Key U.S. Senators Agree on Patent Litigation Reform

Leaders of the U.S. Senate Judiciary Committee said Wednesday they had reached agreement on key elements of a bill to revise U.S. patent law.

One of the changes would require judges hearing patent infringement cases to play a gatekeeper role in helping identify appropriate damages, according to a statement from committee chairman Patrick Leahy, a Democrat from Vermont.

A similar bill passed the U.S. House of Representatives in late 2007, but failed in the Senate largely because of disagreements between industries over how to craft the bill.

The committee will meet on Thursday to discuss the changes.

Big computer and hardware firms have pushed for years for patent law changes in hopes of reducing litigation, much of which they blame on poor quality patents issued by the U.S. Patent and Trademark Office.

But the effort has worried big drug companies, some smaller technology firms and others dependent on small portfolios of patents.

The biggest fight has been over damages.

Current law allows for infringement to be punished by payment of the entire market value of the product, but some high-tech companies say that is unfair, as just one of their products may involve hundreds of patents.

Under the proposed amendment, if a company has been found to have infringed a patent, the judge will help determine if the patent was critical to the product, as is typical in pharmaceuticals, or a bit player, as is more typical in high-tech items like computers and mobile phones.

Currently, damages could be tripled if the infringement is found to be willful. The U.S. Court of Appeals for the Federal Circuit’s 2007 Seagate decision made that harder to accomplish, and the proposed amendment would change the law to make it conform with that decision.

Another proposed amendment to the bill attacks “forum shopping,” where plaintiffs file suit in courts likely to favor them. Again, the language in the amendment is designed to match a recent court decision aimed at curbing the practice.

“We are supportive of that compromise package. We hope that they take it up and we hope that it’s adopted,” said Bill Mashek, a spokesman for the Coalition for 21st Century Patent Reform which includes General Electric, Proctor & Gamble , Eli Lilly, 3M, Johnson & Johnson and Caterpillar.

David DiMartino of the Coalition for Patent Fairness, which counts Apple, Autodesk, Research in Motion , Palm, Google, Hewlett-Packard and Intel among its members, said the amendment represented “significant progress.”

“It’s not everything that we want, that’s for sure,” he added.

Chris Andrews, an IBM spokesman, said his company hoped the bill would become law. “IBM supports the amendment and urges to committee to move the legislation forward. Patent reform is urgently needed, and failure to act will harm our nation’s economy at a time we can ill afford it,” he said.

(Reporting by Diane Bartz; Editing by Tim Dobbyn, Gary Hill)