U.S. Senate Mailbox Filling with Letters against Passage of Patent "Reform" Bill

    By Kevin E. Noonan --

A rising chorus of naysayers from the patent bar, industry, and international opinion is beseeching the Senate leadership and the Chairman and ranking Republican member of the Judiciary committee not to pass S. 1145, so-called "patent reform" legislation.  Perhaps the letter-writers have learned a lesson from the experience with the U.S. Patent and Trademark Office's misconceived and ill-advised "new rules" regarding limitations on continuation application practice and claiming.  There, only an eleventh-hour injunction from Judge Cacheris sitting in the Eastern District of Virginia prevented the new rules from being implemented.  Despite having fair warning about the rules, up until and including publication of the final version in the Federal Register on August 21, 2007, only sole inventor Dr. Triantafyllos Tafas acted promptly to try to thwart implementation of the rules.  It was only when GlaxoSmithKline entered the fray (see "Hooray! - (Finally) the Big Dogs Have Joined the Hunt") that numerous amici joined in admonishing the Court to grant a preliminary injunction, which it did on October 31, 2007 (just one day prior to the planned implementation date of November 1st) (see Patent Docs report).  And to be fair, these amici have remained engaged in the judicial process, many filing additional amicus briefs in support of GSK and Dr. Tafas' motion for summary judgment and permanent injunction of the new rules.

The House passed its version of patent "reform" legislation last year (see "Patent 'Reform' Bill Passes House of Representatives") and the Senate is considering a companion bill that, while not identical, is directed to many of the same goals as the House version:  limiting venue and damages in patent litigation, changing the U.S. patent system from "first-to-invent" to "first-to-file," making it easier for corporations to file in the name of an inventor, and granting the Patent and Trademark Office expanded powers (including the power to require applicants to provide search and extensive characterization of "relevant" prior art).  These provisions of the Senate bill are summarized and discussed in a draft report from the Judiciary Committee circulating this week, and Patent Docs has been providing summaries of key provisions (see links below).

Gene Quinn from the PLI Patent Blog alerted us that GSK, the heroes of the "new rules" battle, has sent a letter to Senators Patrick Leahy (Chairman; D-VT) and Arlen Spector (ranking Republican; R-PA) regarding this bill.  The GSK letter is directed specifically to provisions of the bill that give the PTO expanded power to require searching and characterization of references.  However, the letter pointedly asserts that failure to discuss other provisions should not be taken as acquiescence or support for them, particularly with regard to the venue and inequitable conduct portions of the bill.

With regard to the search provisions, the letter professes wonder and bewilderment that the pending version of the Senate bill contains these provisions, in the face of Judge Cacheris' preliminary injunction.  (The letter helpfully contains a copy of the decision in an Appendix.)  Specifically, the letter notes that one basis for the injunction was Judge Cacheris' belief that the new rules provisions, that required the same sort of disclosure (and are evidence of how the Office can be expected to implement any Congressional permission to impose this requirement), were deemed "unconstitutionally vague for failing to provide any boundaries on the scope of the search."  GSK asserts in its letter that the statute would have to contain "intelligible principles to guide and limit the scope of the delegated authority" to the PTO, at a minimum, for the statute to pass constitutional muster.  Otherwise, GSK states, the PTO would be able to promulgate rules requiring applicants to search and characterize prior art "worldwide" without regard to cost, and to arbitrarily define the meaning of the statutory term "any other information relevant to patentability" in an arbitrary and capricious manner.  It would fall to the courts, then, to either narrow the meaning of the statute or strike it altogether.  The result would be a transfer of Congressional authority to the courts and loss of Congressional control of the U.S. Patent and Trademark Office as an administrative agency with limited rights to exercise Congressional power.

The letter "applauds" the Senate bill for lacking any grant of substantive rulemaking authority to the Office (something contained in the House bill).  GSK warns that granting substantive rulemaking authority to the PTO, presumably resulting in implementation of the type of limitations on patenting intended by the "new rules," would subject the federal government to liability under the Takings Clause, as well as harm U.S. innovation.

The letter is signed by both CEO Jean-Pierre Garnier and Corporate IP Vice President Sherry K. Knowles, another hero of the October 31st skirmish with the PTO.  It includes a list of seventeen foreign and domestic companies and organizations that support GSK in its litigation efforts against the PTO over the new rules.

This letter comes on the heels of a report in The Providence Journal by Gernot Pehnelt (at right) from the Friedrich-Schiller University in Jena, Germany regarding the proposed changes in U.S. patent law (see "Don't Ruin the U.S. Patent System").  Dr. Pehnelt, a lecturer in economics and a research associate, also believes that the proposed changes in the law are a bad idea and will hurt innovation.  Dr. Pehnelt goes further, and states that such changes will harm German innovation (and, presumably, innovation in other countries).  According to Dr. Pehnelt, the availability of U.S. patent protection is responsible for one out of every four high-tech jobs in Germany, and permits German-made goods to be exported to the U.S. without fear of copying.  Industries including chemicals, pharmaceuticals, advanced medical devices, and industrial machinery are cited by Dr. Pehnelt as having benefitted from the U.S. patent system.  Ironically, Dr. Pehnelt says that the European patent system is "inferior" to the U.S. system, in part because of the extensive post-grant review period and caps on damages for "stolen patents" (honesty sounds refreshing, doesn't it?).  He characterizes the patent reform bills before Congress as "replacing many of the best aspects of the U.S. patent system with the worst aspects of the European patent system."

