Patent Legislation Passes House

This overview tells most of the story. But the core of this legislation is to shift the US from a "first-to-invent" to a "first-to-file" system (like Europe's). Researchers and universities have generally opposed the change, fearing it would reward fast filers over good inventors (i.e. rich corporations over university lab investigators), and discourage publication and the circulation of information prior to patenting. The battle is far from over.

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US moves to reform patent laws

By Patti Waldmeir in Washington

Published: September 7 2007 23:37

Big US technology companies won an important patent reform victory on Friday when the House of Representatives passed a bipartisan bill that would bring sweeping changes to the way America rewards innovation.

The bill, which could significantly shift the balance of power between US patent holders and their rivals, must still pass in the Senate, and its prospects of becoming law remain uncertain. But opponents and proponents alike say on Friday’s vote was a milestone, bringing years of congressional debate over patent reform to a climax.

Supporters of the bill, including companies such as Microsoft, Apple, Intel, Google, and many financial services firms, say it will improve patent quality and limit unnecessary litigation and excessive damages.

Jonathan Yarowsky of The Coalition for Patent Fairness, a lobby group of big technology companies, said after the vote: “The current patent system has become bogged down by delays, prolonged disputes and confusing jurisprudence. This comprehensive legislation...will help drive innovation.”

But opposition to the bill is widespread, ranging from pharmaceutical companies to big manufacturers like General Electric, 3M and Johnson & Johnson, small inventors, many venture capitalists, some small technology companies, labour unions and the White House.

The Bush administration said this week it opposed changes to the way patent damages were calculated, which would limit the discretion of judges in awarding damages to compensate patentholders whose patent rights are violated.

The bill would make it harder for inventors to win big damage awards against high technology companies whose products rely on hundreds of different innovations. It would make it more difficult for patentholders to win an award based on the total market value of the product – rather than on the value of one individual patented component.

The White House said: “Making this change to a reasonably well-functioning patent legal system is un warranted and risks reducing the rewards from innovation.” The Coalition for 21st Century Patent Reform, which includes companies like GE and 3M, criticised the bill, saying it “favours infringers over inventors”.

Stephen Maebius, a patent law expert at the law firm Foley & Lardner, said courts had already taken the initiative on patent reform, enacting several major changes, while legislation had been mired in debate. “Judicial developments have rendered portions of this legislation obsolete, because things have been happening so fast in the world of patent infringement case law,” he said.

He predicted a stiff battle to win passage in the Senate, but Emery Simon of the Business Software Alliance, one of the bill’s biggest backers, said on Friday’s vote “puts momentum into (congressional) patent reform”.

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