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Leahy, Specter and Feinstein Reach Compromise on Patent Reform

By Alex Poltorak (March 31, 2009)

Today the Senate Judiciary Committee held an executive session on the S.515 bill a.k.a. The Patent Reform Act of 2009. The Senators on both side of the aisle who were most active in this legislative initiative, Pat Leahy (D-VT), Arlen Specter (R-PA), and Dianne Feinstein (D-CA), agreed today on a compromise on most contentious feature of the bill. The compromise affects the following provisions of the bill:

• Damages Apportionment: The contentious apportionment of damages provision related to calculation of reasonable royalty in Section 4 of the bill will be replaced with the “gatekeeper” concept proposed by Senators Feinstein and Specter, which will provide a greater role for the judge to select the legal standards to be applied by the jury and factual contentions for the jury to deliberate. It will also allow parties to file motions for summary judgment on damages.

• Inter partes Reexamination: The controversial language which would allow a party to an inter partes reexamination to submit art that has been “in public use or on sale” as prior art references will be deleted from the bill.

• Best Mode: The requirement that a patent application specification contain the best mode of carrying out the invention will remain, but best mode will no longer be allowed to be used to invalidate a patent.

• Interlocutory Appeals: The interlocutory appeals provision will be tightened. This amendment will provide the District Court with specific standards to approve an application for interlocutory appeal of a “Markman Hearing,” i.e., a hearing on claims construction.

• Willful Infringement: Willfulness provision will be brought in line with the Federal Circuit’s decision in Seagate.

• Venue: The current subsection on venue will be deleted and replaced with a codification of the Federal Circuit’s recent decision in TS Tech.

The previous attempt at a similar legislation, The Patent Reform Act of 2007, hit a roadblock when Senator Arlen Specter, then chairman of the Judicial Committee, refused to support the damages provision of the bill. Based on today’s compromise, it is expected that Senator Specter (now ranking member of the Committee he once chaired) will throw his support behind this controversial legislation. This development opens the way for the amended bill to be soon reported out of the Judicial Committee for the debate on the floor of the Senate.

You can download a video of this Executive Session. To view this 22-minute clip, you will need RealPlayer. If you do not have it on your PC, it is available as a free download at www.real.com.

Patent Provisions

Thank you for listing the above patent provisions regarding patents. All of these are good to know.

I find your blog very interesting and helpful on patents and patent infringement. I will be subscribing to your Wealth of Ideas Newsletter.

So what's really left?

  • First to file That's still in. That can be lived with.
  • Damages Patents in crowded areas will be less valuable. The "specific contribution over the prior art" requirement is going to result in claims by defendants that the contribution is minimal and not worthy of significant royalties. This could be an issue where a patent covers some trivial but specific way of doing something that's a de-facto standard. The Hayes modem escape sequence patent (on "wait, send "+++", wait") would be an example. Microsoft's FAT file system patents, which merely cover a specific hack for cramming long file names into a old file system design, should decline in value.
    This definitely reduces the value of patents. Litigation becomes more complex. Nobody knows what "specific contribution over the prior art" means in dollar value. Does anybody else? I see years of litigation ahead.
  • Post-grant invalidation Does anybody understand the implications of this yet? Is this going to mean that you don't try to enforce a patent until 12 months after issue?

John Nagle / Animats
nagle@animats.com