On September 7, 2007, after a vigorous debate punctuated by severe criticism leveled against the bill by Rep. Dana Rohrabacher (R-CA) and others, the House of Representatives passed H.R. 1908 by a vote of 220-175. The centerpiece of the bill fundamentally changes the U.S. patent system to a first-to-file system, but is contingent upon major world patent authorities adopting a grace period as provided for in the new version of 35 U.S.C. §102. The companion Senate bill, S.1145, contains no such contingency.

Another major provision of the House bill relates to the manner reasonable royalties are calculated (new version of §284) and includes consideration of the economic value of the contribution over the prior art. The "entire market value" is only used where the contribution of the patent is the "predominant basis for the market demand" for the infringement. Where neither an apportioned or entire market value is appropriate, a reasonable royalty analysis would consider non-exclusive marketplace licensing "as well as other factors under applicable law".

Willful infringement, according to the House bill, would require stringent proof of specific notice to the infringer, intentional copying or contempt of an injunction. In addition, a good faith belief in the invalidity or unenforceability of the patent would trump proof of willfulness.

The House bill also provides for a single post-grant review window during which the patent would enjoy no presumption of validity and the challenger would only need to meet a preponderance of the evidence standard. The Senate bill is similar with regard to this provision. The House bill also retains (and expands) inter parties reexamination. The Senate bill would repeal inter parties reexamination, but would provide a second post-grant opposition window—during which a presumption of validity and a clear and convincing evidence standard apply.

The House bill amends § 101 of the patent law to provide that the tax methods are not patentable subject matter. The Senate bill does not address the issue.

The House bill, as well as its Senate counterpart, includes defendant-based venue provisions that preclude manufactured venue (with certain carve-outs for universities and inventors). Both the House and Senate bills also provide for interlocutory appeals of claim construction rulings, a provision Chief Judge Michel of the Federal Circuit has "lobbied" against.

The House bill codifies the standard for inequitable conduct to require disclosure of "that which a reasonable examiner would have made a prima facie finding of invalidity." The House bill also authorizes the USPTO to require applicants to submit a search report—except for "micro entities," which are defined as inventors or small entities that have previously filed less than five applications and have limited income.

In what would be a post hoc confirmation of the USPTO’s authority to regulate continuation practice [see previous article], the House bill provides, subject to a congressional review procedure, that the USPTO may promulgate rules governing continuation practice. The Senate version has no similar provision.

Attention now shifts to the Senate for action on the S.1145, which was reported out of the Judiciary Committee on July 19. Senate Majority Leader Harry Reid (D-NV) has placed the bill on the calendar of bills on which action is likely to be taken up next month, but "holds" put on the bill by several Senators may delay a Senate vote.

The complete text of H.R. 1908 may be found at http://www.rules.house.gov/SpecialRules_details.aspx?NewsID=2990

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