Senate Amends Patent Reform Bill, Vote Could Come This Week

By | March 2, 2011

The U.S. Senate voted Tuesday to strip controversial provisions out of a bipartisan bill to revamp the U.S. patent system and clear a years long backlog of patent applications.

The vote was 97 in favor and two opposed.

Senators Patrick Leahy, Charles Grassley and Jon Kyl, members of the Senate Judiciary Committee, proposed stripping from the bill a measure that gives judges a major role in determining how important a particular patent is to a product, so that infringing minor patents would not lead to huge damages.

They also took out a provision barring the practice of maneuvering to file patent infringement lawsuits in courts known to be friendly to plaintiffs.

On both issues, the U.S. Court of Appeals for the Federal Circuit, which specializes in patent appeals, has issued rulings that go a long way toward ending the problem of juries in plaintiff-friendly districts giving out-sized damage awards.

Leahy and other of the bill’s supporters are hoping for a vote on the bill this week. There is as of yet no companion bill in the House, but reform advocates expect the eventual House measure will be similar to the Senate bill.

Representative Lamar Smith, chairman of the House Judiciary Committee, said in a statement he was “close to completing the draft of the House patent reform bill.”

The amendment also would end the practice of diverting money from the U.S. Patent and Trademark Office. The patent office sometimes brings in considerably more money in fees than is allowed in its budget, angering companies that wait years to get a patent approved due to a shortage of patent examiners.

The White House said late Monday it supported the bill, with or without the damages and venue provisions.

The Obama administration said it supported moving to a first-to-file system, which is in the bill. Under this system, the patent application sent first to the patent office is approved instead of requiring inventors to show they were the first to develop a certain technology or drug.

This change would make the patent application process easier for companies that apply for patents in multiple countries.

Other provisions in the bill aim to prevent bad patents from being issued by allowing third parties to provide information on why an application should be rejected. The bill also set rules for allowing patents to be challenged after they are granted, which proponents say is cheaper than litigation

The bill also called for allowing the patent office to set its own fees so it can hire more examiners and upgrade technology so examiners can chip away at a massive backlog of patent applications.

David Kappos, the head of the patent office and a former International Business Machines Corp. vice president, addressed criticism of the bill from the high technology sector, which initially pushed for a patent reform and now largely opposes it.

“As a person who came from the information technology industry … there are actually lots of good things for the tech industry (in the bill),” Kappos told reporters.

Leahy’s amendment would also create a temporary, limited proceeding at the USPTO to challenge business-method patents. Perhaps the most familiar example is Inc one-click purchase patent.

The Supreme Court last year rejected a way to hedge energy costs, but did not shut the door on business method patents.

(Editing by Andre Grenon)

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