Tech Industry

Controversial provisions remain in patent reform bill

Leaders in Congress are making a third effort to pass the Patent Reform Act, even though divisions remain over significant portions of the legislation.

WASHINGTON--Democratic and Republican leaders in Congress on Tuesday introduced a patent reform bill (PDF) that aims to pick up where previous patent reform efforts left off.

The controversial provisions of the legislation will be subject to serious debate and may very well be altered before the bill is passed, the bill's co-sponsors said Tuesday. Nevertheless, they said, they are confident the legislation--some form of which has gone before Congress three times over the last five years--will finally pass this year.

"This is the Congress and this is the year bipartisan patent reform should be enacted," said Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), one of the co-sponsors of the legislation. "If we're going to allow our innovators to flourish in the Information Age, we need new patent laws. It's about economic development, it's about jobs, it's about innovation. It's also about consumers."

Senator Patrick Leahy announces the introduction of the Patent Reform Act of 2009 while Senator Orrin Hatch looks on. Stephanie Condon/ CNET Networks

Identical bills are being introduced in the Senate and House of Representatives. Senator Orrin Hatch (R-Utah) joins Leahy as a co-sponsor of the Senate bill, while House Judiciary Committee Chairman John Conyers (D-Mich.) and ranking minority member Lamar Smith (R-Texas) are co-sponsoring the House version.

"My prediction is this will be the most significant bill introduced this year that enjoys bicameral and bipartisan support," Smith said.

One of the most controversial provisions of the Patent Reform Act of 2007--limitations on damages for patent infringement--remains in the legislation.

"We kept the language the same because we want to start where we left off and give us something to work on," Leahy said.

The inequitable conduct provision added to the bill last Congress has been removed, though Leahy said he intends to continue working with Hatch on that issue.

The latest version of the bill also strikes the 18-month publication requirement previously included, since labor unions and small inventors expressed concern that patent applicants not seeking protection abroad would see their inventions used overseas without compensation. The new bill also adopts the language from the House version of the 2007 bill that would alter the post-grant review process.

Leahy said that recent court decisions on patent issues have had a positive impact on the patent system, and the Senate Judiciary Committee will discuss the court decisions at a hearing next week.

Industry representatives had mixed reactions to the legislation, noting that issues like damages limitations will need further review.

"We hope this legislation will get the attention and floor time it deserves," said Ed Black, president and CEO of the Computer and Communications Industry Association. "Leaving (the issue of damages) to the courts could have a chilling effect on innovation due to rulings that have been wildly disproportionate to the relative economic contribution of the intellectual property rights at issue."

Mike Holston, general counsel and executive vice president for Hewlett-Packard, said regulations were needed to protect businesses like HP.

"We are the constant target of patent lawsuits, many of which are frivolous," he said. "More than half have been filed from non-operating entities. Instead of having our inventors and lawyers developing new technology, time is diverted fending against these lawsuits."

Still, many in the innovation industry are opposed to the damages limitations. Brian Pomper, the executive director for the Innovation Alliance, called the bill "divisive."

"The U.S. patent system has been critical to the success of countless American entrepreneurs, large and small businesses, and workers for over two hundred years," he said. "At this time of grave economic uncertainty, Congress should not make changes recklessly, without compelling evidence that the proposed changes will positively strengthen the U.S. economy."

The co-sponsors of the bill said the current state of the economy only gave more reason to move forward with the legislation.

"Intellectual property has grown in significance beyond anybody's imagination," Smith said. "If there's any time to encourage industries that do generate jobs to prosper, now is the time to do that."

Even though divisions remain on damages limitations and some other issues, Leahy said the increasingly urgent need to reform the patent system will compel both sides to reach a compromise.

"We will work out the differences," Leahy said. "I know when you have something extremely important to get done, it does get done."