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White House, Siding With Inventors, Objects To Contended Section of Patent-Reform Bill

The Bush administration this week voiced its objections to a controversial patent reform bill that has passed in the House of Representatives and is currently awaiting a vote in the Senate.
However, the White House more or less agreed with other contentious provisions in the bill, such as a switch to a first-inventor-to-file system and the establishment of a post-grant patent review window. It also reiterated its desire to pass sweeping patent-modernization legislation as soon as possible.
Specifically, the administration said that Section 4 of the bill, which addresses inventors’ rights to obtain damages in the case of patent infringement, would “likely lead to less than adequate compensation for many patent holders and could promote infringement.”
The administration’s position is shared by many members of the biotech, university, and venture-capital sectors, all of which have voiced strong opposition to that section of the bill because they say it may erode their ability to defend their intellectual property.
In a letter addressed to Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), one of the original sponsors of the bill, the administration stated that while language in the current Section 4 of the bill, also known as S. 1145, “will create more problems than it solves, we believe that certain useful improvements could be made to the current law governing damages.”
It added that it is looking forward “to working with Congress to find a compromise that spurs innovation and strengthens IP enforcement while deterring infringement. However, without substantive changes that protect the inventor and deter infringement, we will continue to strongly oppose this legislation in its current form.”
The full version of the letter can be downloaded here.
In a conference call yesterday, Under Secretary of Commerce for Intellectual Property Jon Dudas provided further explanation of the administration’s views during a conference call for reporters.
“Essentially we’re saying that we very much would like to have a bill that improves the patent system, but we think that the current version of S. 1145 does not do that,” Dudas said. “In fact, in some ways, it undermines innovation, particularly in the damages provision. So the administration strongly opposes S. 1145 in its current form, but strongly supports passage of balanced patent modernization legislation, and we’re looking forward to working with folks in Congress.”

“The administration strongly opposes S. 1145 in its current form, but strongly supports passage of balanced patent modernization legislation and we’re looking forward to working with folks in Congress.”

When asked what type of damages provision the administration would like in the bill, Dudas said that it would prefer to “keep judges with the maximum amount of flexibility” in determining the damages that would be awarded to companies and innovators whose patents have been infringed.
“Each patent case is different,” Dudas said. “The objection to what is in the current damages provision is that they ask you to choose, from among 15 different factors that are available, a couple of factors first, and then if those don’t work, then look beyond.
“Essentially what the administration is saying is, ‘Give the judges the discretion to look at all of the factors,’” Dudas added. “Then, which we think is really at the heart of the issue that people have raised, give the judges the ability and responsibility to then guide the jury and say ‘These are the most important factors for you to look at.’”
Dudas added that writing in such a provision “seems to answer every concern that has been raised” across all industry segments.
He also said that if disagreement over the damages provision threatened to scuttle the bill in its entirety that the administration would still support passage of the remaining items outlined in the bill, with a few minor tweaks.
Major areas of agreement outlined in the letter included a provision that would improve the quality threshold for patent application submissions; granting authority to the US Patent and Trademark Office to eliminate, lower, consolidate, or raise certain patent and trademark fees as needed; and establishing a post-grant review patent review process that would function as a lower-cost alternative to litigation for those who want to challenge a patent’s validity.
According to Dudas, USPTO employees have visited nearly 40 Senate offices in the last two weeks, and that the office held a briefing earlier this week that was attended by some 70 Senate staffers.
“We’re always under pressure” at the USPTO, Dudas said, but added that the office has set no specific deadline for passage of the bill. “The sooner we come to the right answers, the better off we are because there are improvements that can be made and should be made," he said.
In September, the Patent Reform Act of 2007 narrowly passed through the US House of Representatives with a final vote of 220 to 175, causing various concerned parties from the biotech and university tech-transfer communities to voice disappointment and call for the Senate to address their concerns before voting on its version of the bill (see BTW, 9/10/2007).

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