Congressional Spending Bill Features Several IP Measures

By Ryan Davis
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Law360 (December 21, 2020, 11:01 PM EST) -- The massive $2.3 trillion spending and coronavirus relief bill passed by Congress Monday night includes numerous intellectual property provisions, such as creating a copyright small claims court, making unauthorized commercial streaming of copyrighted material a felony, and altering trademark and patent procedures.

The bill, which both provides for $900 million in economic relief from the COVID-19 pandemic and $1.4 trillion in federal spending to avert a government shutdown, runs 5,539 pages. It was approved by the Senate by a vote of 92-6 shortly before midnight, after passing the House 359-53 earlier Monday evening, and now goes to President Donald Trump for his signature.

Beyond the spending provisions, the bill makes several changes to intellectual property law, including a lengthy measure to set up a Copyright Claims Board within the U.S. Copyright Office to adjudicate disputes valued at under $30,000.

Proponents of the measure, the Copyright Alternative in Small-Claims Enforcement Act of 2020, or CASE Act, have argued that litigation in federal court is too expensive for many copyright holders and that a panel within the Copyright Office to handle small claims would be easier and cheaper for them.

Cases before the board will have damages capped at $15,000 per claim or $30,000 for the entire case. They will be more streamlined than in federal court and allow for remote participation without an attorney.

Entertainment industry groups had argued that many small copyright owners are currently unable to enforce their rights in court, but civil liberties groups warned that the new proceedings could be abused by so-called copyright trolls or used to silence free speech.

The CASE Act passed the House by a vote of 410-6 last year, but was held up in the Senate by Sen. Ron Wyden, D-Ore., who on Monday voiced his displeasure on Twitter with the way the measure came to a vote.

"I have been working for more than a year to make common sense changes to this bill to better serve users AND creators," he tweeted. "Unfortunately, the CASE Act was rammed through without those improvements."

Another copyright measure included in Monday's bill was unveiled earlier this month and makes it a felony for large-scale streaming services to provide unauthorized access to copyrighted material.

The bill makes it unlawful to offer a digital transmission service that is primarily designed to publicly perform copyrighted works without permission for financial gain and has no other "commercially significant purpose." It provides for penalties of up to 10 years in prison if the operator knew or should have known that the work was prepared for a commercial public performance.

Sponsors of the bill said it was meant to close a "loophole" that reproducing and distributing copyrighted works is a felony, but streaming them is a misdemeanor.

Lead sponsor Sen. Thom Tillis, R-N.C., this month said that the discrepancy is "particularly harmful to the U.S. economy because streaming has become the most common form of criminal copyright infringement."

The spending bill also includes the Trademark Modernization Act, which was advanced by a House committee in September and creates a process to challenge issued trademarks, along with other changes to trademark law.

The bill creates a mechanism to allow people to file petitions to expunge or reexamine trademarks based on an argument that the mark has never been used in commerce in connection with the goods and services listed in the registration.

It also allows third parties to submit evidence during the trademark examination on why the application should be refused. Proponents of the measure claim those mechanisms are needed to prevent fraudulent trademarks from being issued to entities from China and elsewhere.

Rep. Jerrold Nadler, D-N.Y., said at a hearing on the bill this fall that "clearing improper registrations from the trademark register allows those marks to be available again for use and registration by later, legitimate actors."

The version of the Trademark Modernization Act in Monday's bill also includes two other notable changes to trademark law. First, it gives the director of the U.S. Patent and Trademark Office "the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board."

That provision is designed to shield the TTAB from the type of constitutional challenge currently faced by the Patent Trial and Appeal Board in a case that is pending before the U.S. Supreme Court known as U.S. v. Arthrex.

The Federal Circuit ruled last year that PTAB judges do not have enough oversight from the USPTO director, and there has been speculation that courts could find the same is true of the TTAB. Monday's bill does not include a similar provision to let the director review PTAB decisions.

The Trademark Modernization Act also establishes that plaintiffs in trademark cases are entitled to a rebuttable presumption of irreparable harm upon a finding of infringement when seeking a permanent injunction. Courts have held that trademark owners are not entitled to such a presumption, applying a 2006 Supreme Court ruling in a patent case.

Finally, Monday's bill includes changes to patent law that were passed by the Senate earlier this month. It requires the U.S. Food and Drug Administration's Purple Book, which provides information about biologic drugs, to include more information about the patents that cover the products.

The bill mandates that after a biologic product maker gives a biosimilar applicant a list of the patents on the product and their expiration dates, that list shall be provided to the FDA to be made available to the public in the Purple Book.

Sponsors of the measure said that it will prevent patent listing errors that could delay biosimilars from coming to the market sooner. A measure to make similar changes to requirements for the FDA's Orange Book for small-molecule drugs was passed by the Senate this month but was not included in Monday's bill.

--Editing by Alanna Weissman.

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