U.S. Patent Reform Stalls in the Senate; Remains a Topic of Interest Before Congress
Kevin Richards, manager, U.S. Government Federal Affairs: Thursday, June 5th, 2008 | 4:00 pm
For the past two years, Joe Fitzgerald, Vice President of Legal and Deputy General Counsel, and I have been coordinating Symantec's efforts to pass patent reform legislation in Congress. Symantec and other leading high tech firms have increasingly become the target of frivolous lawsuits by patent speculators resulting in large settlements which hinder greater investment in innovation by our company.
Symantec joined the Coalition for Patent Fairness (www. patentfariness.org) a coalition of high tech, telecommunications, rural farming organizations and financial services firms in favor of meaningful patent reform legislation. The CPF believes that the following principles should drive patent reform:
- "Damage awards should be based on common sense standards. In a world where a device can be made up of thousands of patented components, patent infringement damages should be proportionate to the value of the component in question rather than the entire product."
- "The standard for assessing "willful infringement" - which triggers a tripling of ordinary damages - must ensure "willful" damages are only assessed where there is truly egregious conduct and all parties' right to counsel is protected."
- "To encourage companies to keep their R&D programs in the U.S., patent laws governing how global damages are awarded should be revised so that foreign companies are not advantaged over U.S.-based companies."
- "The practice of "forum shopping" should end, ensuring patent lawsuits are resolved in courts that have a reasonable connection to the underlying claim
The push to reform the U.S. patent system tracks back to February 2003 with the publication of the USPTO's 21st Century Strategic Plan. Other studies followed, identifying key areas for reform: improving the quality of patents, litigation reform i.e. venue and damages provisions, and harmonization of U.S. patent law with the laws of the U.S.'s major trading partners.
In 2007, identical bills, H.R. 1908 and S. 1145, were introduced in the House and Senate, with the expectation that refinements would be made during the legislative process. H.R. 1908, with amendments, was passed on September 7, 2007. But when the 110th Congress adjourned its first session in December, the full Senate had not acted on its amended version of the bill.
U.S. Senate negotiations on sweeping reform of the patent system foundered late last month as ongoing disputes over key damages and inequitable conduct provisions - and possible squabbling over confirmation of federal judges - resulted in S 1145 being pulled from the floor schedule for the time being. "We are not going to do a patent bill now," said Senate Majority Leader Harry Reid (D-NV), because the chairman and ranking member of the Senate Judiciary Committee cannot agree on the text, he said on 10 April.
But while prospects for the bill's immediate passage have dimmed, it is not yet dead, many observers conclude. Judiciary Committee Chairman Patrick Leahy (D-VT) intended to announce that a revised version of the measure would be brought to the Senate floor by mid April. The plan derailed when Leahy failed to agree on several provisions with the panel's ranking member, Senator Arlen Specter (R-PA).
The principal sticking point for Senator Specter is the issue of how to assess damages in patent infringement lawsuits. The Senators thought they had reached agreement, but the language continued to shift, so there is no deal on the package. The current draft allows damages of "no less than a reasonable royalty" calculated on either the entire market value of the invention, an established royalty based on marketplace licensing, or the proportional contribution of a patented component. Judges and juries must establish an invention's "specific contribution over prior art" to gauge the actual harm of an infringement. The provision is unpopular with some pharmaceutical companies, biotech firms, labor unions and others.
Senator Specter said later, as reflected by the Congressional Record, that some in the Republican Party want to hold up S 1145 to pressure Democrats to confirm several judicial nominations. Specter's earlier comments drew criticism from Leahy, who complained that "just a handful of words" had stalled work on a key piece of legislation. The time for patent reform is now, Leahy said. "Unfortunately, some have yet to fully grasp this fact."
I will continue to inform our blog readers of new developments in Congress on our efforts to pass patent reform. Please stay tuned.