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House subcommittee holds first hearings on Patent Reform Act of 2007

April 27, 2007
Post by Blog Staff

Yesterday a subcommittee of the House Judiciary Committee, the Subcommittee on Courts, the Internet and Intellectual Property, held the first hearings on the House version of the Patent Reform Act of 2007 (HR 1908). The witnesses were:

Details about the testimony after the jump.

Gary L. Griswold

In favor of:

  • First-to-file system
  • "Prior user" rights for all types of claims, not just method claims
  • Third-party submission of prior art during prosecution
  • Limits on willful infringement
  • Publication of all patent applications (no more domestic-only opt-out)
  • Assignee filing

Against:

  • Changes in how damages are awarded
  • Expanding USPTO rulemaking authority to include substantive patentability issues
  • Interlocutory appeals of claim construction as a matter of right
  • Changes to the patent venue statute

Additions/changes desired:

  • Add consensus "best practices" for implementation of the first-to-file system
  • Increase effectiveness of the duty of candor before the USPTO, including prohibiting a finding of inequitable conduct if a patent's claims are held valid
  • Repeal the best mode requirement
  • Post-grant opposition period limited to 9 months after the patent issues, after that existing reexamination procedures would have to be used

An interesting suggestion by Mr. Griswold pertains to inequitable conduct, as he suggests that the increase in inequitable conduct allegations has corresponded with the decrease in "patent quality." This is because patent prosecutors and inventors, fearing future allegations of inequitable conduct in litigation, do one of two things: they "overdisclose" prior art, flooding the patent office and making examination less efficient, or they don't perform a search at all, which places a greater burden on the patent office to find all relevant prior art, and also keeps the initial patent application and claims from being drafted predominantly toward patentable subject matter, extending the examination process.

Mr. Griswold also noted that if the changes to damages calculations are enacted, the value of the Post-It® Note patent would have been drastically reduced: "An infringer of the Post-it Note patent would be permitted to argue that the value of the paper and adhesive ... should be subtracted from the value of the infringing note, leaving essentially nothing on which to base a calculation of damages." This argument seems logical, and shows that a "one-size-fits-all" legislative approach to damages may not be the best option.

Anthony Peterman

In favor of:

  • Post-grant opposition procedures
  • Increased regulatory authority for the USPTO (in particular related to continuation "abuses")
  • Third-party prior art submissions during examination
  • First-to-file system
  • Litigation reforms, including restriction on willful infringement, reasonable royalty calculations, and modification of the venue statute

As a representative of Dell, one of the largest computer manufacturers in this country, it is unsurprising that Mr. Peterman was in favor of virtually everything included in the bill.

Kevin Sharer

In favor of:

  • Assignee filing of patent applications
  • No opt-out of publication
  • First-to-file system

Against:

  • Post-grant opposition (especially if available throughout the life of the patent), and not requiring clear and convincing evidence of invalidity in such proceedings
  • Changes to damages calculations

Additions/changes desired:

  • End fee diversion to increase USPTO funding
  • An even stricter limitation on willful infringement (eliminating the "claim chart letter" way to find willfulness)
  • Either eliminate inequitable conduct, or at least make it so it can only be found if there is a claim found invalid, and adopt a "but for" standard between the invalidity of the claim and the challenged conduct
  • Eliminate the best mode requirement

As with Mr. Peterman, because Mr. Sharer represents the biotech/pharmaceutical industry, it is unsurprising hat he was against several of the proposed reforms.

John R. Thomas

In favor of:

  • Revisions to damages calculations ("market-based damages")
  • Addition of post-grant opposition period that extends for the life of the patent

Mr. Thomas was testifying on his own behalf, so while it is interesting to hear the views of someone not affiliated with major industry, it will remain to be seen whether his views are given as much weight as the heavyweight industry lobbyists.

William T. Tucker

In favor of:

  • Derivation proceedings and creation of Patent Trial and Appeal Board
  • Retention of best mode requirement
  • Changes to venue statute
  • No "loser pays" attorney fee system
  • No restrictions on continuations or additional restrictions on injunctions
  • No opt-out of publication of applications

Against:

  • First-to-file system
  • Changes to make it easier to proceed without the inventor
  • Changes in how damages are computed
  • Vagueness of prior user rights as currently drafted
  • Increased rulemaking authority for the USPTO

Additions/changes desired:

  • Change post-grant opposition period to a limited period of time (12 months as currently written is acceptable)
Mr. Tucker's testimony was notable in that he was the only witness to argue against a first-to-file system. This is largely because the University's technology transfer program typically involves small businesses, and these types of entities are often the "losers" in a first-to-file system, as such a system arguably promotes filing more patent applications to ensure the earliest possible filing date, whereas the current first-to-invent system promotes additional development and refinement of an invention before filing.

Since this is only the first round of hearings (none have yet been held in the Senate), and the legislation was introduced just last week, it remains to be seen what changes the Patent Reform Act of 2007 will undergo over the coming months. The last two years patent reform has stalled because industry groups could not reach a compromise acceptable to all involved, and as a result Congress did not pass reform legislation. Given the increased interest in patent law by industry, the public, and the Supreme Court, however, perhaps this year some patent reform legislation will actually be enacted.

Media coverage of the hearings is somewhat scant thus far, but here is a sampling:

Computerworld

MSN (via AP)

BioWorld Today

InfoWorld

San Jose Business Journal ($)

Several blogs have weighed in:

271 patent blog

Promote the Progress

Patently-O (2 3

  • Legislation
  • News
  • Patents

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