In a unanimous vote, the U.S. House Judiciary Committee gave the thumbs-up to new patent-reform legislation, the Patent Reform Act of 2007, H.R. 1908 (see also  S. 1145, which the tech industry has been pushing.

The Patent Reform Act would:

Allow a second review of patents after they have been granted to challenge the validity of a newly issued patent.

Narrow the definition of willful infringement, which brings treble damages in infringement lawsuits.

Limit infringement damages to the economic value of the patent’s contribution to an overall product. Currently, damages are based on the entire market value of the product.

Implement a first-to-file standard.

Concerns by 3M Eli Lilly, General Electric, Johnson & Johnson and Proctor & Gamble were muted after amendments to the bill narrowed the “second window” of post-grant reviews.

One of the biggest changes limits post-grant review process by allowing challenges only in the first 12 months.  The Senate Judiciary Committee approved much the same amendments.

According to Sen. Patrick Leahy, infringement damages would be limited, “unless the claimant shows that the patent’s specific contribution over the prior art is the predominant basis for market demand for an infringing product or process.”

Sen. Arlen Specter added an amendment to the Senate version that seeks to eliminate the popular practice of “forum shopping” by limiting venues for patent-infringement cases.

BIO expressed its concern with the bill stating that it threatens continued biotech innovation stating that:

We remain concerned, however, with provisions in the legislation that would change how damages against patent infringers are calculated, in a way that would often make infringement cheaper. We also believe changes are required to the provision that would require that courts peel away from the patented and infringed invention the value of all previously known elements and award damages based solely on the remaining elements. This provision severely devalues all underlying patent rights and could seriously undermine the incentive to develop novel new forms of medicines and other biotechnologies. Further, the bill continues to contain broad new rulemaking authority for the PTO, which is of great concern to BIO.

The Coalition for Patent Fairness sent out a press release giving a big group hug to the bill and stating that it supports patent reform legislation that will:

Balance the apportionment of damages. The standard for calculating damages should be based on the fair share of the patent’s contribution to the value of a product, and not on the value of a whole product that has many other components.

Establish fair standards for punitive damages. Awarding punitive, triple damages for “willful” patent infringement should be reserved for cases of the most egregious conduct, as required by the U.S. Supreme Court for virtually all other punitive damages.

Restrict forum shopping. Cases should be brought in courts with some reasonable connection to the case and not, by gaming the system, in courts solely because they historically favor patent claims.

Improve patent quality. The system should promote quality patents by providing a meaningful second chance for the experts at the PTO to review potentially problematic patents in a timely manner, and should promote sharing of information with the PTO to improve the process and increase innovation.

The bill now goes before the full U.S. House for a floor vote.

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    FYI: This goes to the House for a floor vote on Friday, Sept. 7.