Patent Overhaul Bill Moves Forward in Congress

A subcommittee of the U.S. Congress has taken the first step toward overhauling the U.S. patent system by approving a patent reform bill Wednesday.

The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property voted to send the Patent Reform Act to the full committee, despite concerns that lawmakers voiced over several portions of the bill. The subcommittee approved the legislation by voice vote.

Several subcommittee members questioned a provision that would allow a nearly unlimited window for patents to be challenged after being granted by the U.S. Patent and Trademark Office.

Several also raised objections to a provision that would limit the damages a patent holder can collect when an infringing technology is part of a larger product. This apportionment provision would limit damages based on the number of patents within a product, instead of the current practice of considering the total value of the infringing product.

Several large tech vendors, including IBM Corp., Cisco Systems Inc. and Microsoft Corp., have pushed for patent changes, arguing it's too easy for patent holders to collect huge damages when a small part of an IT product is found to infringe a patent. But small inventors, pharmaceutical companies, and some small tech vendors have opposed the bill, saying many of the changes would allow large competitors to infringe patents without meaningful penalties.

Several subcommittee Republicans suggested the bill goes too far in watering down the value of U.S. patents. The bill would also change the U.S. patent-award system from first-to-invent to first-to-file, and would limit the jurisdictions where patent lawsuits can be filed.

"None of us wants a [patent] system that rewards legal gamesmanship," said Representative Howard Coble, a North Carolina Republican. "But in our zeal to weed out bad lawsuits, let's not proceed on the assumption that every patent holder who wants to license an invention or enforce his or her property is ill-intentioned."

Others argued patent reform is needed to limit multimillion-dollar patent awards that impede innovation. Moving the bill ahead will "send a strong, bipartisan signal we are serious about completing the job of patent reform," said Representative Lamar Smith, a Texas Republican.

Patent reform will create new U.S. jobs, Smith added. "The changes are necessary to bolster the U.S. economy and improve the quality of living for all Americans," he said. "The bill will eliminate legal gamesmanship in the current system, which rewards legal abuses over creativity."

But Representative Hank Johnson, a Georgia Democrat, said the apportionment section of the bill would do away with a "time-honored" method of considering the market value of the entire infringing product and would limit judges' discretion to consider the facts of individual cases in patent lawsuits.

"I have concerns that there may be unintended consequences to the approach taken in this bill," added Representative Tom Feeney, a Florida Republican. "I am concerned that the [apportionment provision] diminishes the value of a granted patent."

Feeney also raised concerns about the bill's provision allowing post-grant opposition to patents during the entire life of a patent. "In order to encourage continued investment in innovation, patent holders must have certainty of their idea after a reasonable period of time," he said.

Subcommittee Chairman Howard Berman, a California Democrat, said he will continue to be open to suggested changes for the bill, but patent changes are needed. "Legitimate questions are raised ... about the effect poor quality patents have on innovation and progress," he said. "We must fix that so American industry and technology not only remain competitive, but meet tomorrow’s challenges."

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