Similar versions of the Patent Reform Bill of 2007, introduced in April this year, reported out of the House and Senate Judiciary Committees recently. I gave a brief summary of bill introduced in April in my last post. The current bills, although amended, retain the essence of the provisions of the earlier bill.
Both the Senate and House versions of the bill contain provisions, which if enacted, would go a long way towards enhancing the quality of issued patents, reducing litigation and unnecessary licensing and removing artificial constraints on competition and innovation. I will mention a few provisions that stand out.
First, both bills retain the provision that would allow third parties to submit patent defeating documents to the United States Patent and Trademark Office (USPTO) before a patent issues. As I mentioned in my last post, this provision would aid over burdened patent examiners in finding prior art and reduce the possibility that bad patents will issue.
Second, the provision for post-grant review contained in both bills, would provide an inexpensive alternative to litigation. Under current law, an issued patent can be challenged either in the USPTO through the severely constrained re-examination process or through costly litigation. The post-grant review provisions would allow questions of patent validity to be settled through an administrative proceeding before the USPTO that would be far less restrictive than current reexamination proceedings. This procedure would be less time consuming and far less expensive than litigation. Thus, it would allow companies to concentrate their resources on innovation rather than on litigation.
Third, the willful infringement provision of both bills would encourage innovation by removing disincentives that prevent competitors from reading each other's patents. Under current law, once a competitor has knowledge of the existence of a patent, he is charged with an affirmative duty to ascertain its scope and avoid infringement. Many suggest that this involves getting the opinion of counsel which can be very expensive. As a result, companies discourage their employees from researching patents in their field, thereby discouraging innovation. The willful infringement provision of both bills would remedy this situation by providing that willful infringement can be found only when the patent owner gives notice as to how a product infringes his patent. Competitors would be able to read each other's patent and make follow-on innovations without fear of being held liable for willful infringement.
Fourth, the apportionment of damages provisions would ensure that damages awarded in infringement suits bear some relation to the value of the patent infringed. As I pointed out in my last post, current law allows damages to be awarded far in excess of the value of the patented technology. This puts defendants under immense pressure to settle lawsuits and license patents even where the patent's validity is questionable. The apportionment provisions of both bills would change this scenario and reduce costs associated with unnecessary licensing.
Both bills contain several other positive provisions. If enacted, the bills would be a significant first step towards bringing about much needed reform to patent law.
UPDATE: The Federal Circuit's August 20th decision in In Re Seagate Technology changed the standard for finding willful infringement from one based on “affirmative duty” to one based on recklessness. Under the new standard, a defendant would be liable for willful infringement if there was a “high likelihood that its actions constituted infringement of a valid patent.” Although this decision is positive, the willful infringement provisions of the bills would bring further clarity to this area of the law