Patent reform bill may have a chance

Patent reform bill may have a chance

	Published : Wed, 18 Apr 2007 23:41 By : Agencies Print this Story

WASHINGTON (AP) - A bipartisan group of senators and House members introduced legislation Wednesday that would make the biggest changes to the U.S. patent system in over 50 years.

The bill, which is similar to legislation introduced last year, is expected to reignite longstanding disagreements on Capitol Hill between a range of business groups. Companies in the technology and software industries support the legislation, while firms in the biotech and pharmaceutical industries are cool toward many of its reforms.

Patent reform efforts have stalled in Congress for several years, but this time could be different, with Democrats sympathetic to patent reform now in control of Congress albeit by a slim margin. In a February speech, Rep. Howard Berman, D-Calif., who introduced the House version of the bill, blamed the pharmaceutical industry's 'hold on the Republican leadership' for the failure of reform in 2006.

The central issue behind patent reform is whether the current system still spurs innovation, as it was intended to do, or whether increased patent litigation and the large damage awards that can result are hindering new product development.

'The object of the patent law is to promote innovation and we think the balance has been tipped away from that and has created too much incentive for ... litigation,' Emery Simon, counsel to the Business Software Alliance, said. Members of the Alliance, which supports the reform legislation, include Microsoft Inc., Apple Inc., and Hewlett-Packard Co.

The House and Senate versions of the bill were introduced by Sens. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, and Orrin Hatch, R-Utah, and Reps. Howard Berman, D-Calif., and Lamar Smith, R-Texas.

Robert Lindefjeld, a patent expert at the Jones Day law firm, said the fact that bills have been introduced simultaneously in the House and Senate 'shows unanimity in Congress about getting patent reform approved.'

That hasn't always existed in the past, he said. Last year, the Senate held off on its bill to await a Supreme Court decision in a case involving patents and eBay Inc., he said.

The bill introduced Wednesday seeks to reduce the incentives for litigation by making it harder for patent holders to show that a company has willfully infringed another company's patent, which can entitle the patent holder to triple damages. It would also require damage awards in patent lawsuits to be more closely tied to the value of the actual patented technology, rather than the value of larger goods of which the patented item may be a component.

Microsoft, for example, has complained that the $1.52 billion in damages a federal jury ordered it to pay Alcatel-Lucent SA in February for violating digital music technology patents was calculated based on worldwide sales of its Windows software, even though the MP3 technology at stake in the case represents only a small part of the Windows computer operating system.

The legislation would grant patents to the first person or company to file an application, a switch from the current system in which the patent goes to the first person to develop the innovation. The United States is the only country that still uses a 'first-to-invent' system.

Lindefjeld said that reform would save 'tons of hassle and money' that result from trying to determine who first invented a technology, which is not always the same as the first person to seek a patent. Individuals and small businesses argue that such an approach would favor large companies with big legal staffs.

The legislation also seeks to improve patent quality by reforming the review process at the Patent and Trademark Office after a patent is granted that would allow companies to challenge bad patents without having to go to court.

Critics argue that such 'post-grant reviews,' particularly if they are not restricted to a short period after a patent is issued, could weaken patents by adding the uncertainty of potential challenges for years into the future.

Venture capital firms will be less likely to invest in new, patented technologies if patents can be continually challenged, said Manus Cooney, a representative of Tessera Technologies Inc., in an interview before the bill was introduced. Tessera develops miniaturization technologies for the semiconductor and electronics industries.

AP Business Writer Dan Caterinicchia contributed to this report.