Patent Reform 2007 - The debate is heating up
Called the most sweeping patent reform in fifty years, the bi-partisan Patent Reform Act of 2007 (S.1145 & H.R. 1908) was introduced on April 18, 2007. Generally speaking, those proposed reforms include:
Rights to First Inventor to File (Section 3)
Assignee Right to File (Section 4)
Patent Damages (Apportionment & Willfulness) & Prior User Rights as a Defense (Section 5)
Post-Grant Opposition (Section 6)
Submission of Prior Art by Third Parties (Section 9)
Venue for Patent Suits (Section 10)
Interlocutory Appeals of Claim Construction (Section 10)
Expanded USPTO Rulemaking Authority (Section 11)
For more detailed information, please click here.
Since that time, businesses large and small have weighed in on the proposed reforms through affiliated groups [200 Company letter; The Coalition for 21st Century Patent Reform; Coalition for Patent Fairness; BIO Statement & BIO Press Release]. Some have characterized the debate as IT and High Finance vs. Manufacturing and Biotech/Big Pharma but the battle lines are not so clearly drawn and the debate over patent reform is complicated. Few groups have opposed or supported the bills in their entirety. One thing that is clear from the list of companies that have weighed in, there is plenty of lobbying power on the issue.
It is not just businesses that are expressing opinions about the proposed reforms. Members of the judicial and legislative branches are also getting into the act. Chief Judge of the Federal Circuit, Paul R. Michel, has written two letters on the proposed reforms – one to Senators Leahy, Specter and Hatch (letter) and another to Chief Counsel to the House Subcommittee on The Courts, Internet and Intellectual Property, Shanna Winters (letter). In those letters, Chief Judge Michel is critical of proposed reforms regarding apportionment of reasonable royalty damages by determining the economic value of the patent over the prior art and points out the burden to the Courts in conducting a mandatory macroeconomic analysis in each and every case. Chief Judge Michel also expressed his concern that permitting automatic interlocutory appeal of any order "determining claim construction" would unduly burden the court system because one more of the parties is nearly always unhappy with the district court's claim construction.
One of the bills sponsors acknowledged that additional work needed to be done when the bill was introduced in April 2007. "This bill is not perfect – we all know that – but it represents a commitment from both sides of the aisle to move forward in streamlining and strengthening our patent system," bill sponsor Senator Orrin Hatch said. "I am hopeful refinements will be made to this bill during the legislative process."
A group of Senators recently wrote to Senate Judiciary Chairman Leahy and ranking committee Republican Arlen Specter urging more time for debate and proposed language changes (letter). Specifically, the Senators suggested that mandatory apportionment of damages, post-grant opposition, and broad rulemaking authority for USPTO need to be more carefully examined. In addition, Rep. Sensenbrenner sent a letter to Rep. John Conyers, Ranking Member of the House Judiciary, outlining ten issues that he believes received inadequate debate. The Senate Judiciary Committee held a hearing on June 6, 2007 during which several industry leaders presented prepared statements regarding the various provisions. http://judiciary.senate.gov/hearing.cfm?id=2803
It appears, however, that efforts to slow down the process have failed because Senate Judiciary committee members have provided markup amendments to the bill in its current form for discussion, debate and adoption in the Judiciary Committee. Some of the more interesting amendments proposed include:
(1) dueling provisions from Senators Specter and Hatch regarding codification of the law of inequitable conduct, (2) repeal of the best mode requirement, (3) elimination of the second look window for post-grant proceedings (while maintaining the first window for post-grant review), (4) codification of the Georgia-Pacific factors for calculating reasonably royalty damages and (5) a requirement for the losing party in patent infringement litigation to pay attorney fees absent substantial justification.
On June 21, 2007, the Senate Judiciary Committee unanimously adopted Senator Leahy's Manager's Amendment that modifies the bill to be considered, including removing "prior user rights" provision but basically leaving intact apportionment of reasonable royalty calculation and other controversial provisions. The Senate Judiciary Committee is expected to take up other amendments either Thursday, June 28 or when it returns from the 4th of July recess.
Members of the Senate and House are expected to continue to work intensively through the summer months on the controversial patent reform legislation and lobbying efforts will undoubtedly continue at a breakneck pace. Senator Kennedy suggested on June 18, 2007, that biotech and traditional high tech industries may want to come to agreement about how patent laws should be updated rather than pursue conflicting agendas through Congress…otherwise there is a chance that "it comes down to who has more lobbyists." http://www.bizjournals.com/boston/stories/2007/06/18/daily9.html
Hopefully Congress will maintain the delicate balance of United States' successful patent system that rewards innovation but protects against frivolous lawsuits with any new legislation that is adopted. Stay tuned to this space for additional updates.