By Donald Zuhn —

The U.S. Patent and Trademark Office announced today that Nathaniel Wienecke (at right), Assistant Secretary for Legislative and Intergovernmental Affairs of the U.S. Department of Commerce, has addressed a letter to Senator Patrick Leahy, Chairman of the Senate Judiciary Committee, expressing the Bush Administration’s views on the Senate patent reform bill (S. 1145).  According to the USPTO (which may be overstating the case), the Administration’s letter indicates that it “strongly opposes S. 1145 in its current form, but strongly supports passage of balanced patent modernization legislation.”

The Administration’s letter begins by noting that it “strongly supports passage of patent modernization legislation that fairly balances the interests of innovators across all industries and technologies by improving patent quality, which will reduce excessive patent litigation costs and promote certainty among patent holders and users.”  While opposing provisions of the Senate bill concerning damages and Patent Office funding, the Administration has no quarrel with those portions of the bill that require applicant quality submissions, provide the Patent Office with fee setting authority, and replace inter partes reexamination with post-grant review.

The linchpin of the Administration’s opposition to S. 1145 is the bill’s section on damages.  The Administration states that it will “continue to oppose S. 1145 – in its entirety – unless Section 4 [“Right of the Inventor to Obtain Damages”] is significantly revised, as we believe the resulting harm to a reasonably well-functioning U.S. intellectual property system would outweigh all the bill’s useful reforms.”  According to the Administration, the problem with the bill’s section on damages is that it “would likely lead to less than adequate compensation for many patent holders and could promote infringement.”  Echoing comments made last November by Yongshun Cheng, the Deputy Presiding Judge of the Intellectual Property Division of Beijing High People’s Court (see “Chinese IP Judge Discusses Implications of U.S. Patent Reform Bill and Two Congressmen Heed Warning”), the Administration contends that “[a]t a time when we are actively encouraging our foreign trading partners to strengthen their IP protection and enforcement systems, this legislation may send the opposite signal – that we intend to weaken aspects of our current law that deter infringement.”  In the letter, the Administration pledges to work with Congress to develop damages provisions that are “technology-neutral without favoring or injuring a particular industry.”

Although the Administration ultimately withholds its support of S. 1145 based on its disagreement with the damages section, the Administration does find much to like in the Senate bill.  For example, the letter states that the Administration “strongly supports the bill’s provisions to promote patent applicant quality submissions,” arguing that “the efficiency of patent examination, including our ability to keep costs low, depends on quality patent applicant submissions.”  Not surprisingly, the Administration’s stance on applicant quality submissions was well received by the Patent Office, which declared that “the Administration . . . believes that those provisions pertaining to applicant quality submissions are the only ones that serve to maximize quality in the U.S. IP system.”  More important, however, was the Administration’s recognition that S. 1145 needs to go further in reforming the law of inequitable conduct.  Stating that “[t]he uncertain inequitable conduct standard in effect today actually deters applicants from sharing necessary information with the agency,” the Administration seeks a revision of the “vague ‘important to the reasonable examiner’ standard for materiality” that is codified in the bill.

The Administration concludes its letter by commenting on a number of other provisions in the Senate bill.  While supporting a move to a first-inventor-to-file system, the Administration contends that “the effective date of the first-to-file provisions should be contingent upon a formal determination that specific progress and certain agreements have been reached in relevant international negotiations.”  Interestingly, in commenting on the bill’s grant of authority to the Patent Office to accept late filings in certain cases of unintentional delay, the letter notes that the Administration has “not identified a need for such a provision.”  One wonders whether anyone in the Commerce Department has had a chance to read last year’s N.D. Cal. decision in Aristocrat Tech. Australia v. International Gaming Tech.

The USPTO also announced today that Under Secretary of Commerce for Intellectual Property and USPTO Director Jon Dudas (at right) will be holding a teleconference tomorrow (February 5, 2008) to discuss the Administration’s views as expressed in Mr. Wienecke’s letter.  Mr. Dudas’ presentation will begin at 10:30 am ET.  Details for participating in the teleconference can be found here.

For additional information regarding this topic, please see:

• "Biotech and Pharma Opposition to Senate Patent Reform Bill," February 3, 2008
• "The Letters Keep Coming Over the Senate Transom," January 30, 2008
• "U.S. Senate Mailbox Filling with Letters against Passage of Patent ‘Reform’ Bill: An Update," January 23, 2008
• "U.S. Senate Mailbox Filling with Letters against Passage of Patent ‘Reform’ Bill," January 18, 2008
• "Patent Reform Discussed on Senate Floor," December 21, 2007
• "Enjoined New Rules and Patent Reform Finally Appearing on Biotech Industry’s Radar," December 20, 2007
• "Chinese IP Judge Discusses Implications of U.S. Patent Reform Bill and Two Congressmen Heed Warning," December 17, 2007
• "IPO President Seeks Deletion of Patent Reform Provision," December 12, 2007
• "Senate May Act on Patent ‘Reform’ Bill in the New Year," December 2, 2007
• "The Wall Street Journal Gets It Half Right," November 5, 2007
• "BIO CEO Provides Briefing on Follow-On Biologics and Patent Reform," September 18, 2007
• "Patent ‘Reform’ Bill Passes House of Representatives," September 9, 2007
• "Reversal in Microsoft Case Weakens Patent Reform Argument," August 7, 2007
• "San Francisco Chronicle Opines on Patent Reform," August 6, 2007
• "Patent Reform Bill to Be Delayed?" June 12, 2007
• "Senate Judiciary Committee Holds Hearing on Patent Reform," June 10, 2007
• "Could Creating a U.S. ‘Utility Model’ Patent Fulfill the ‘Need’ for Patent Law Reform?" May 21, 2007

For Patent Docs‘ series on specific sections of the Senate’s draft report, please see:

• "Interlocutory Decisions & Venue," Section 8, January 29, 2008
• "Damages," Section 4, January 28, 2008
• "Applicant Quality Submissions & Micro-Entities," Section 11, January 25, 2008
• "Post-Grant Procedures," Section 5, January 22, 2008
• "Inequitable Conduct Provisions," Section 12, January 21, 2008
• "First Inventor to File Provisions," Section 2, January 17, 2008
• "Assignee Filings, Mandatory Publication, and Third Party Submissions," Sections 3 and 7, January 16, 2008
• "Late Patent Filings," Section 13 January 15, 2008
• "Draft Report on Senate Patent Reform Bill Circulated," Sections 9 and 15, January 14, 2008