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Patent Reform 2009: Still Too Many Competing Interests

In a game of one-upmanship,  Sen. Jon Kyl (R-AZ) introduced — and apparently with a straight face — Senate bill (S. 610 [1]) 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) [2] that has been removed from S. 515 and H.R. 1260 [3].

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 [4] 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.