March 4, 2010 – The United States Senate Judiciary Committee released details of a new compromised patent reform bill entitled the "Patent Reform Act of 2010." Introduced by Senators Patrick Leahy (D-VT) and Orrin Hatch (R-UT), the proposed amendment retains several of the key components of the original bill but also adds new provisions such as a provision limiting false patent marking lawsuits and the creation of a new administrative post-grant review procedure.
First to File
As in the previous patent reform bills, the proposed bill would transform the United States' unique first-to-invent patent system into the more common first-to-file system. In a first-to-file patent system the patent is granted to the first person who files a patent application, regardless of the date of conception.
Limitation on Damages
The amended bill also retains the provision designed to prevent excessive damages awards. This provision allows the judge to act as gatekeeper during the damages phase of the trial, including determining whether a party's damages theories and methodologies are sound and, therefore, should be allowed before the jury. The judge may keep potentially damaging evidence from the jury if the party's damages theory lacks legally sufficient evidentiary basis. Therefore, the court acts as the gatekeeper, permitting the jury to hear evidence relating to the determination of damages only if the evidence is relevant to the methodologies and factors that the court determines are sound.
Opponents of the gatekeeper provision argue that the provision is unnecessary because the existing judicial framework already allows the court to prevent excessive damages awards, as seen in the recent Lucent v. Gateway1 case. In Lucent v. Gateway, the Court of Appeals for the Federal Circuit vacated a US$357 million damages award against Microsoft because the evidentiary record failed to show how the US$357 million lump sum award was calculated.
Heightened Willfulness Pleading Standard
In addition, the amended bill makes it harder to plead willful infringement because, under the amended bill, the plaintiff must plead willfulness with particularity as set forth under Federal Rule of Civil Procedure 9(b). The amended bill also allows bifurcation so that the infringement and validity portions of the case are decided before the issues of damages and willful infringement.
Also new to the bill is an administrative post-grant provision which allows third parties to challenge the patentability of newly issued patents within nine (9) months of issue. Similar to inter parte reexamination, the patent owner is allowed to file responses throughout the process. Final determination in any post-grant review is to be issued within one (1) year after the post-grant review petition is granted.
False Marking Provision
Finally, the new bill includes a provision addressing the flood of false marking litigations since the Court of Appeals for the Federal Circuit's decision in Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009) (imposing a US$500 penalty for each article falsely marked). Under the amended bill, the plaintiff must show it has suffered a competitive injury as a result of the false marking. If enacted, this provision would apply to all pending and future cases.
Due to the bipartisan compromises contained in the current bill, the full Senate is likely to vote on the bill without additional amendments.