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Patent Reform Efforts Continue in Congress Patent Law Reform legislation remains under active consideration as Congress returns from a five-week recess after Labor Day. The House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property and the Senate Judiciary Subcommittee on Intellectual Property have each held three hearings on the topic, and further hearings are under consideration. Following extensive consultation with private sector IP organizations, including the IPL Section, House IP Subcommittee Chairman Lamar Smith introduced H.R. 2795 on June 8. The bill, which Smith frequently refers to as “the most significant revision of the patents laws of the United States since the 1952 Act,” contains far-reaching changes to address issues of patent quality; the cost, complexity, and impact on innovation of patent litigation; and international harmonization of patent laws. Specific provisions include adoption of a first-inventor-to-file priority system and elimination of “loss of right” conditions for patentability that are not compatible with such a system, establishing a post-grant opposition system, authorization for third party pre-grant submission of prior art, reform of damages for patent infringement, authorization for assignee filing, reform of rules of inequitable conduct to reduce spurious claims, repeal of the “best mode” requirement, publication of all patent applications at 18 months, more clearly delineated grounds for damages awards for willful infringement, narrower grounds for permanent injunctions for patent infringement, and expanded prior user rights.Following the introduction of H.R. 2795, Chairman Smith continued to encourage private sector groups to work together to try to resolve their differences on major provisions of the bill. Some such differences tend to exist along industry sector lines. For example, those in the pharmaceutical and biotechnology fields, who frequently rely upon one or a few individual patents for their business success, support stronger enforcement mechanisms. By way of contrast, companies in high tech industries such as computer software and financial services typically offer products and services that utilize a multiplicity of patents. They perceive a threat of devastating consequences from having their business shut down by an injunction that might issue from a finding of infringement of any one of hundreds of patents that might be implicated in a single product or service that they offer, or similar consequences from a damages award that far exceeds the contribution of the infringed patent to the value of their final product. It is a widely held view of those involved in the efforts to develop and enact this patent reform legislation that consensus and agreement among all the major interests involved is not only desirable, but that such agreement is a political necessity and indispensable prerequisite to enactment. For this reason, Chairman Smith initiated this project by asking the private sector interest groups involved to work to develop joint recommendations. He used the work product of those discussions as a basis for the provisions of H.R. 2795 as introduced on June 8, and immediately urged the groups to continue to try to reach agreement on issues that remain in dispute. Smith, Ranking Minority Member Berman, and other members of the Subcommittee met on several occasions with representatives of the groups to explore possible avenues by which to reach agreement. Based on developments during these discussions, alternative language to H.R. 2795 has been developed from time to time, and has become a de facto replacement for the original text. For example, on July 26, Chairman Smith circulated a draft Amendment in the Nature of a Substitute to H.R. 2795, and sought support for this substitute by all those participating in the process. Major changes from the bill as introduced includedropping of all changes regarding injunctions, elimination of a “second window” for filing post grant opposition, and dropping of provisions that would alter rules applicable to continuing applications. New provisions in the substitute include changes to patent venue statutes and further changes to section 102 prior art. Smith is urging all those expressing views on patent law reform to take a position on the package as a whole, rather than merely indicating what they like and do not like in the bill. It does not appear that, to date, he has received sufficient expression of support for any proposed total text for him to bring the bill to a vote in Subcommittee. However, sufficient support seems to exist for Smith to continue his efforts, and several major interests involved in the process are proposing further changes to the Smith July 26 substitute in the hope of finding a consensus text that can be approved by the Subcommittee in the time remaining in this legislative year.Copies of H.R. 2795 and of the Smith draft Amendment in the Nature of a Substitute to H.R. 2795 are posted on the Section website under IP Legislation, 109 th Congress. Studies and Reports on PTO Operations Several major reports of studies on PTO operations have recently been released, some of which were examined in an oversight hearing on PTO operations by the House IP Subcommittee on September 8. These reports, which are posted on the Section website under IP Legislation, 109th Congress, are:
Today, success in a market economy depends more and more on intellectual property assets. Indeed, IP-based businesses drive more economic growth in the United States than any sector. Unfortunately, the benefits of capitalizing on intellectual property have captured the attention of counterfeiters and pirates around the world – and the threat posed to the U.S. economy by piracy and counterfeiting is staggering. Industry groups estimate that every year, American businesses lose $250 billion to copyright piracy and 750,000 jobs – again, per year – to overall IP theft. Consumer safety is also at risk – the U.S. Food and Drug Administration estimates that 10 percent of all pharmaceuticals in America are actually fake – and that these fakes can cause serious complications or even death. While all U.S. businesses are vulnerable to IP theft, small businesses areoften at a particular disadvantage. In the fierce competition for the time of a typical small-businessman or woman, things that go beyond payroll, accounting and general operations – including IP protection – often get put on the back burner, leaving small businesses at risk. In addition, small businesses may not have the personnel and operations needed to watch out for counterfeiters around the globe, so theft of their IP overseas can often go undetected.Small businesses should think about intellectual property protection from day one – at the inception of their business – asking themselves whether they need IP protection, and if so, what kind (patents, trademarks or copyrights), when and where to apply and how to go about doing so. The USPTO is proud to be working with the Section to help small businesses – the engine of American economic growth – learn more about protecting their most valuable asset: their ideas. More information about USPTO’s small business initiative, along with a wealth of IP-related tools, can be found at www.stopfakes.gov/smallbusiness. |
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