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Senate inches ahead on patent law overhaul

Panel approves slight changes to divisive patent proposal applauded by Silicon Valley firms but leaves key sticking points intact, signaling more political battles lie ahead.

WASHINGTON--A U.S. Senate panel has taken a tiny new step toward overhauling the patent system in a manner endorsed by high-tech companies like Microsoft, and Oracle.

By unanimous consent, the Senate Judiciary Committee on Thursday adopted an amendment that proposes slight modifications to a sweeping patent reform measure but leaves intact the thorniest components of the bill. (A House subcommittee approved its version of the bill, with the understanding that further alterations would be made, last month.)

"Given the depth and complexity of the subject, and the number of amendments filed, I do not expect the committee will complete its work on the bill today," Committee Chairman Patrick Leahy (D-Vt.) said in a written statement. But he and other bill sponsors at the meeting said it's vital for Congress to forge ahead with what would be the most significant updates to the U.S. patent system in 50 years.

Many Silicon Valley companies have applauded the bill because it proposes making a number of changes they consider favorable. Chief among them is restructuring the way that damages are awarded in patent suits so that they are based only on the patent's "specific contribution over the prior art"--that is, the extent to which the patent at issue improves on previous inventions.

Tech companies favor that approach because their products often contain thousands of patented items. They view current law as encouraging disproportionately high damage awards and out-of-court settlements, particularly with so-called "trolls" that exist solely to assert patents against deep-pocketed companies.

But that provision, which was left unchanged after Thursday's amendment, has drawn fire from a wide array of patent-dependent corporations in the pharmaceutical, biotechnology and manufacturing arenas, venture capital firms and some academic institutions. They argue that method of calculating damages and other components of the existing patent bill would water down the rights of patent holders and make their inventions less valuable.

A group of more than 200 organizations, companies and universities signed a letter to the Judiciary Committee leaders in both chambers this week urging them not to move forward with the current version. Five Senate Republicans on the committee have also sought to stall a vote on the bill until more hearings are held.

The next step in the Senate's consideration of the bill isn't likely to come until at least after July 4, which is when Leahy predicted the next committee meeting will occur. Update at 7:46 a.m. PDT on Friday: The Patent Reform Act is back on the agenda for a meeting scheduled for June 28, although that hardly guarantees it will move forward.