The largest IT vendors are backing a proposed overhaul to the US patent system, but they likely face a battle with their counterparts in the biotech and pharmaceuticals industries.
A bipartisan bill introduced to both houses of Congress yesterday would reform how patents are reviewed, approved and litigated, and how the US Patent and Trademark Office is funded.
The goal is to increase the quality of patents that are approved and reduce the number of frivolous patent lawsuits, by increasing USPTO funding, revamping the review process, and reducing infringement damages.
It would be the biggest overhaul of the patent system in 50 years, but it may face opposition from politicians supported by, for example, pharmaceuticals vendors, which appear to be opposed to the reforms.
The IT industry largely supports the bill, the Patent Reform Act of 2007, saying it will provide more certainty and less chance of legal distraction for companies in fast-moving industries.
The Coalition for Patent Fairness, which represents pretty much every big-name IT company, supports the bill as drafted. CPF has Microsoft, IBM, Intel, HP, Sun, Symantec, Cisco and a few dozen more well-known IT vendors on its membership roster.
The comprehensive changes proposed in the Patent Reform Act of 2007 will strengthen and restore balance to the patent system — legislative action that has been urgently needed for years, said Jonathan Yarowsky, a CPF lawyer.
The USPTO has long been criticized for lacking funding, resources and expertise, which can result in patents being approved for inventions that are either obvious or pre-dated by prior art.
The new legislation, brought to Congress by Democrat Patrick Leahy and Republican Orrin Hatch of the Senate, and Democrat Howard Berman and Republican Lamar Smith of the House, would reform how the USPTO is funded, giving it more resources.
Symantec’s vice president of intellectual property Joe FitzGerald told us he believes the legislation would speed up patent approval, and provide more certainty over intellectual property rights more quickly.
Now it takes over three years before a patent examiner picks up our patent application and looks at it, and in the software industry that’s an awful long time, he said.
The patent system needs overhauling so not only can inventors get their hands on patents more quickly, but their competitors can create their own technologies while worrying less about being sued.
If you have a very clear grant, then it allows competitors to understand what is out there and deal with those things up front, FitzGerald said. We’re looking to bring some certainty. Certainty’s very important.
The bill also contains provisions that would mitigate the problem of litigants shopping for the best court in which to file a patent infringement lawsuit, according to the Congressmen.
A key part of a patent lawsuit is the Markman hearing, in which a patent’s technical legalese is construed or translated into real-world definitions by a judge, before the jury hears the case.
How the Markman hearing goes can make or break a case. Ask Vonage, which is currently facing the possible collapse of its business after losing a patent case in which it claims the Markman hearing was hasty and overly beneficial to the plaintiff, Verizon.
The new legislation would allow companies to reduce the problem of being distracted by lawsuits in these odd jurisdictions by people trying to extract money from us, Symantec’s FitzGerald said.
The bill would also make it harder for very large damages awards to be made.
One of the ironies of current patent legislation is that it can, in theory at least, discourage companies from researching whether their new products infringe upon others’ patents, potentially increasing the number of cases of infringement.
If you know that your new product infringes a patent, and you sell the product anyway, a court can find you guilty of willful infringement, which triples the damages you have to pay if you lose your case.
The Patent Reform Act would increase the plaintiff’s burden of proof to show willfulness, from a preponderance of evidence to clear and convincing evidence that the defendant had, for example, been notified of infringement or had intentionally copied a patented technology.
While IT companies are backing the legislation, another coalition, the Coalition for 21st Century Patent Reform, which draws its members from a wider range of industries and can be found at PatentsMatter.org, is more critical.
We are encouraged that the bills that Chairman Leahy and Chairman Berman have introduced will allow the legislative process on needed reforms to advance, the coalition said. However, we are concerned the bills as introduced do not adequately address several critical reforms.
The PatentsMatter.org coalition is not happy with the parts of the bill that could reduce damages payments, and with the parts that allow multiple challenges to be made to a patent approval.
This coalition draws its members from all sectors, but the industry most-represented is biotechnology/pharmaceuticals, where research is a deal more scientific, arguably more cutting-edge and takes longer than coding software or web services.
It’s also an industry where patents are critical for profits. Pharmaceuticals companies can make fund research and make large profit margins on patented drugs for years before functionally identical but much cheaper generic brands are allowed to hit the market.
The industry also has an intensely powerful Washington lobby. As distasteful as it may seem to some overseas readers, drug companies have previously lobbied successfully for a Republican-controlled Congress to pass law banning the government from negotiating deep discounts when buying medicines in bulk for senior citizens under the Medicare program.
Clearly, with these players involved, the proposed patent reforms are not going to pass quietly. But with Congress now Democrat-controlled, and already trying (unsuccessfully, so far) to overturn the aforementioned Medicare negotiation law, the pharmaceuticals lobby may find itself on less secure ground than in previous years.