, many practical problems must be addressed in establishing such a tribunal. Streamlined litigation may be appropriate for peripheral patent issues, such as actions to challenge inventorship under 35 U.S.C. § 256, especially since the America Invents Act removed the requirement that a correctable mistake in designating inventorship lack deceptive intent. In many cases involving infringement contentions, however, the issues arising from claim interpretation and the joinder of claims involving multiple patents (including patent infringement counterclaims ) would seem to guaranty a panoply of issues too large for any “small” scale proceedings. Furthermore, any savings in time and expense likely are offset by decreased due process and, potentially, credibility.

The USPTO’s request for comment catalogs some of the hurdles facing the patent small claims court concept:

(a) what the possible venues for a small claims proceeding should be, including whether patent small claims should be heard by Federal District Court judges or magistrates, whether patent small claims should be handled by an Article I court, such as the U.S. Court of Federal Claims, or whether patent small claims should be heard in another venue not specifically listed here; 

(b) what the preferred subject matter jurisdiction of the patent small claims proceeding should be, including which if any claims, counterclaims, and defenses should be permitted in a patent small claims proceeding;

(c) whether parties should agree to waive their right to a jury trial as a condition of participating in a small claims proceeding;

(d) whether there should be certain required pleadings or evidence to initiate a small claims proceeding;

(e) whether a filing fee should be required to initiate a small claims proceeding and what the nature of that fee should be;

(f) whether multiple parties should be able to file claims in a small claims proceeding and whether multiple defendants may be sued together;

(g) what role attorneys should have in a small claims proceeding including whether corporations should be able to represent themselves;

(h) what the preferred case management characteristics that would help to control the length and expense of a small claims proceeding should be;

(i) what the preferred remedies in a small claims proceeding should be including whether or not an injunction should be an available remedy and any minimum threshold or maximum cap on damages that should be imposed;

(j) whether a small claims proceeding should include attorney’s fees or some form of a “loser pays” system;

(k) whether a small claims proceeding should include mediation and whether mediation should be mandatory or permissive;

(l) what type of record should be created during a small claims proceeding including whether hearings should be transcribed and whether a written decision should be issued;

(m) what weight should be given to a decision rendered in a small claims proceeding in terms of precedent, res judicata, and estoppel;

(n) how should a decision in a small claims proceeding be enforced;

(o) what the nature of appellate review should be including whether there should be a direct appeal to the U.S Court of Appeals for the Federal Circuit or whether there should be intermediate review by a U.S. district court or some other venue;

(p) what, if any, constitutional issues would be raised by the creation of Federal small claims proceedings including separation of powers, the right to a jury trial, and/or due process[.]

Kudos to the USPTO for seeding a discussion of the patent small claims court proposal, but clearly the obstacles to a meaningful alternative venue for even routine patent disputes seems a long way off.