SAN JOSE, Calif. — The U.S. House of Representatives passed Friday (Sept. 7) a sweeping and controversial patent reform bill. HR1908 aims to raise the quality of patents and reduce patent litigation and abuse.

Sharply divided reactions came quickly in the wake of the 219 to 176 vote that was led by Democrats. A companion bill in the Senate has yet to be brought up for a vote. President George W. Bush might exercise a veto on any final legislation that does not meet administration requirements set out in a statement released earlier today.

Similar bills have been proposed in several past legislative sessions but were shot down by debates between various industries and groups. The current bill sponsored by Howard L. Berman (D-Calif.) reflects the directions of many past proposals.

 

HR1908 calls for the U.S. to shift from its first-to-invent to a first-to-file policy more in line with patent offices around the world.

The bill also aims to set limits on damages by tying them to the value of the patent itself, not including any prior art on which it is based. It also seeks to narrow the definition of willful infringement to cases where it can be demonstrated an infringer knew of the patent and used it anyway. Willful infringement can pay treble damages.

The bill also would limit patent lawsuit venues to courts in jurisdictions where the infringement took place or where the parties do business. Finally, it would define a new and streamlined process for re-examining patents when they are challenged.

The vote quickly drew a mix of reactions for and against the move.

The IEEE-USA came out strongly opposed to the bill, saying it would weaken the patent system and thereby harm an already bad job market for US engineers. In letters to Congressional leaders in August, the group said the government needs to improve the management and operation of the US Patent and Trademark Office, but generally leave the existing patent system alone.

The group also compiled a list of about 200 generally medium-sized companies and universities who opposed the bill. The list included some large concerns such as the AFL-CIO, the American Intellectual Property Lawyers Association, General Electric, Medtronic and Texas Instruments.

"I fundamentally believe this reform bill is wrong," said Keith D. Grzelak, chairman of the IEEE-USA's intellectual property committee. "The patent system has been working fine for 200 years especially for small growing companies, the startup companies where a lot of the new hiring will be for engineers in this country," added Grzelak who is also an IP lawyer with the Spokane firm of Wells St. John P.S.

Grzelak said the first-to-file provision would benefit big companies over startups and individual inventors. "If it's a race to the patent office, the big behemoths will win," he said.

The move to limit damages and create a new, easier method to challenge existing patents will also weaken the system, he added. "The new system brings a lot of debate about the value of patents and that value will be diminished," Grzelak said.

Grzelak called for government to replace the existing political appointees managing the USPTO with IP law specialists. He also the patent office needs to hire more seasoned technologists to assure the quality of patents it grants.

Grzelak lambasted the patent office as inefficient. For example he noted that the patent office does not allow for online searches of patents granted before 1976, but Google has been able to create such a service.

Finally the IEEE-USA representative lashed out at Congress for a patent reform process that he said was too heavily influenced by lobbyists in a handful of large companies.

"This bill has not been well vetted, It's been well paid for," he said. "This legislation was sponsored by a sliver of companies looking for a tactical advantage. There's a lot of gamesmanship going on," he added.

In a speech earlier this year on the House floor Representative Dana Rohrabacher (Rep., Calif.) called the bill the "Steal American Technologies Act" because it would mandate the publication of all patent applications 18 months after the patent is applied for whether or not the patent has been granted.

"This legislation will facilitate China, India, and other countries in their efforts to steal our creative genius" he said.

Perhaps most damning was a statement of opposition from the administration released through the patent office the day the bill went to the floor for a vote. The nearly 900-word statement said the administration supports patent reform but disagreed with at least seven aspects of HR1908.

Specifically, the administration said the bill puts too many limits on a court's discretion assessing damages in patent infringement cases. In addition, a recent federal Court of Appeals decision involving disk-drive maker Seagate Technology set a precedent for narrowing the use of willful infringement to claim treble damages, making that part of the bill unnecessary, the administration argued.

The statement said the administration broadly supports the idea of moving to a first-to-file system and setting up a post-grant review process as low-cost alternative to litigation of existing patents. However on both scores the administration faulted HR1908 for some of the details of how it would enact those moves.

The statement said the administration would work with Congress on addressing its concerns in future legislation. However it did not explain why the administration failed to engage with lawmakers since the bill was introduced in April.

A representative of the 800-member Software and Information Industry Association praised the passage of the bill. "We have been working with Congress through many legislative sessions to get a bill passed which would make the patent system more effective," said a group spokesman.

Both the patent office and the legal system have been under increasing strain due to the number of patent applications and patent lawsuits. The US Patent and Trademark Office is said to have a backlog of as many as 750,000 patent applications.

The number of patent lawsuits settled in or disposed by federal district courts doubled between 1988 and 2001, from 1,200 to nearly 2,400, according to a report from the National Research Council. Meanwhile, the number of patent attorneys in the United States rose 39 percent, more than six times the growth rate overall for attorneys, the report found.

"High patent quality is essential to continued innovation," said Rep. Berman when the bill was introduced in April. "Litigation abuses, especially ones committed by those which thrive on low quality patents, impede the promotion of the progress of science and the useful arts. This is why we must act quickly -- to maintain the integrity of the patent system," he added.

A companion bill in the Senate (S1145), sponsored by Senator Patrick Leahy (D-Vt.) was referred to the Judiciary Committee in July and has yet to be scheduled for a Senate vote.

"If the House bill passes, that would be a big impetus to set a vote for the Senate bill," said an aide to Rep. Berman.