During late June and early July 2007, it was two steps forward one step back insofar as the Senate Judiciary Committee’s consideration of patent reform is concerned. The committee did adopt two major amendments to the Patent Reform Act of 2007 (S. 1145) and reported out the bill. The House Judiciary Committee has also reported out as version of "substitute" text bill (H.R. 1908) having several substantive changes compared to the original house bill.
During its markup on June 21, 2007, the Senate Judiciary Committee unanimously adopted Senator Patrick Leahy’s Manager’s (D-Vt.) Amendment. Among other things, the Manager’s Amendment effectively requires a petitioner seeking post-grant review to demonstrate economic harm, e.g., that the claim in issue is not only invalid but also harms the opposer. This should operate to curb resort to the post-grant review process and should be viewed as a pro-patentee amendment. The amended bill also provides that foreign defendants may be sued only where their principal subsidiaries are located (much to the chagrin of some IP "rocket dockets" such as the Eastern District of Texas) and it designates the United States Patent and Trademark Office’s jurisdiction as the Eastern District of Virginia, rather than its current designation of the District of Columbia. Despite the Committee’s unanimous approval of the Manager’s Amendment, the Committee was unable, either at the June 21 markup or at a follow up meeting on June 28, to assemble a quorum to vote on whether to forward the amended bill to the full Senate.
The Senate Committee also adopted a second Manager’s Amendment during a markup session on July 12, 2007. Among the revisions, the Committee adopted language imposing additional limitations on forum selection; most notably, applying the venue restrictions not only to infringement clams but to declaratory judgment (DJ) actions as well (much to the relief of patent owners, especially in view of the expansion of DJ jurisdiction following the Supreme Court MedImmune decision and Federal Circuit ScanDisk decision). Additionally, the second Manager’s Amendment includes language that would prohibit patent holders from "manufacturing venue" by assignment or incorporation to establish venue for a specific district. Additionally, the second Manager’s Amendment eliminated the provision of the original bill that would have given the USPTO substantive rule making authority. This provision had been the source of considerable controversy. The Committee considered an amendment that would give federal appeals courts greater discretion in considering challenges to interlocutory rulings by trial judges while a trial is ongoing, but that amendment (which was the subject of opposition voiced by Judge Michel, Chief Judge of the Federal Circuit in a letter to the committee) was defeated. Finally, the committee adopted an amendment to end USPTO fee diversion.
A substitute text House bill (H.R. 1908) was favorably reported out of the House Judiciary committee on July 18, 2007. The substitute text House bill eliminates the so-called "second-window" of time for challenging a patent (post grant review more than one year post issuance); but will retain inter partes reexamination for that purpose. A controversial aspect of the substitute text is the limitation placed on inequitable conduct as a basis for an unenforceability defense. Also (bowing somewhat to Judge Michel’s opposition to the damages apportionment provision in the original bill), the House committee has revised that provision to provide district court’s discretion in applying an appointment analysis. Finally the substitute text contains a new section that would mandate that applicants for patents provide a search report and "analysis relevant to patentability." The House committee has now moved the bill to the House for a vote.
Both the Senate and the House bills retain the basic first-inventor-to-file system and provide for filing by assignee (in lieu of inventor(s)). Both bills also heighten the standards for establishing willful infringement. The issues where reconciliation between the Senate and House bills will likely be required include post-grant opposition proceedings, USPTO rulemaking authority, best mode requirement (whether to keep it), and a new limitation on past damages for method claims (the House bill provides 2 years prior to actual notice.) It is expected that there will be heavy lobbying over the remaining summer period before Congress reconvenes in September.
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