I keep hoping that I will be able to write that an agreement between the pharmaceutical industry and the electronic industry has been reached on U.S. patent reform legislation, but that probably will just not happen. Instead, the stalemate will continue - as so often occurs in traditional political battles – until, quite possibly, 11:59 PM on the night that Congress adjourns. At that time, some form of patent reform will likely emerge - but I would prefer to be wrong about the timing.

Currently, H.R. 1908 (the U.S. House of Representatives bill on patent reform) and S. 1145 (the identical Senate version) are making their way through Congress. Both bills were introduced on April 18, 2007 in a seemingly bipartisan manner. However, there is a fierce debate between the pharmaceutical industry and the electronic industry about what exactly should ultimately pass. I have discussed this divide in earlier articles - simply put, the pharmaceutical industry is concerned about the weakening of U.S. patent rights and the electronics industry is concerned about large infringement damages being awarded to manufacturers of small components of their multicomponent products.

On May 16, 2007, the House IP subcommittee voted their approval of H.R. 1908 and sent it to the full committee. While a number of congressmen expressed concerns about the bill during the hearing, it was recognized that changes to the bill still can be worked on at the committee level.

The patent reform bills contain the following major provisions:

1) Adoption of the Right of the First Inventor to File;

2) Modification of the Right of Inventors to Obtain Damages;

3) Expansion of the Prior User Defense;

3) Limitations on Willful Infringement;

4) Implementation of Post-Grant Opposition Procedures;

5) Broadening of Pre-issuance Submissions by Third Parties;

6) Limitations on Venue;

7) Creation of the Ability to File Interlocutory Appeals to Federal Circuit after a Markman Hearing;

8) Grant of Enhanced Rule-making Authority to U.S. P.T.O.;

9) Grant of the Right to File Patent Application by the Assignee; and

10) Elimination of opt-out provision for publication of patent applications.

The patent reform bills do not contain:

1) provisions to eliminate the best mode requirement; and

2) provisions to revise the inequitable conduct defense during litigation.

On May 16, 2007, the U.S. Department of Commence sent a letter to Congressman Howard Berman (Chairman, House IP Subcommittee) expressing its views on H.R. 1908. Interestingly, the Commerce Department had issues with a significant number of the provisions. In particular, the department did not support conversion to a first-to-file system as part of this legislation - stating that it was too soon to switch in view of on-going patent law harmonization discussions with foreign patent offices. It was also opposed to the apportionment of damages provision of the bill – noting that a case had not been made for a legislative provision to emphasize any one or more factors that a court must apply when determining reasonable royalty rates.

This letter raises the possibility that even if Congress passes the bill, the President of the United States may not sign it. We will have to wait and see.