The momentum behind the most recent patent reform bill, S. 1145 and H.R. 1908, known as the Patent Reform Act of 2002 (the Act), appears to be slowing as a group of senators have called for a delay in implementing the legislation. Leaders in major technology industries have also voiced their opinions about the controversial Act through testimony before the Senate Judiciary Committee, demonstrating the existence of significant disagreements between industries.
On June 11, 2007, five Republican members of the committee sent a letter asking the committee’s chairman, Patrick Leahy (D-Vt.), to delay the committee’s markup of the bill, scheduled for June 14, 2007. Senators Tom Coburn (R-Okla.), Jeff Sessions (R-Ala.), Chuck Grassley (R-Iowa), Jon Kyl (R-Ariz.) and Sam Brownback (R-Kan.) claimed that the controversial issues associated with patent reform deserve additional hearings. Specifically, the senators identified that the issues of mandatory apportionment of damages, post-grant opposition procedures and the grant of broad rulemaking authority to the U.S. Patent and Trademark Office (USPTO) call for more careful examination to ensure that they "do not undermine innovation, increase frivolous litigation, or undermine property rights." On the House side, Rep. James Sensenbrenner (R-Wis.) has written asking the subcommittee chairman, Howard Berman (D-Calif.) for more time.
The chief judge of the U.S. Court of Appeals for the Federal Circuit, Judge Michel, has also weighed in, voicing, in a letter to Senator Leahey and Senator Hatch, his opposition to at least two of the proposed reforms: making claim construction ("Markman") rulings immediately appealable and changes to the law as it relates to apportionment of damages in patent cases. On the apportionment issue, Judge Michel warned that the courts are "ill-equipped" to determine the relative value of an infringed patent over the prior art as the legislation would require. Judge Michel favors retention of the present law on patent damages, which he characterizes as having undergone "decades of refinement," as being "highly stable" and "well understood by litigators as well as judges."
Technology companies and related trade groups have also expressed their opinions regarding the Act in recent testimony before the Senate Judiciary Committee. Rep. James Sensenbrenner, speaking on behalf of the Biotechnology Industry Organization (BIO), testified on June 6, 2007, that BIO opposes the Act in its current form, cautioning that the Act’s proposed post-grant opposition procedures would "result in fewer cures for diseases and other breakthrough biotechnology products." BIO also warned that the Act’s apportionment of damages provision could disincentivize biotech companies from developing improvements to existing technologies.
On June 6, 2007, a senior vice president and general counsel of Palm, Inc, also testified on behalf of Palm and as member of the Coalition for Patent Fairness, a group including Microsoft and Intel (the Coalition). In contrast to BIO, Palm and the Coalition favor the Act’s proposed "second window" post-grant opposition procedures as well as damages apportionment, noting that the proposed post-grant review process should lead to improved patent quality "which will benefit everyone—patent holders, patent users, and consumers" that damages apportionment would "help limit excessive royalty awards and bring them back into line with historical patent law and economic reality." The Coalition believes the benefits of the bill outweighs any downsides and the bill is needed to "restore balance" to the patent system.
Jon Dudas, the director of the USPTO, also testified as to the provisions in the bill. Dudas stated that the USPTO had not taken a position or could not support them without further review. However, Dudas testified that the USPTO currently supports the provisions that expand the ability of third parties to submit information that they believe is pertinent to a pending application, believing that it "should result in a more efficient examination process and a higher quality, more reliable patent." The USPTO does not support the Act’s proposals towards apportionment of damages, however. Dudas stated that the USPTO "does not believe that a sufficient case has been made for a legislative provision to codify or emphasize any one or more factors that a court must apply when determining reasonable royalty rates."
In a related development, on May 18, 2007, three members of Congress introduced a bill that would limit the damages available for infringement of patented tax planning methods—a subcategory of business method patents. Specifically, H.R. 2365 would prohibit a civil action for infringement of a tax planning method patent, as well as the grant of an injunction, award of damages and award of attorneys’ fee. The language of the bill resembles that of 35 U.S.C. § 287(c), which restricts infringement liability for certain surgical procedures.
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