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Conflicting Views Mire Patent Reform

A possible shuffling of committee and subcommittee chairmanships in the 111th Congress could help jump-start action on complicated patent overhaul legislation that has stalled.

Both the House and Senate bills would set up a federal system like those in Europe and Asia that award patents on a first-to-file basis — rather than the current

system that awards patent protection to

the first person who can prove he is the inventor.

But opposition over how the House and Senate bills would allow courts to calculate infringement damages is causing the measure to hit gridlock.

Senate Judiciary Chairman Patrick Leahy (D-Vt.) and ranking member Arlen Specter (R-Pa.) are negotiating language in their bill that would allow courts to award damages based on the entire market value of the product if the infringing invention’s specific contribution is the predominant basis for market demand of the product.

Both sides have expressed disappointment in not being able to reach a compromise but say they remain committed to trying to find a solution.

Similarly, Rep. Howard Berman (D-Calif.), chairman of the Judiciary Subcommittee on the Courts, the Internet and Intellectual Property, has backed an approach that would allow plaintiffs to recover damages based on the value of the patent’s contribution to the infringing product.

However, the next Congress could provide room for compromise, with the possibility that several key players negotiating the current bill could change jobs.

Berman is expected to give up the gavel of his subcommittee to lead the House Foreign Affairs Committee, while Leahy could move from head of the Senate Judiciary Committee to take over the Appropriations Committee for the ailing Sen. Robert Byrd (D-W.Va.).

Another unknown factor is the health of Specter, who is battling a recurrence of cancer.

One lobbyist for the Innovation Alliance, a coalition of technology innovators and patent owners that opposes the damages language being hashed out in the Senate, said that with new leadership on the panels, “you could end up with a better bill.”

“Enough concerns have been raised about the legislation as it stands,” the lobbyist said. “It’s created enough uncertainty for it to go into the next year.”

Industry opposition and support for the bill rests with patent holders and patent users, respectively.

The biggest complaints for those against the bill have been on the post-grant review and damage provisions, which they say could encourage infringement.

Part of the holdup is also based on differences in restrictions on forum shopping and language used as a defense to invalidate a patent. Courts could rule in the defendants’ favor if they can show that the applicant would not have been granted a patent if they had submitted information on a previously known invention.

Bill Mashek of the Coalition for 21st Century Patent Reform, which represents a broad swath of industries from technology to pharmaceutical groups, agreed that patent reform efforts are in “cold storage” for the remainder of the year and that it would be brought back up next year.

His group wants a bill that would be fair for patent owners and rejects attempts to include language in the Senate bill’s damages provision that he says would discourage innovation.

The Innovation Alliance lobbyist said much of the focus has been on the back end of the process — what happens when you end up in litigation — and that a fresh start could help focus on the patent application process.

The Coalition for Patent Fairness, which has supported the House and Senate bills since their introduction in April 2007, wants to see that there is a balance to the patent litigation system and that with infraction cases, damages are based on the fair share of their contribution to the value of a product.

“Everyone agrees on the end game that we need a better patent system. [Intellectual property] is the linchpin of the economy,” the Innovation Alliance lobbyist said.

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