On March 3, 2009, Senators and Representatives Leahy, Hatch, Conyers, and Smith introduced the bipartisan, bicameral Patent Reform Act of 2009 Bill (the "Bill"). The political battles between Democrat and Republicans subsided for that moment. War, silent for almost a year, was reinstated between high tech software and hardware companies versus biotechnology, pharmaceutical and other similar situated companies.
This Bill contains many industry-changing provisions, including:
First to File: This provision would bring the United States in line with the other nations, and change our system to award patent rights to the first applicant(s) to file. The United States is the only industrialized nation that awards patent rights to the persons(s) first to invent, rather than those first to file. This current system provides for added complexity, namely, the determination of who actually was the first to invent. The first to invent system can be more equitable because the patent rights go to the true original inventor, not the quickest to file.
Patent Infringement Litigation: This change would require that patent infringement litigation be brought in the state where the defendant has a physical place of business that constitutes a substantial portion of the operations of the defendant or where the defendant has committed substantial acts of infringement and has a similar amount of business, with minor exceptions for "micro-entity" inventors.
Damages: The Bill would raise the statutory requirements to prove "willful" infringement. The Bill would require a plaintiff to demonstrate with clear and convincing evidence that the infringer acted in a manner that was objectively reckless.
The Bill also changes the calculation of awarded reasonable royalties, one of the typical types of damages awarded. It does this by calculating the reasonable royalty as a reflection of "specific contribution [of the invention] over the prior art." Thus, for the patents that do "little" to advance the sciences and the art, the Bill mandates that they will be given only a reasonable royalty for that "little" advancement, regardless of other royalty factors, such as anticipated profitability of infringing products. The Bill also requires the court to identify the factors that are considered in determining a reasonable royalty.
Post-Grant Review: The Bill introduces a post-grant review of issued patents, allowing a party to petition the USPTO for cancellation of the patent within twelve months of its issuance. In this post-grant review, the presumption of validity would not exist, but the petitioner would bear the burden of the patent's invalidity. Currently, a patent can be challenged two ways, either in Federal court or through a reexamination proceeding.
Interlocutory Appeals: The Federal Circuit would have jurisdiction over interlocutory appeals of claim construction, i.e., Markman hearings, when approved by the lower court.
Pre-Issuance Submissions: Third parties would be able to submit prior art during examination of patent applications. The art would be submitted at the latter of six months after publication or before the first office action on the merits.
As stated above, there has been a "line" drawn in the proverbial sand between various organizations. A recent survey reveals that there are many more organizations against this Bill than for, but its passage is, in some form, probable.
Organizations which are for the Bill are the Coalition for Patent Fairness, the Business Software Alliance and the Software & Information Industry Association, among others.
Organizations against the Bill are the Institute of Electrical and Electronics Engineers, the Coalition for 21st Century Patent Reform, the Union of US Patent Examiners, the National Small Business Association, the Patent Office Professional Association, the Innovation Alliance, the Professional Inventors Alliance, the American Conservative Union, the Christian Coalition of America, the American Civil Rights Union, and Monsanto, among others.
A compromise may be reached allowing some changes to take place. Senator Dianne Feinstein, a California Democrat, has pushed the sides to come to agreement on damages and post-grant review; she stated, moreover, that her vote would not be forthcoming unless a reconciliation was reached.
Not since 1952 has a major overhaul of the patent system taken place. 2009 may be the year. We are paying close attention to the situation as it develops, and will be prepared to act accordingly should any changes materialize. See Robert Payne’s article on apportionment of damages in this issue.