Reactions have emerged since last week’s release by United States Senate Judiciary Committee bipartisan leaders of details of compromise legislation to reform US patent laws. Most are generally positive, signalling that a long-sought compromise might be near, but strong reservations remain among some stakeholders.

The Judiciary Committee released the bill, S. 515, on 4 March (IPW, US Policy, 4 March 2010), highlighting several “significant” changes over previous versions.

“Patent reform legislation is closer to being enacted into law than any time since the effort started two Congresses ago,” said Phil Kiko of Foley & Lardner. “Although the House of Representatives passed legislation in the last Congress, there was substantial opposition on the House floor and with the previous administration, particularly with the damages’ provision, and the effort died. Obviously the bipartisan leadership of the Senate Judiciary has been working hard for further changes to the legislation after it was reported out of the Judiciary Committee last year.”

Kiko said it will be “interesting to see” which organisation endorses the latest compromise and whether there is support particularly from the high-tech community, as well as the pharmaceutical, biotechnology, university, and manufacturing communities, and who comes out against it.

“The joint statement from the House Judiciary Committee is certainly a less than ringing endorsement and is indicative that the House wants more significant changes to have ‘meaningful patent reform’,” he said. The issue remains as to whether the Senate will move forward if consensus cannot be reached with the House Judiciary Committee.”

House Judiciary Committee members John Conyers, Jr. (Democrat, Michigan), Lamar Smith (Republican, Texas), and Zoe Lofgren (D-California) said in a statement: “We are hopeful that Congress can come together to pass real and meaningful patent reform.

But, they added, “We believe a number of changes are essential before it could be considered by the House. We are hopeful our Senate Judiciary colleagues will consider these changes as part of their process. We remain open and willing to work on meaningful patent reform, but must be sure that any legislation responds to abuses and improves the overall system.”

One of the stated benefits of reform has been to bring the United States more in line with the rest of the world on issues such as granting patents to the first to file rather the unique US approach of granting it to first to invent. European views on the new bill were still unclear at presstime.

On other issues, Stephen Kunin, a partner and director of the Reissue/Reexamination Practice Group at Oblon, Spivak and former deputy commissioner for patent examination policy at the US Patent and Trademark Office, said, “The new Leahy bill on patent reform makes substantial improvements to earlier changes to inter partes reexamination.”

“IPR will now be an adjudication proceeding much like post grant review contested at the Patent Trials and Appeals Board with rights to appeal to the Federal Circuit,” he said. “To address the concerns about undue duration the proceedings must conclude within 12 to 18 months from initiation.”

“The standard for grant of an IPR has been raised and the estoppel provisions strengthened to avoid re-litigation of final decisions at the USPTO or courts,” Kunin added. “Supplemental examination will now be available to cure inequitable conduct committed in the procurement of the patent. This is an artful way to address the inequitable conduct standard debate.”

DLA Piper’s Andrew Valentine said “one interesting provision relates to the Section 292 of the Patent Act (false marking of patents). Since the Federal Circuit’s Forest Group Inc. v. Bon Tool Company decision at the end of December – finding that the statutory penalty for false marking of a product with a patent is on a “per article” basis – there have been several dozen cases filed in different jurisdictions across the country. In many of those cases, the plaintiff has questionable standing.”

S. 515, he added, “addresses this issue by amending the Patent Act to require a plaintiff to have ‘competitive injury’ and limiting damages to those ‘adequate to compensate for the injury.’ S. 515 proposes that this be applied to all cases pending on or before the date of its enactment, so would likely be applicable to all the cases filed since Bon Tool.”

Opposition to New Compromise

The proposed compromise met with opposition from the Coalition for Patent Fairness, which represents high-tech industry. The new proposal would “produce a patent system that is significantly worse than the status quo,” the coalition said in a statement.

“It weakens the protections against abuse under current law, expands the opportunities for new forms of abusive litigation, and does not include new provisions that would curtail abuse.”

Proposed changes would make it easier for those filing lawsuits to win treble damages claims on grounds that the alleged infringement was wilful, the coalition said. In addition, the proposal would impose new restrictions making it harder to invoke post-grant review procedures at the Patent and Trademark Office.

The coalition also claimed the new proposal eliminates a legal principle aimed at stopping inequitable conduct and abusive claims. The group further opposed the first-to-file provision for several reasons including that “abusers will seek patents on minor advances in technology – that practicing companies would not view as worth the cost of obtaining a patent – in order to use those patents to extort royalty payments.” It had similar concerns about other measures such as damages, venues and interlocutory appeals which could expand pretrial appellate reviews of rulings.

Supporters List

The American Intellectual Property Law Association (AIPLA) issued a release commending the bill as “balanced” and “carefully crafted.” It praised several provisions in particular. “Many of its provisions, including the adoption of a first-inventor-to-file system and the expansion of post-grant review options, will aid in strengthening the system as a whole,” it said. “AIPLA particularly notes that the amendment’s provisions maintain the constructive judicial gatekeeper function for determining royalty damages, incorporate more definite standards for finding willful infringement, and aid in determining appropriate venue in patent litigation.”

It also drew cautious acceptance from the Innovation Alliance, whose members include technology companies. “In its current form, we will not oppose its passage this Congress,” Executive Director Brian Pomper said in a statement. “This is not the bill we would have written, but everyone should understand that is the nature of compromise. We are concerned, however, about changes to the text that may be sought in the House of Representatives. Achieving this compromise was long and difficult.” Any changes could lead the alliance to reconsider its support, he warned.

Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood issued a statement of preliminary support for the bill as it makes “several important and well-crafted improvements to the overall bill.” It represents a “significant step forward” toward high-wage, innovation-related jobs, he said.

Leahy’s office issued a list of statements of support by manufacturers and innovators. These included several of the above organisations plus the Coalition for 21st Century Reform, Genentech, Pharmaceutical Research and Manufacturers of America, IBM, Microsoft, and the Higher Education Coalition.