These benefits are not all one-sided, either; Dr. Pehnelt notes that the U.S. and Germany are strong trade partners, and each country has extensive investments in the other.  The result:  millions of jobs created.  He ends his statement by imploring Congress to "think twice before 'fixing' a patent system that is the envy of the world."

The National Association of Patent Prosecutors (NAPP) has also weighed in on the side of scuttling the proposed legislation.  In a letter to the Senate leadership, NAPP says that the proposed legislation "will make U.S. patents less strong and would reduce patent-owners' ability to enforce U.S. patents."  This is because patents "would become harder to get, more subject to challenge, harder to enforce, and able to justify only lower infringement damages."  The resulting state of affairs would "embolden infringers to ignore patents instead of settling or otherwise dealing with the patents," leading to more lawsuits, not less, and reducing inventor rights and innovation, with the consequences of lost jobs and manufacturing.

There is little that NAPP likes in S.1145, which will weaken patents in almost all its provisions.  These include provisions intended (according to NAPP) at making it easier to challenge patents (the inequitable conduct provision will make such charges easier to make and sustain, the damages provisions will change a system that is "working well," and the mandatory publication provision will just give infringers and knock-off artists more time to copy a product prior to patent grant).  The provisions for challenging patents and applications (post-grant review and public art submissions) are criticized for reducing the presumption of validity and the presumption that the patent examining corps is performing examinations properly, and for permitting post-grant opponents to preserve issues for later challenge and pre-grant opponents to submit argument as well as art.  Changes in venue and creation of interlocutory appeals (of claim construction decisions, for example) are said to reduce the patentee's ability to choose its forum and to add additional cost layers to patent infringement litigation.  In all, the NAPP letter describes the bill as an "anti-patent wish list" that requires significant amendment to be acceptable.  NAPP volunteers to help the Senate make these amendments, including suggestions for "new, pro-patent changes that would tend to make patents more valuable and encourage invention."

There is evidence that at least some of our political leaders are listening.  In late October, Senator Schumer (D-NY; at left) sent a letter to Jon Dudas, Director of the Patent and Trademark Office, asking him to delay implementing the new rules until after the merits of GSK and Dr. Tafas' challenge had been litigated (see "Senator Schumer Sends a Signal").  And at least one Presidential candidate, Mitt Romney, appears to understand the importance of protecting rather than killing the goose that laid the golden egg of technological innovation that has sustained the U.S. economy since the dark days of the mid-1980's (see "Mitt Romney on Patents").  The Senate could do great harm to the American economy by passing S. 1145.  As our civics teacher used to say, write you Congressman.

For additional information regarding this and other related topics, please see:

• "Draft Report on Senate Patent Reform Bill: First Inventor to File Provisions," Section 2, January 17, 2008
• "Draft Report on Senate Patent Reform Bill: Assignee Filings, Mandatory Publication, and Third Party Submissions," Sections 3 and 7, January 16, 2008
• "Draft Report on Senate Patent Reform Bill: Late Patent Filings," Section 13 January 15, 2008
• "Draft Report on Senate Patent Reform Bill Circulated," Sections 9 and 15, January 14, 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

Comments

[NIPRA anonymous]

NIPRA has posted (another) sample letter to Congress regarding 35 USC 123 (USPTO requiring search etc.) at:

http://www.nipra.org/congress.htm

In part:

This Section, as written would be detrimental to the U.S. Patent System and it would hinder rather than promote the progress of science and the useful arts for at least five (5) reasons:

1) It gives too much discretion to the current U.S.P.T.O. Director (and to any future Directors who might not have professional background and experience in patent law) to make requirements that unduly burden patent applicants. The current U.S.P.T.O. Director (Jon W. Dudas) has already demonstrated a marked anti-patent (and anti-patent applicant) sentiment, as demonstrated for example his ill-conceived final "Claims and Continuations" rule-making which is currently under an injunction issued by the U.S. District Court in Alexandria. Specifically, Section 123 gives the Director "carte blanche" to promulgate whatever requirements he sees fit, regardless of whether those requirements might unduly burden patent applicants and the patent application process. For example, in the final "Claims and Continuations" rule-making, the Director has shown (in Rule 265) his desire to require patent applicants to not only perform a patentability search for every claim, but also to perform a technical assessment of the prior art, an analysis of the claims for legal support in the specification, and a patentability determination of how each element and limitation in each and every claim by its wording technically distinguishes over the prior art. In effect, the patent applicant is required by the Rule to do the totality of the work of the patent Examiner. It is apparent that one of the purposes of the workload burden of new Rule 265 is to discourage the applicant from filing applications which would come under its purview (i.e applications with more than 5 independent claims or 25 total claims). Of course, if Section 123 is passed, Rule 265 might apply to every patent application by this time next year without any recourse for patent applicants whatsoever.