In a game of one-upmanship,  Sen. Jon Kyl (R-AZ) introduced — and apparently with a straight face — Senate bill (S. 610) as an alternative to the earlier introduced bills, S. 515 and H.R. 1260.  While differing in the standard for showing  inequitable conduct, the bill still retains the dreaded applicant quality submissions (AQS) that has been removed from S. 515 and H.R. 1260.

Instead of requiring applicants to perform searches and submit the closest prior art with analysis with respect to the claims, S. 610 provides that the PTO may offer incentives to applicants to submit such search reports.  And we use the word “incentive” loosely here.  It also contains the DataTreasury “Check 21” provision for making use of the Check Imaging patents a noninfringment.

This is probably a non-starter but some pertinent sections are outlined below:

SEC. 4. DAMAGES.

(a) In general:

(1) COMPENSATORY DAMAGES.—Upon finding for a claimant, the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as determined by the court.

(2) INCREASED DAMAGES.—When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to 3 times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d) of this title.

(3) LIMITATION.—Subsections (b) through (h) of this section apply only to the determination of the amount of reasonable royalty and shall not apply to the determination of other types of damages.

(b) HYPOTHETICAL NEGOTIATION.—For purposes of this section, the term ‘reasonable royalty’ means the amount that the infringer would have agreed to pay and the claimant would have agreed to accept if the infringer and claimant had voluntarily negotiated a license for use of the invention at the time just prior to when the infringement began. The court or the jury, as the case may be, shall assume that the infringer and claimant would have agreed that the patent is valid, enforceable, and infringed.

(c) APPROPRIATE FACTORS.—The court or the jury, as the case may be, may consider any factors that are relevant to the determination of the amount of a reasonable royalty.

(d) COMPARABLE PATENTS.—

(1) IN GENERAL.—The amount of a reasonable royalty shall not be determined by comparison to royalties paid for patents other than the patent in suit unless—

(A) such other patents are used in the same or an analogous technological field;
(B) such other patents are found to be economically comparable to the patent in suit; and
(C) evidence of the value of such other patents is presented in conjunction with or as confirmation of other evidence for determining the amount of a reasonable royalty.

(2) FACTORS.—Factors that may be consid
ered to determine whether another patent is economically comparable to the patent in suit under paragraph (1)(A) include whether—

(A) the other patent is comparable to the patent in suit in terms of the overall significance of the other patent to the product or process licensed under such other patent; and
(B) the product or process that uses the other patent is comparable to the infringing product or process based upon its profitability or a like measure of value.

(e) FINANCIAL CONDITION.—The financial condition of the infringer as of the time of the trial shall not be relevant to the determination of the amount of a reasonable royalty.

SEC. 11. INEQUITABLE CONDUCT.

(a) IN GENERAL.—Except as provided under this section, a patent shall not be held invalid or unenforceable on the basis of misconduct before the Office. Nothing in this section shall be construed to preclude the imposition of sanctions based upon criminal or antitrust laws (including section 1001(a) of title 18, the first section of the Clayton Act, and section 5 of the Federal Trade Commission Act to the extent that section relates to unfair methods of competition).

(b) INFORMATION RELATING TO POSSIBLE MISCONDUCT.—The Director shall provide by regulation procedures for receiving and reviewing information indicating that parties to a matter or proceeding before the Office may have engaged in misconduct in connection with such matter or proceeding.

(c) ADMINISTRATIVE PROCEEDING.—

(1) PROBABLE CAUSE.—The Director shall determine, based on information received and reviewed under subsection (b), if there is probable cause to believe that 1 or more individuals or parties engaged in misconduct consisting of intentionally deceptive conduct of a material nature in connection with a matter or proceeding before the Office. A determination of probable cause by the Director under this paragraph shall be final and shall not be reviewable on appeal or otherwise.

(2) DETERMINATION.—If the Director finds probable cause under paragraph (1), the Director shall, after notice and an opportunity for a hearing, and not later than 1 year after the date of such finding, determine whether misconduct consisting of intentionally deceptive conduct of a material nature in connection with the applicable matter or proceeding before the Office has occurred. The proceeding to determine whether such misconduct occurred shall be before an individual designated by the Director.

(3) CIVIL SANCTIONS.—

(A) IN GENERAL.—If the Director determines under paragraph (2) that misconduct has occurred, the Director may levy a civil penalty against the party that committed such misconduct.

(B) FACTORS.—In establishing the amount of any civil penalty to be levied under subparagraph (A), the Director shall consider—

(i) the materiality of the misconduct;

(ii) the impact of the misconduct on a decision of the Director regarding a patent, proceeding, or application; and

(iii) the impact of the misconduct on the integrity of matters or proceedings before the Office.

(C) SANCTIONS.—A civil penalty levied under subparagraph (A) may consist of—

(i) a penalty of up to $150,000 for each act of misconduct;

(ii) in the case of a finding of a pattern of misconduct, a penalty of up to $1,000,000; or

(iii) in the case of a finding of exceptional misconduct establishing that an application for a patent amounted to a fraud practiced by or at the behest of a real party in interest of the application— (I) a determination that 1 or more claims of the patent is unenforceable; or (II) a penalty of up to $10,000,000.

