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Coalition for Patent Fairness Thinks Patent Reform Is Near

The Coalition for Patent Fairness [1] held a conference call for the Media yesterday to announce that Senate leaders has made public statements suggesting that the Patent Reform Act (S.1145 [2]) could come up for the floor vote in mid-April.  General Counsels from companies that make up the Coalition for Patent Fairness discussed the current state of the bill, what they expect will be accomplished in the weeks ahead and answered some questions.

The Coalition for Patent Fairness is made up of high-tech companies pushing for patent reform. While the last comprehensive patent law reform by Congress was last major revision of the patent laws was the Patent Act of 1952, P.L. 82-593, there is intense lobbying urging that the U.S. patent system is broken and needs to be fixed.

Although no one has really studied whether or not the system is actually in need of change, the call for altering the patent system comes mainly from the high-tech industry, which feels under fire from too many patent infringement lawsuits. Many believe corporations are trying to change the laws to fit their business model instead of trying to fit their business practices to conform to existing U.S. patent laws.

Taken together, the Patent Reform Act, the Supreme Court rulings and the proposed Patent Office rule changes tend to favor the high-tech industry over the biotech and pharmaceutical industries. The bill favors high tech over pharma and biotech particularly in changing the apportionment of damages clause, which would reduce damage awards substantially.

The effect can be disparate since the high tech industry is built on many patents covering incremental changes and improvements while the pharmaceutical industry typically would have one or two patents covering the compound at issue. High tech companies are out to quash so-called nuisance suits while pharmaceutical companies can live and die on a single patent.

(See: Duality: Light and Dark Forces Line Up For and Against Patent Reform [3])

Mark Chandler, General Counsel of Cisco, Mike Holston, General Counsel of HP and Time Warner chief patent counsel Chuck Fish answered questions on the perennial reform bill. They presented the bill as having consensus on most items with four remaining issues of serious contention.

These issues are:

Applicant Quality Submissions – what Fish said was referred to by the three letters AQS (but often referred to by opponents with four-letter words). In this provision, the USPTO wants to transfer responsibility for patent searching from patent examiners to patent applicants. The Intellectual Property Owners (IPO) has been campaigning against this hair-brained idea [4].

Venue – the bill would change the rules on venue, i.e., where a patent holder can sue an infringer. The Coalition believes that neither plaintiffs nor defendants should have to go to an inconvenient forum. Of course, the definition of inconvenient is up for debate.  More at the Chicago IP Litigation Blog [5].

Reasonable Royalty Damages – Currently, courts generally consider the value of the entire product when any part of it infringes a patent. The proposed changes would allow judges to base damages only on the “economic value properly attributable to patent’s specific contributions over the prior art.” Opponents of the legislation say it would make it easier for large companies to infringe the patents of small companies or individual inventors. More at Patently-O [6].

Equitable Defense – the Coalition urges that there needs to be real consequences for misleading the PTO and there needs to be efforts to avoid making changes with unintended consequences. Currently, the legislation would effectively remove inequitable conduct as a defense in infringement cases by first requiring a finding of prior art that invalidates the patent claim. If the claim is already invalid on the basis of the prior art, the issue of inequitable conduct becomes moot. More at Patent Docs [7].

When pressed for making any substantive comments, the Coalition members shrugged off questions by saying they were not prepared to make specific statements or suggestions especially related to what they would compromise on or not. However, the Coalition members made it clear that the one item on the list that was a minimum for their approval was the limitation on damages. They said there needs to be meaningful changes and that the only way the bill was going forward was with this critical issue intact. More from the Patent Law Center [8].

It’s not clear why the announcement now but Dan Sweet, a spokesman for the Coalition for Patent Fairness, said he expects the Senate to take action soon.

Ronald Riley, president of the Professional Inventors Alliance, thinks there is enough opposition to prevent passage of the bill.  Many unions [9], such as the AFL-CIO, the International Federation of Professional and Technical Engineers, and the United Steelworkers are against the legislation. Unions are concerned that the mandatory publication clause will make it easier for others to pirate technology leading to a loss of jobs.  While the Coalition has said their concerns were addressed, universities and research institutes also appear to have problems with the bill [10] in its current form.

Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood immediately released a statement [11] rejecting claims that patent reform legislation is close to ready for consideration by the full Senate:

BIO has been working constructively with interested Senators and stakeholders, and we are unaware of any “deal” on patent reform, or that a consensus deal is close to being finalized. A wide range of industries, labor unions and universities continue to have serious concerns about key provisions of the Patent Reform Act, S. 1145, including the apportionment of damages, post-grant review and real inequitable conduct reform.

Apparently, the USPTO doesn’t even support the Patent Reform Bill [12]

 More here:
IPO Urges Action Against Patent Reform Bill Provision [14]
Bush Administration Calls For “Tech Neutral” Patent Reform [15]
Senate Committee Gives Thumbs Up To Patent Reform Bill [16]
Corn Growers Like Patent Reform; Venture Capitalists Not So Much [17]
Patent Reform Act of 2007: Responding to Legitimate Needs or Special Interests? [18]