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Patent
Reform Nearing Reality in 2007
By
Layne
J. McWilliams P.E., George
C. Rondeau, Jr. and Seth
D. Levy
[April 2007]
Last week, legislators
in both the Senate and the House of Representatives introduced bills
that, if enacted, will create broad reforms in the prosecution and
litigation of patents. On April 18, 2007, Senators Patrick Leahy
(D-VT) and Orrin Hatch (R-UT), and Representatives Howard Berman
(D-CA) and Lamar Smith (R-TX) sponsored the introduction of similar
bills titled “The Patent Reform Act of 2007.” Click
here to view the Senate bill; click
here to view the House bill. Although the Act touches a variety
of aspects of U.S. patent law, following are some of its key components.
The Act would
change U.S. patent law from a “first to invent” to a
“first to file” system, giving priority to the first
applicant for a patent on an invention. This marks a fundamental
shift in the U.S. patent system, more closely aligning U.S. patent
law with the patent laws of other countries. Rather than using interference
proceedings to determine who invented first, a “derivation”
procedure would be used to check if an earlier application was filed
by a proper applicant. The United States is the only country currently
using the “first to invent” system for patentability.
The Act allows
use of a “substitute statement” that should make it
easier for organizations to obtain patent protection when the actual
inventor is unable or unwilling to sign the inventor’s declaration.
An assignee or another person showing sufficient proprietary interest
in the invention would be able to file the application.
Most other proposed
changes in the Act are aimed at reforming patent infringement litigation.
For example, the “reasonable royalty” damage measure
would be limited to reflect only the economic value of the patent’s
“specific contribution over the prior art.” Although
this is likely to have an impact on numerous industries, this feature
of the Act is believed to be particularly important to the software
industry where one product may rely on hundreds of patented components.
Also, the “willful infringement” definition is changed
so that proving willfulness would be more difficult, although an
award of treble damages would remain available if willfulness is
proven. In addition, there are proposed limitations to jurisdiction
and venue that impact where an infringement suit may be brought
and thereby limit forum shopping.
Another significant
change is the replacement of reexamination proceedings with a post-grant
review procedure initiated by a party filing a “petition for
cancellation.” The petition can be filed within 12 months
of a patent’s issuance (the “first window”) or
later if the petitioner can show significant economic harm, has
received a notice of infringement from the patent holder, or has
obtained the consent of the patent owner (the “second window”).
Rules and standards for the new proceeding are authorized in an
effort to ensure a final decision is reached within 12 months of
filing. The presumption of patent validity would not be used in
the cancellation, and the patent owner may file only one motion
to amend, cancel, or propose a substitute to the challenged claims.
A petitioner whose petition is denied may not pursue reexamination,
interference, post-grant review, or assert the invalidity of such
claims in a lawsuit based on the same arguments. The post-grant
review procedure is intended to provide a streamlined alternative
to civil litigation, but if used, to also limit the ability to litigate.
In the words
of Rep. Berman, the Act “contains a number of provisions designed
to improve patent quality, deter abusive practices by patent holders,
[and] provide meaningful, low-cost alternatives to litigation for
challenging the patent validity.” Rep. Berman’s April
18, 2007 statement introducing the legislation, available
here.
Generally speaking,
the high-tech industry supports new limitations on certain aspects
of patent litigation, including limits on forum shopping and damages.
Various lobbying groups, among them, the Innovation Alliance, the
Business Software Alliance (BSA), and the Coalition for Patent Fairness,
have issued statements in support of the Act. The biotech and pharmaceutical
industries, on the other hand, are less supportive. Groups such
as the Pharmaceutical Research and Manufacturers of America (PhRMA)
and the Biotechnology Industry Organization (BIO) have issued statements
announcing their concerns. Links to some of these position statements
are found below:
Similar legislation
was introduced in the past two years, but the changes in congressional
leadership may now give the Act the needed votes to become law.
This will have significant ramifications for current patent owners
as well as those that are currently pursuing or may in the future
seek patent protection for valuable technologies.
For
more information, please contact:
This advisory
is a publication of the patent group of Davis Wright Tremaine LLP.
Our purpose in publishing this advisory is to inform our clients
and friends of recent legal developments. It is not intended, nor
should it be used, as a substitute for specific legal advice as
legal counsel may only be given in response to inquiries regarding
particular situations.
Copyright
© 2007, Davis Wright Tremaine LLP.
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