By Liza Porteus Viana for Intellectual Property Watch
Despite an apparent stalemate on patent reform in the United States Congress, the Bush administration is still pushing for a bill to be completed this congressional session.

Speaking in California’s Silicon Valley this week, US Commerce Secretary Carlos Gutierrez acknowledged that talks over S 1145, the Patent Reform Act, had broken down in the US Senate. At the centre of the disagreement is the debate over how patent holders should be compensated for infringement. Senators need to be up to the challenge of “mustering the will to forge a compromise and get it to the president’s desk,” he said.

“We can do better than this. I believe there is a way forward to pass legislation that improves our patent system – already the envy of the world – and addresses many of the concerns raised by patent holders and industries,” Gutierrez added. He made similar remarks in an editorial in The San Jose Mercury News Sunday.

S 1145 has officially been removed from the Senate schedule, and will not be added again until Senator Patrick Leahy (Democrat, Vermont), chairman of the Judiciary Committee, signals Senate Majority Leader Harry Reid (D-Nevada) that an agreement has been reached on the language. There are other items on the Senate’s agenda that must be dealt with before patent reform, which Reid had deemed a priority in January. The House passed a similar bill last fall.

“I don’t know exactly when it would be, but there is the potential for it to be brought up again if they come up with an agreement,” a Reid spokeswoman told Intellectual Property Watch. “The door isn’t closed.”

“We haven’t been able to reach that final agreement,” added a Senate Judiciary aide. “We’re not ready for patent reform at this time … [but] patent reform is not off the table.”

Leahy and the committee’s ranking Republican, Sen. Arlen Specter of Pennsylvania, are still disputing the bill’s text, mainly the damages provision. As of now, there are no days scheduled to work on it.

The Judiciary Committee has other intellectual property-related issues, such as Leahy’s orphan works legislation – marked up on Thursday – performance rights and intellectual property enforcement that the chairman needs to work on this session.

The Judiciary Committee on 15 May voted unanimously in favour of legislation to encourage the use of “orphan works,” material that may be protected by copyright but whose owners cannot be identified or located. Leahy and Sen. Orrin Hatch (R-Utah) introduced the legislation last month (IPW, US Policy, 7 May 2008).

Whereas Specter and Leahy were working constantly to iron out their differences on patent reform as of last month, “I don’t know that we’re working around the clock at this point,” the aide said, but stressed that the issue is still a priority.

The US Patent and Trademark Office said it “remains eager to work with Congress to pass a bill that will promote innovation across all business models.” A source said the agency continues to have meetings with members on technical issues.

Lobbyists Ready for More

Some industry groups have continued the discussion among themselves and with some Senate offices. The debate has involved education, labour, high-tech, energy, biotechnology and a number of other groups.

The Coalition for 21st Century Patent Reform, a group of 40 global corporations including 3M, Caterpillar Inc., General Electric, Procter & Gamble and Johnson & Johnson, was among the many groups working with Capitol Hill staffers on the language, even after last month’s public dispute between Leahy and Specter. But that has tapered off.

“The flurry of activity to try to take something to the floor has died down and I think frankly for us at this point, we’re not unhappy at what I’ll call this relatively quiet time,” said Bob Armitage, senior vice president and general counsel for Eli Lilly and a coalition steering committee member.

Armitage said his group does not think the current bill has “the right formula,” and is in favour of not having any damages provisions.

“We definitely need to see a good bill and until the stage is set, basically, for a compromise that meets the needs for each of the various constituencies involved in the patent system, we’re much happier with no bill than a bad bill,” he said.

The coalition is very concerned with what’s called “prior art subtraction,” requirement, which says the court would have to subtract the value of any prior art used in the invention in the claim against the infringer.

“Alexander Graham Bell invented the telephone and he took wires that already existed … speakers that already existed, electric current that already existed … and he basically didn’t provide anything that wasn’t in the prior art,” Armitage explained. “When you subtract the prior art, there’s nothing Alexander Graham Bell invented that was new.”

Intellectual Property Owners Association Executive Director Herb Wamsley thinks that for a bill to be passed, a consensus would have to be reached on a pared down bill that omits damages, and some other provisions altogether.

“At this point we are not aware of any agreement on damages or a pared down bill,” Wamsley said. “But we believe a great many people have invested thousands of hours working on this bill and there’s still widespread interest in trying to find a way to get meaningful patent reform passed this year.”

“Within the next several weeks” there may be a clearer indication of whether that will happen, he added. “The clock is ticking.”

Eric Thomas, spokesman for the technology- and patent-holder-heavy Innovation Alliance, also noted that “some significant changes would really be necessary for the opposition to fall in line. Right now, I don’t know if it’s going to.”

“Clearly it’s hit a roadblock,” he said. “Is it dead? We wouldn’t say so.”

The Coalition on Patent Fairness, which represents telecommunications, energy, computer, and other high-tech sectors, has stressed that the bill’s supporters have gone above and beyond to make concessions for critics.

For the administration’s part, Gutierrez said the bill should include: a post-grant review process should be included in the bill to help protect patent holders from frivolous lawsuits; a requirement that higher quality patent applications are submitted in the first place; and penalties for applicants misrepresenting information before the USPTO. If all those elements are included, he said, “I believe we would have the makings of a good bill.”

“Of course, this doesn’t meet the definition of a perfect patent bill,” he said. “But I believe such an agreement would represent a significant improvement—and we all know the importance of not letting the perfect be the enemy of the good.”

Liza Porteus Viana may be reached at info@ip-watch.ch.