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5 Comments

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    >>While differing in the standard for showing inequitable conduct, the bill still retains the dreaded applicant quality submissions (AQS) that has been removed from S. 515 and H.R. 1260.

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    The usage of AQS as “dreaded” is an opinion and should be viewed as a documented and accepted fact!!!

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    sorry- The usage of AQS as “dreaded” is an opinion and should NOT be viewed as a documented and accepted fact!!!

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    It came as no surprise that Senate Minority Whip Jon Kyl (R-AZ) (and apparently with a straight face) has recently introduced HIS Patent Reform Act (S610), a copycat of the Bill he proposed last September (S3600) in the wake of the failure of the other patent reform bill then pending in the Senate and contrary to (S515) and (HR1260) currently pending in Congress.
    It again includes a “Check 21” exception (sec. 13,): “With respect to the use by a financial institution of a check collection system that constitutes an infringement under subsection (a) or (b) of section 271, the provisions of sections 281, 283, 284, and 285 shall not apply against the financial institution with respect to such a check collection system.” Although a small Technology Company named Data Treasury and its patents were NOT specifically mentioned, the intent of the exception is aimed directly at Data Treasury and its ongoing litigation against the banking industry for infringing upon its “Check Collection” remote image capture technology.
    Sen. Jeff Sessions originally sponsored this exception in the then pending reform bill, but he later withdrew his support expressing doubts about its legality. Kyl’s proposal has one key difference from the one Sessions offered: It attempts to keep the federal government from shouldering any financial liability for blocking DataTreasury’s pursuit of patent damages against the banks. Under Kyl’s bill, the bank-immunity provision would be voided if a federal court found that the legislation amounted to a government “taking” of DataTreasury’s patent rights. This exception, as written, pollutes a legitimate legislative effort with ex post facto and probably unconstitutional provisions having the lofty purpose of allowing banks infringing Data Treasury Patents to negate and or dramatically reduce the damages they face. So rather than face a jury, where they obviously fear losing, the banks decided to call on their friends in Congress for legal protection. So what was the purpose of his adding this exception with the Gov’t provision to the bill other than to protect the banking industry depicting a clear and crass example of who gets bought in Congress? Legislation should not be used to grant retroactive legal immunity to large corporations that willfully ignored the property rights of a small, innovative company. And no elected official who has pledged to maintain the integrity of our legal system should be a party to such a travesty. Senator Kyle by championing this exception should be made (with a clear answer devoid of spin) to explain why exactly, banks should be immune to patent law that applies to everybody else.
    This is the Industry that Sen. Kyl Champions:
    From: Chief executive (U.S.) 5/1/2002 –Author PRINCE, C.J.
    “It’s not every CEO who freely admits to swiping other people’s ideas—although, truth be told, the vast majority of successful chief executives have probably taken the liberty. But ask Richard Kovacevich, CEO OF WELLS FARGO, whether he prefers inventing ideas or stealing them and he’s quick with his response. “Oh I would much rather steal an idea,” the 57-year old CEO says matter-of-factly. “Quite frankly, it’s much easier mentally. I have no pride about that.” Such disclosure was for the purpose of marketing new technology and while his comments may have been in another context, they clearly set a tone and standard for his senior executive’s actions over the ensuing years.
    For years, DataTreasury Corp. tried to sell its technology to the banks, but instead of buying or licensing the technology, several big banks expropriated it and began using it to change the way they processed checks. DataTreasury’s technology created a windfall for the banks. According to the industry’s own experts, the banks save $20 to $40 billion annually because of the switch to digital processing. Of course, that switch would not have been possible without DataTreasury’s technology, which was covered by patents that the banks callously ignored. Understandably, the company has sued for damages. The banks initially responded by trying to get the patents invalidated with some legal jujitsu. But the U.S. Patent and Trademark Office upheld the validity of DataTreasury’s patents in their entirety. Since then, via ongoing litigation, the Data Treasury patents have withstood the best legal challenges the banks could buy, and that some of the more responsible banks have admitted the validity of the patents by licensing them. And every entity that has been sued almost surely had opportunity to negotiate a license before being sued. This exception has the backing of the Coalition for Patent Fairness, (Fairness by definition – freedom from dishonesty and injustice), a group of high-tech companies backed by (The Financial Round Table.) The Financial Round Table is an institution that represents the country’s’ one hundred largest banks. These banks have a serious financial problem. A finding of willful infringement, will subject them to treble damages. Are they trying to slide an, (unconstitutional) exception through in the name of (honesty and justice)?
    It is abundantly clear that the Banking industry motivated by their unbridled power and greed are prepared to do whatever they believe is necessary to achieve their goals to avoid having to pay a reasonable royalty on Data treasury’s validated Patents. We are on very dangerous grounds with congressional tampering with the constitutional right of intellectual property protection. These are high-quality patents; to not enforce patent rights would be a discredit to those who fairly and lawfully use these licenses.

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    I cant believe the number of inventor unfriendly proposals being submited by supposedly respectable people.At what point do thgey feel all inventing will stop due the distruction of the incentive to produce conceptions. what disgusting ingratitude for the improvements through invention over the last 219 years.