By Donald Zuhn --
BIO Seeks Improvements to Patent Reform Legislation
Following Tuesday's hearing on patent reform, the Biotechnology Industry Organization (BIO) issued a press release urging the Senate Judiciary Committee to make improvements to its new patent reform bill (S. 515). The organization's written testimony, which was submitted to the Committee on Tuesday, was also made available.
In the press release, BIO "expressed its support for strengthening the U.S. patent system through carefully constructed and consensus-based legislation." BIO asked the Committee to hold a series of hearings "to evaluate the major legal and economic changes relevant to patent reform efforts," and reminded the Committee that since its last hearing in 2007, there have been several landmark Supreme Court and Federal Circuit decisions "that have weakened the rights of patent owners, making it more difficult to obtain and enforce valid patents while making it easier to challenge patents." The organization also requested that the Committee "undertake a careful and comprehensive evaluation of the continuing need for, and potentially negative impact of, some of the more controversial provisions in the patent reform debate, including changes to how damages are calculated after a finding of infringement and expanded administrative opportunities to challenge patents without the protections afforded to patents in courts of law."
BIO did not deny that some reforms are needed, pointing to full funding for the U.S. Patent and Trademark Office, expanded opportunities for the public to submit prior art during patent examination, and repeal of the best mode requirement and inequitable conduct doctrine, as a few examples. BIO President and CEO Jim Greenwood stated that the industry group hoped that Tuesday's hearing would be "the beginning of an open and fair process to get a good patent reform bill that benefits all sectors of the U.S. economy."
IPO Summarizes Positions on Patent Reform
On Tuesday, Intellectual Property Owners Association (IPO) Executive Director Herbert Wamsley appeared at the Senate Judiciary Committee's hearing on patent reform. Today, the IPO outlined its positions on patent reform in its daily e-mail newsletter. The newsletter noted that the organization's positions on certain patent reform provisions had been adopted by the IPO Board of Directors prior to the introduction of the new Senate bill.
With respect to the most hotly debated issue (damages), the IPO stated that "[a] majority of IPO's board supported codifying existing patent damages law, but IPO has been unable to develop consensus language to recommend." This is not a startling revelation in view of the testimony provided by Mr. Wamsley at the hearing. Noting that four of the other five witnesses worked for IPO members, Mr. Wamsley responded to Senator Spector's request for suitable damages language by saying that there were "no magic words."
As for its other patent reform positions, the IPO indicated that the group:
• Supported the bill's reform of willful infringement law (but was studying the need for such reform in view of the In re Seagate);
• Generally supported the bill's post-grant review procedure (but had concerns about a clause opening reexamination proceedings to public use and on sale issues);
• Endorsed "certain changes" to the venue statute (but suggested the provision be reviewed in light of decisions granting motions to transfer suits from the Eastern District of Texas);
• Opposed interlocutory appeals of patent claim interpretations to the Federal Circuit as a matter of right;
• Opposed authorizing the USPTO Director to raise patent and trademark fees by rule change;
• Supported legislation to prevent diversion of fees;
• Supported the removal of the Applicant Quality Submissions (AQS) provision from the bill; and
• Urged legislators to add a provision on inequitable conduct to the bill.
Coalition Believes Patent Reform Should Stimulate R&D Investment
The Coalition for 21st Century Patent Reform issued a press release shortly after the Senate Judiciary Committee's hearing on patent reform, stating that witness Philip Johnson, the Chief Intellectual Property Counsel for Johnson & Johnson, represented the views of the Coalition. Johnson & Johnson is a member of the group of nearly 50 global corporations "advocating for patent reforms that will continue to foster innovation and enhance American competitiveness."
In addition to providing excerpts from Mr. Johnson's written testimony, where he states that "the principle objective of patent reform should not be on saving administrative costs, but on changes that will stimulate research and development investment," since "these changes will stimulate job growth," the Coalition's press release notes that with respect to patent damages, "the case for remedial legislation has not been made." In support of this assertion, the Coalition points to a recent study indicating that patent damages awards have been relatively stable for many years, and that the number of patent litigations was leveling off, if not in fact declining (see "PWC Releases Patent Damages Report"). The Coalition concludes that "any approach to reasonable royalty damages that would redefine the invention to be less than that to which the inventor has proven he/she is entitled, such as an 'essential elements' approach, would amount to just another version of 'prior art subtraction,' and would be grossly unfair to inventors."
Reuters Paints Optimistic Picture Regarding Divide on Damages Provision
Earlier this week, a Reuters report indicated that "[h]igh tech and pharmaceutical companies expressed unusual agreement" on the Senate's new patent reform bill (S. 515) during the Senate Judiciary Committee's hearing on patent reform (see "U.S. battle over patent reform headed for compromise?"). The report noted that this "agreement" even extended to the bill's "most contentious issue: how to determine damages for infringement," with the two sides appearing to agree that "the judge in a patent infringement trial should act as a gatekeeper, instructing juries on what factors to consider in determining damages."
As an initial matter, the Reuters report seems to suggest that both industries were adequately represented at the hearing, when in fact only one representative from a pharmaceutical company provided live testimony. Three witnesses, on the other hand, represented high tech companies.
In addition, while none of the witnesses was looking to go toe-to-toe with Senator Dianne Feinstein (D-CA) (at left), who made it abundantly clear that she favored a codification of the Georgia-Pacific factors and the gatekeeper approach (in which the court determines the Georgia-Pacific factors to be used by the jury in determining damages), it would be stretching it to say that the witnesses reached any agreement on the damages issue. As we noted on Tuesday, the divide on this issue was highlighted when the witnesses, in response to a question from Senator Spector, provided almost as many different approaches for calculating damages as there were witnesses (see "Senate Judiciary Committee Holds Hearing on Patent Reform").
• "Senate Judiciary Committee Holds Hearing on Patent Reform," March 10, 2009
• "Senator Specter Seeks Resolution of Issues before Vote on Patent Reform Bill," March 5, 2009
• "Senate Judiciary Committee Releases Witness List for Patent Reform Hearing," March 4, 2009
• "Senate and House Introduce New Patent Reform Legislation," March 3, 2009
Comments