Chief Judge Michel offers additional thoughts on the Patent Reform Act of 2007
June 18, 2007

Back when the Patent Reform Act of 2007 (H.R. 1908 and S. 1145) was first introduced, Chief Judge Paul Michel of the Federal Circuit wrote a letter to Senators Patrick Leahy and Orrin Hatch (the Senate sponsors of the Patent Reform Act of 2007) discussing the practical implications of certain provisions of the bill on the courts.

As it turns out, this wasn't the Chief Judge's last word on the subject. Since then, he has sent a letter to Shanna Winters, Chief Counsel to the House Subcommittee on The Courts, Internet and Intellectual Property in response to her request for information regarding the controversial damages apportionment provisions in the Act. He has also sent another letter to the Senate, this time to Chairman Leahy and Ranking Member Specter of the Senate Judiciary Committee. This letter discusses both the damages provisions as well as the proposals regarding interlocutory appeals of claim construction.

It is clear based on these letters that Chief Judge Michel does not think that these particular aspects of the reforms would have a positive impact on the judiciary. More details regarding the letters after the jump.

Damages apportionment

Both letters take issue with the Patent Reform Act's damages apportionment's focus on the value of the patented invention as compared to that which existed in the prior art. Specifically, Chief Judge Michel notes that this requires a court to consider this in the computation of a reasonable royalty, whereas in the past, this factor is just one of the fifteen Georgia-Pacific factors (named after the case in which they were first listed) that may or may not be relevant in a given case.

In addition, he reiterates the likelihood that courts will have to undergo "massive macroeconomic analysis" in order to determine the amount of damages in a given case in order to separate out the economic value of the patented invention as well as the prior art. He offers several suggestions to change the current draft, requesting that the provision be removed, that the analysis be discretionary (and therefore limited to cases where it might actually be necessary), and requiring the accused infringer to establish a basis for the value by submitting sufficient evidence before such analysis would be undertaken.

He also provides a link to a study on the subject by William Rooklidge, a past president of the AIPLA. The study, among other things, picks apart the recent House testimony of John R. Thomas, Professor of Law at Georgetown University Law Center regarding damages in patent cases.

Interlocutory appeals

Chief Judge Michel also reiterates the sentiments in his previous letter that permitting interlocutory appeal of claim construction would be a bad idea. He also cites a recent study by Professor Jay Kesan of the University of Illinois Law School, which indicates that the number of patent-related appeals to the Federal Circuit would roughly double if such a provision were enacted.

Further, the average patent appeal to the Federal Circuit requires 11 months. Chief Judge Michel notes that if the number of appeals doubles, this time would also correspondingly increase, thus adding a substantial amount of time to already time consuming patent cases.

The Chief Judge makes some interesting points, and it is nice to see Congress is attempting to determine the practical implications of the Patent Reform Act of 2007 before making dramatic changes to several areas of patent law.

Hat tip to the Patent Prospector.

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