Six leading consumer groups have asked U.S. Senate leadership to bring to the floor legislation (S. 1145) to reform the patent system. The Judiciary Committee approved the bill July 19, 2007.
In a letter sent November 7, Consumer Federation of America, Consumers Union, Electronic Frontier Foundation, Knowledge Ecology International, Public Knowledge and U.S. Public Interest Research Group said the legislation represents “a valuable first step in improving the quality and ensuring the strength of validly issued patents.” The bill is sponsored by Judiciary Committee Chairman Patrick Leahy (D-VT).
The groups said the patent approval process will particularly benefit from provisions in the bill that
- allow for more comprehensive reviews of patent applications, before and after approval;
- ensure that the apportionment of damages for infringement are more fair and
- clarify what will constitute “willful infringement.”
The text of the letter follows:
November 7, 2007
The Honorable Harry Reid
Senate Majority Leader
528 Hart Senate Office Building
Washington, DC 20510
The Honorable Mitch McConnell
Senate Minority Leader
361-A Russell Senate Office Building
Washington, DC 20510
Re: Patent Reform Act of 2007
Dear Senators Reid and McConnell:
The undersigned organizations, representing a broad range of public interest groups, submit this letter to express our continued support for S. 1145, the Patent Reform Act of 2007. The current patent system has many flaws that can foster poor quality patents and inflate the risk and cost of litigation. As a result, innovators may face unwarranted threats of liability, spending resources on unnecessary litigation and licensing instead of on innovation. Poor quality patents also discourage follow-on innovation and distort competition, ultimately harming consumers and the general public. S. 1145 takes a significant first step towards improving patent quality and reducing the costs and uncertainties of litigation. We greatly appreciate the Senate taking up this vital issue and wish to comment specifically on a few of its provisions that we regard as necessary for substantial improvements to the patent system.
Patent examiners are under immense time constraints and do not always discover prior art that might render a patent invalid. In addition, patent applicants often do not provide the Patent Office with all relevant art. Section 7 of the bill helps fill this gap by allowing third parties to submit relevant documents to examiners before the issuance of a patent. Allowing third parties to aid in the examination process increases the chances that relevant prior art will be discovered and decreases the possibility that invalid patents will issue. We support any measure that encourages valuable input to examiners, and believe that barriers, if any, to third-party submissions should be as low as possible to encourage the robust application of this provision.
Current post-grant challenges to issued patents are limited to severely-constrained reexamination proceedings or costly litigation. S. 1145 supplements these procedures by introducing a post-grant review procedure that would allow third parties to challenge issued patents in the USPTO within a year of the patent's grant, or whenever the third party can show a risk of substantial harm. This provision would provide a comparatively inexpensive and quick means to weed out invalid patents and avoid unnecessary litigation. The parallel bill in the House, H.R. 1908, also supports the current inter partes reexamination procedures, which provide an additional level of review, open to all parties, including public interest groups and consumers affected indirectly by poor quality patents.
Apportionment of Damages
S. 1145's provisions concerning apportionment of damages would require courts to limit damages for infringement so that they bear some relationship to the actual value of the damage to the patent owner. Current practice has allowed patent holders to recover damages for infringement based on the entire value of the infringing product even where the patented technology is a small part of the infringing product. Thus, damages can far exceed the value of the patent. Fear of having to pay excessive damages forces defendants to settle lawsuits and license technologies even where the validity of the patent is doubtful. S. 1145's apportionment of damages provision would go a long way towards remedying such unjust situations.
Willful Infringement Standards
S. 1145's provisions on willful infringement would clearly define situations in which defendants would be liable for willful infringement. Until the recent Federal Circuit Court of Appeals decision in In re Seagate Technology, defendants could be held liable for willful infringement and hence treble damages if they merely knew of the existence of a patent. This low threshold for a finding of infringement discourages many competitors and follow-on innovators from reading each other's patents. Although the Seagate decision improves this situation to a certain degree by raising the threshold for a finding of willfulness, the clarity provided by S. 1145 is necessary to reduce pressure on defendants to license patents of questionable validity.
These provisions of the Patent Reform Act of 2007 represent a valuable first step in improving the quality and ensuring the strength of validly issued patents. We thank you for your consideration of S. 1145 and hope that the bill will succeed in initiating the much-needed reform to the U.S. patent system.
Consumer Federation of America
Electronic Frontier Foundation
Knowledge Ecology International
United States Public Interest Research Group
Members of the United States Senate
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