Patent Reform Is Back before Congress

Article excerpt

Patent reform emerged from a 7-month congressional hiatus with the simultaneous introduction of companion bills in the U.S. Senate and the US. House of Representatives. The identical bills, H.R. 1260 in the House and S. 515 in the Senate, would overhaul portions of the U.S. Patent Act.

The patent reform movement that generated these proposals has a long and convoluted history, largely tied to challenges brought about by new technologies and new ways of doing business. Throughout the latter 20th century, the ume of issued patents increased significantly. Between 1980 and 2007, the number of patents issued per year jumped from less than 62,000 to more than 157,000. The number of patent applications also increased by nearly four-and-a-half times, from about 100,000 to more than 450,000. Technology, including biotechnology, and business method patents make up the bulk of the new patents and applications.

BlackBerry Lawsuit

As the number of issued patents increased, so did the amount of litigation over patents, including claims of patent infringement and challenges arguing that patents should not have been issued. In one high-profile example, Research in Motion (RIM), maker of the BlackBerry portable device, was sued for infringing on patents owned by a small U.S. com- pany Even though the patents were be- ing re-examined by the U.S. Patent and Trademark Office (USPTO) because ques- tions arose about their validity, RIM paid a settlement of more than $600 million to the patent owner. If RIM had lost in court, the company could have been enjoined from using the patented technology, which would have shut down the BlackBerry network entirely. The risk of losing the infringe ment suit was too great.

Several factors moved Congress to propose patent reform legislation in 2005: the questionable patents issued by the patent office, the risk of companies being shut down for infringement, and an interest in better coordination between U.S. patent law and international patent law. The current proposal reflects the culmination of more than 4 years of work. However, prospects for enactment of patent reform legislation remain as uncertain today as at the beginning.

The chairs and minority leaders of the House and Senate judiciary committees announced the current patent reform proposals in early March. They have been said to reflect the legislative proposal that was left on the table at the end of the 110th Congress, although some changes were noted.

Damages and Re-Examination

While the proposal covers a broad spectrum of issues, most of the debate centers on damages in patent infringement cases as well as the patent examination and re-examination processes.

A commercial item, such as the BlackBerry, is often the product of years of development and is covered by several patents. Some of the patents reflect major elements of the product, whereas others may reflect only minor or tangential elements. Infringement is often claimed when a product is alleged to infringe on a patent that was not involved in product development but was independently developed and in some way overlaps with the finished product. Because damages and injunctions for patent infringement can derail a commercial item in the marketplace, the developer may find it more cost-effective to settle rather than challenge the infringement.

A 'Predominant Basis'

The patent reform proposal would allow a court to explore whether an infringed patent serves as a "predominant basis" for a commercial product. …

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