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Senate hearings on the Patent Reform Act of 2007

June 07, 2007
Post by Blog Staff

As noted previously, the Senate yesterday held hearings on the Patent Reform Act of 2007 (S. 1145). The witnesses were:

Below is a brief summary of the testimony.

Director Jon W. Dudas

In favor of:
  • Third party prior art submissions
  • Some changes to willful infringement (regarding notice and no inference of willfulness if no opinion of counsel offered)
  • Enhanced rulemaking authority
  • Filing patent applications by assignees

Against:

  • Damages apportionment
  • Prior user defense (unless first-to-file adopted)
  • First to file (at least for now)
  • Mandatory publication of applications

No opinion on:

  • Changes to venue provisions
  • Interlocutory appeals of claim construction

Additions/changes desired:

  • Mandating the "applicant quality submissions" that are currently only required in the Accelerated Examination Program
  • Post-grant review should be modified in accordance with USPTO suggestions, namely to reduce the time in which such challenges could be brought

Of most interest was the testimony of Director Dudas, as it represents the views of the USPTO on the currently-proposed patent reforms. Possibly the most troubling aspect of his testimony was his view that virtually all applicants should be required to go through the hoops required by the accelerated examination program, such as the examination support document, a prior art search, as well as the various other requirements (more detail about the requirements can be found in this post).

Director Dudas did note that these requirements would be expensive and difficult to comply with for small entities and individual inventors. He proposes a third class of entity: the "micro-entity," which would be exempt from some or all of the "applicant quality submissions" (AQSs). He also noted that such a system would also require a change in how inequitable conduct is determined in order to avoid having unintentional misstatements or withholding of information in the AQS result in a finding of inequitable conduct.

More about the rest of the testimony and media coverage after the jump.

Bruce G Bernstein

In favor of:

  • Third party prior art submissions
  • Mandatory publication of applications

Against:

  • Apportionment of damages
  • Expanded post-grant review
  • Expanded rulemaking authority for the USPTO
  • Interlocutory appeal of claim construction

Additions/changes desired:

  • Permanent end to USPTO fee diversion
  • Enhanced judicial training
  • Elimination of best mode requirement
  • Clarification of inequitable conduct

Mr. Bernstein's testimony is interesting in that it presents a contrary viewpoint to that of large technology firms. Smaller technology firms, like most small businesses, would likely be harmed if the Patent Reform Act of 2007 is enacted in its present form. He also notes that the currently proposed post-grant review procedures could potentially tie up a patent in post-grant review for the entirety of its term, thus netting the inventors nothing other than costs to defend their patent. His company also signed on to a letter previously sent to Congress detailing concerns with the reform bills as currently drafted.

Mary E Doyle (on behalf of the Coalition for Patent Fairness)

In favor of:

  • Interlocutory appeals of claim construction
  • Changes to venue provisions
  • Post-grant review procedures
  • Damages apportionment
  • Changes to willful infringement

Against:

  • None

Additions/changes desired:

  • None specifically mentioned
This position is not surprising, given on whose behalf Ms. Doyle was appearing. The Coalition for Patent Fairness expressed its support for the Patent Reform Act of 2007 shortly after it was introduced.

John A. Squires (on behalf of the Securities Industry and Financial Markets Association, the American Bankers Association, and the Financial Services Roundtable)

In favor of:

  • Damages apportionment
  • Post-grant review
  • Interlocutory appeal of claim construction
  • Changes to willful infringement

Against:

  • None

Additions/changes desired:

  • Venue provisions should be "strengthened" to further limit possible venues, specifically limiting to where both parties have a substantial business nexus
  • Prior user defense should be expanded to permit a holding company to confer the defense upon affiliates
  • The Act should take effect immediately
  • Clarification of secret prior art

Mr. Squires painted a bit of a "gloom and doom" scenario, insinuating that because patent infringement suits carry the "risk of injunction, the delivery of financial services in the U.S. economy is all too easily put at risk." This statement seems unnecessarily alarmist, particularly after the Supreme Court's eBay decision.

Kathryn L. Biberstein (on behalf of the Biotechnology Industry Organization)

In favor of:

  • First to file
  • Ending fee diversion
  • Third party prior art submission
  • Some willful infringement reforms (such as mandatory bifurcation)
  • Changes to venue provisions (in principle, not necessarily as drafted)
  • Expansion of the prior user defense

Against:

  • Expanded post-grant review, particularly if no presumption of validity attaches
  • Apportionment of damages
  • Expanded rulemaking authority
  • Interlocutory appeal of claim construction (at least for now)

Additions/changes desired:

  • Repeal of the best mode requirement
  • Restoring a rebuttable presumption of irreparable harm and inadequacy of remedies at law to prevent undermining the "essence of the patent right," the right to exclude
  • Reform of inequitable conduct doctrine

As with several of the other witnesses, Ms. Biberstein's positions were predictable given that she represented the interest of BIO, a group of biotechnology companies.

In addition to these witnesses who appeared before the committee, there were reports that executives from several large technology companies, including Microsoft CEO Steve Ballmer, were "working the halls of Congress" in support of the reform legislation.

The next step will be to see what amendments, if any, are introduced and considered by the committee. We'll be watching for further developments in both the Senate and the House.

Media coverage:

New York Times

CNN Money

Information Week

InfoWorld

Internetnews.com

Blog coverage:

Patent Prospector

Chicago IP Litigation Blog

Wall Street Journal Law Blog


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