Tech Groups Push Patent Reform

— -- Some tech groups are beginning to worry that major IT industry priorities, including patent reform, may lose out to other priorities in the U.S. Congress this year.

In the last couple of weeks, large tech companies have renewed their push for patent reform legislation in the U.S. Congress, despite opposition from U.S. President George Bush's administration and some labor unions.

The Computing Technology Industry Association (CompTIA) is concerned that a congressional debate over an economic stimulus package, plus typical election-year gridlock, could hurt the prospects for patent reform and other tech priorities, said Michael Wendy, a spokesman for the trade group.

The House of Representatives' economic stimulus package includes tax write-offs for small business purchase of equipment, which could include computers, Wendy said. That's a good move, but patent reform, a research and development tax credit, H-1B visa reform and other issues remain undone, he said.

"We hope that Congress -- assuming they pass an [economic stimulus] package -- doesn't just say, 'Well, we gave you some favorable tax provisions that will help boost industry activity and have a long-tail effect on the economy, so that should be enough for you guys this session,'" Wendy said last week. "One thing we're concerned about is that the economic stimulus bill may be seen by Congress as a 'get out of jail free' card when it comes to other of our tech policy agenda."

The House in September passed a patent reform bill -- supported by many large tech vendors, but opposed by several small tech companies -- but similar legislation has been stalled in the Senate. Large tech vendors, including Microsoft, IBM and Symantec, have called for patent reform, saying it's too easy for companies with no intention of creating products to buy up patents and file multimillion-dollar infringement lawsuits against other companies.

On Jan. 22, Senate Majority Leader Harry Reid, a Nevada Democrat, said patent reform was a priority, but it was in a line behind several other bills, including an economic stimulus package and a government surveillance authorization bill. The Senate would turn to patent reform, "time permitting," he said then.

"On patent reform, we must carefully strike the right balance with a bill that promotes rather than blocks innovation from enterprising entrepreneurs," Reid added.

The Senate Judiciary Committee approved its version of the Patent Reform Act on Jan. 24, and the bill is awaiting action in the full Senate.

But earlier this week, the U.S. Department of Commerce sent a letter to the Senate Judiciary Committee raising concerns about the bill. The letter, outlining the Bush administration's views, focused on a section of the bill that would apportion infringement damages in a new way. Currently, courts generally consider the value of the entire product when a small piece of the product infringes a patent; the bill would allow courts to base damages only on the value of the infringing piece.

The wide-ranging bill would also allow a new way to challenge patents after they are issued.

That provision would "create more problems than it solves," said the Commerce Department letter, signed by Nathaniel Wienecke, the agency's assistant secretary for legislative and intergovernmental affairs. "The administration believes that such a dramatic change from current jurisprudence may have the unintended consequence of reducing the rewards of innovation and encouraging patent infringement," Wienecke wrote.

Both sides can still work out their differences, Wienecke added.

In addition, 14 labor unions, including the United Steelworkers, the Patent Office Professional Association and the Communications Workers of America, sent a letter to Senators last week, saying they were concerned about the patent bill. "Key parts of the proposed legislation may have the effect of increasing the likelihood of American inventions being stolen by our international competitors and, consequently, inhibiting sorely needed new investment in domestic manufacturing," the letter said.

Still, some representatives of the tech industry say they're hopeful that patent reform can move forward.

Senators, representatives of the Bush administration and other interested parties have been meeting regularly "to find balanced solutions on all the issues," said Mark Isakowitz, spokesman for the Coalition for Patent Fairness, a group representing several large tech companies. "We respectfully disagree [with the Bush administration] on damages, but we are confident ... we can work through concerns and achieve broad consensus on the bill, which would be a victory for the administration, the Congress and our economy," he added.