Patent bill to be reintroduced in Congress this week

Major companies have been lobbying politicians for months in anticipation of the reintroduction of the Patent Reform Act, which is now scheduled for this week.

Members of the U.S. Congress plan to introduce a pair of patent reform bills on Tuesday, lending stronger support to a complicated political topic that has failed to win congressional approval in previous years.

Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and former chair Orrin Hatch (R-Utah), along with House Judiciary Committee Chairman John Conyers (D-Mich.) and ranking minority member Lamar Smith (R-Texas), will discuss the reforms they see as necessary at a Capitol Hill press conference Tuesday.

The Patent Reform Act of 2007, a bill that would have introduced sweeping changes to the U.S. patent system, passed in the House but never made it to the Senate floor. An earlier version of the bill introduced in 2005 never made it through congressional committees.

"I've always believed this legislation would be a multi-Congress process," Hatch, one of the legislators who helped bring bipartisan support for the bill in 2007, wrote in an e-mail to CNET News last month. "We are in the third, and I believe, final round of fine-tuning the bill. Of course, there are some remaining issues that need to be dealt with before full Senate consideration."

While some likely provisions in the anticipated legislation, such as reforms to the U.S. Patent and Trademark Office, could easily garner widespread support, other potential provisions have had major companies and patent coalitions scrambling for the attention of key congressional offices for months.

The debate over damages
One of the most controversial measures of previous versions of the legislation has been a provision to limit the damages patent holders can collect in infringement cases to the value of the specific infringing technology, rather than the entire product.

In anticipation of the legislation's reintroduction this year, the technology sector, along with other industries, has responded with stepped-up lobbying efforts. Representatives from major companies have been meeting with key congressmen and committees this year to discuss the legislation, forming new lobbying groups, and commissioning studies to provide evidence for reform that suits their interests.

"We are constantly receiving language and proposals to improve last year's bill, and we review all of the good ideas that come to us," Hatch said.

Hatch said he has an "open door policy" for all interested parties. Taking advantage of that policy is the Coalition for 21st Century Patent Reform, which is composed of about 40 large companies such as 3M, Caterpillar, Eli Lilly, Motorola, Procter & Gamble, Pfizer, and Texas Instruments.

The coalition met with Hatch and other members of the House and Senate judiciary committees last year. This year, the group has met with Leahy and Conyers, as well as some committee staff members like the legislative directors, according to Bill Mashek, a spokesman for the coalition. The coalition is pressing for Congress to introduce a more tailored bill focused simply on reforming the PTO.

"The last two times it has been the whole ball of wax, and the legislation did not advance," Mashek said. "Perhaps with a fresh look at the system, you could see a different type of bill advancing."

The damages provision should stay out of the bill, the coalition argues, because the issue is being addressed by the courts. In Microsoft v. AT&T, they point out, the Supreme Court limited offshore infringement liability.

"They've held up their poster boy cases and found out those were overturned," Mashek said in reference to proponents of damages limitations.

The potential economic impact
Groups in favor of broader legislation agree that recent court rulings have altered the debate, but members of the Coalition for Patent Fairness, including the Business Software Alliance, Apple, Symantec, and Google, say there is still plenty of room for clarification in the courts in the area of damages.

"There have been a number (of court decisions) since April, but none of them dramatically change our perceptions," said BSA counselor Emery Simon. "Under current law, juries are given very little guidance."

Both the BSA and Google have also been in communication with key congressmen and congressional committees. Google has faced an onslaught of patent litigation lawsuits that are driven by the potential for large damages to be awarded, said Michelle Lee, Google's head of patents and patent strategy.

"Especially in this environment where we're looking for innovation to bring us out" of a recession, Lee said, "the incentives to innovate have to be tied to the underlying reality of the contribution."

Some of the companies represented by the Coalition for 21st Century Patent Reform are also taking an economic approach to their argument. The like-minded Manufacturers Alliance on Patent Policy represents some of the same companies as the Coalition for 21st Century Reform, such as Dow Corning, DuPont, and Texas Instruments. Members of MAPP met with key legislators this year to discuss a report it commissioned to show the potential economic effects of a damages provision.

The analysis, released January 14 by Case Western Reserve economics professor Scott Shane, concludes that limiting patent infringement damages could reduce patent value by between $34.4 billion and $85.3 billion. That lowered value would supposedly lead to a decrease in the value of U.S. public companies by $38.4 billion to $225.4 billion, which would supposedly jeopardize 51,000 to 298,000 U.S. manufacturing jobs. (On the other hand, the market value of companies that might want to use patents owned by someone else might increase.)

"There's been a lot of interest on the Hill and around Washington in trying to quantify what the results would be" of limiting infringement damages, said Stan Fendley, director of legislative and regulatory policy for Corning."Until now the whole debate has been anecdotal, and we are hoping policy makers will take a closer look."

 

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