Apprehension lingers for many over Patent Reform Act

Most patent practitioners can agree that the patent system as it currently exists is in need of help. Just how much help, and in what form, remains a hotly contested issue. 
 
The Patent Reform Act of 2007 (S.1145) now rests in the U.S. Senate Judiciary Committee (view its final report and minority opinions here) following passage of a version last year by the U.S. House of Representatives, and the patent community finds itself divided across a broad spectrum – industry vs. industry, inventor vs. innovator.  It is said that the proposal to join the rest of the world’s first-to-file system aids large organizations at the expense of individual inventors.  Perhaps nowhere has the rift been better dissected than in the patent blogosphere, by such heavyweights as Dennis Crouch at Patently-O and Steven Albainy-Jenei at Patent Baristas
 
If there is a consensus, it’s that the sweeping reforms proposed in the legislation will most directly benefit the high-tech arena, where a single invention is covered by numerous patents. Besieged by lawsuits, larger high-tech companies particularly favor the Patent Reform Act’s restrictions on royalty damages calculation and venue provisions that seek to eliminate forum shopping. Of note for the high-tech industry is that the current version of the Senate bill drops an earlier proposal to repeal the extra-territorial provision embodied in 35 U.S.C. section 271(f).
 
On the other side of the field with quite the opposite problem stands the pharmaceutical industry, where a drug invention often is covered by a single patent. Provisions relating to post-grant opposition proceedings and inequitable conduct reform could stifle innovation in industries that invest inordinate sums of money to develop their patents, the pharmaceutical and bio-technology industries complain.
 
The Bush administration has opposed the legislation previously, and in its latest criticism – in the form of a letter sent to Senate Judiciary Committee Chairman Senator Patrick Leahy (D-Vt.) on Feb. 4 – it took particular issue with Section 4 of S.1145, the provision pertaining to apportionment of damages.  According to the administration, the intellectual property system is “reasonably well functioning” and the “resulting harm” posed by the legislation “would outweigh all the bill’s useful reforms.” Furthermore, the letter adds,
 
While well-intentioned, we do not believe a convincing basis has been established to justify the significant changes to current law in the bill’s damages section. The Administration believes that it is important to provide greater certainty in patent litigation and remains interested in exploring options that do so. The requirements in Section 4 of the bill, as currently drafted, would likely lead to less than adequate compensation for many patent holders and could promote infringement.
 
E. Anthony Figg of Rothwell, Figg, Ernst & Manbeck chairs the Patent Law Reform Task Force of the American Bar Association’s Intellectual Property Law Section. In that capacity, he’s been a regular contributor to the Section’s White Paper on Patent Reform, and he’s been keeping a close eye on the legislation as it winds its way through Congress. The more controversial aspects of the bill may very well keep it from even making it to the Senate floor but the legislation is not entirely without merit, either, Mr. Figg says. 
 
There’s a lot in the bill that we like. We support the first to file provisions. We support the notion that there should be some sort of post grant review process, where validity can be challenged in a patent office proceeding. We support the proposals that would reduce or eliminate subjective elements of patent litigation, like the elimination of the best mode requirement, clarifying willful infringement, reform of inequitable conduct law. And we’ve long been an advocate of eliminating PTO fee divergence.
 
Although the Senate could throw the baby out with the bath water, there are other options, Mr. Figg says. The provisions which have drawn the most ire can be addressed by either a Managers Amendment from Senator Leahy or Senator Orrin Hatch (R-Utah), or by a substitute bill once the legislation has been introduced on the Senate floor. Getting it there is another story. Adds Mr. Figg,  
 
The big issue now is whether the bill has sufficient support in the Senate to go to the floor. We hear mixed reports on that. Some are optimistic that the 60 votes for cloture are there and that it will be sent to the floor sometime later this month. We’ve heard from others that it doesn’t have the necessary votes, that there’s too much controversy over some of the provisions, and that it’s not likely to go forward unless some of those things are fixed… The impression I get is that it really isn’t ready to go to the floor unless some significant changes are made.
 
If the legislation garners the necessary support and makes it to the Senate floor, a vote most likely will occur by the end of February.