Tech Transfer eNews Blog

U.S. Senate releases details of patent reform bill

By David Schwartz
Published: March 10th, 2010

Leaders of the U.S. Senate Judiciary Committee have released details of compromise legislation aimed at reforming U.S. patent laws. The bill ostensibly makes significant steps toward resolving longstanding differences in legislative efforts to modernize U.S. patent law and make it more compatible with international laws. Referred to as the managers’ amendment to S.515, the bill must go to the full Senate for a vote and must be passed in the House of Representatives. According to background materials circulated by members of the Judiciary Committee, the managers’ amendment includes nearly all of the improvements to U.S. patent laws that were part of the reported version of the Patent Reform Act of 2009, as well as changes designed to strike a better balance among users of the patent system. In particular, the legislation preserves:

  • changes to improve patent quality, including allowance for third parties to comment on pending patent applications;
  • a first-window post-grant review proceeding to weed out patents that should not have issued;
  • the gatekeeper compromise on damages;
  • the compromise on venue;
  • fee-setting authority for the USPTO to address its backlog problem;
  • amendments to best mode;
  • the new district court pilot program; and
  • increased incentives for government labs to commercialize inventions.

The proposed reform would largely eliminate the first-to-invent priority system in the U.S. The bigger deal is that the proposal would eliminate the one-year grace period unless the inventor was the “first-discloser.” A “derivation” proceeding would replace interferences. The proposed reform also would eliminate the right of “any person” to file a false marking claim. Rather, those claims would be limited to individuals who have “suffered a competitive injury.” This change would apply to eliminate standing of already-filed cases.

The damages revision is less significant than previous iterations. Under the proposed revision, a court would be required to “identify the methodologies and factors that are relevant to the determination of damages, and the court or jury shall consider only those methodologies and factors relevant to making such determination.” The parties also would be required to “state, in writing and with particularity, the methodologies and factors the parties propose for instruction to the jury in determining damages … specifying the relevant underlying legal and factual bases for their assertions.” The provision generally creates a better situation for accused infringers but does not necessarily limit damage awards. The managers’ amendment provides these additional changes:

  • Shortens the first-window post-grant review from 12 to nine months and raises the threshold for instituting a proceeding to a showing that it is “more likely than not” that at least one claim is unpatentable.
  • Slightly raises the threshold for instituting an inter partes review (IPR) to a “reasonable likelihood” that the challenger would prevail in invalidating a claim of the patent, creates additional safeguards to prevent a challenger from using the administrative process to harass patent owners, and inserts “reasonably could have raised” estoppel to prevent a challenger from raising in court an argument that could have been raised during an IPR instituted by the challenger.
  • Codifies recent case law that requires willfulness to be demonstrated by clear and convincing evidence that the infringer acted with objective recklessness and adds substantive and procedural safeguards for alleged infringers.
  • Removes the provision that would have required the federal circuit to accept interlocutory appeals of claim construction determinations.
  • Requires that the USPTO reduce fees by 50% for small entities and by 75% for the new classification of “micro-entities” created by the bill.
  • Permits a patent holder to provide additional, potentially material prior art regarding the patent to the USPTO. If the USPTO considers the information and determines it has no effect on patentability, that information cannot later serve as the basis for an inequitable conduct claim in court.

Sources: Intellectual Property Watch and Patently-O

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