February 5, 2010 - In an address to a NYIPLA meeting, USPTO Director Kappos endorsed S. 515, especially noting its grant to the Office of controlled fee-setting authority. He said that the Senate Judiciary Committee staff is preparing a managers' markup (amendment) of that bill, which he expects to be revealed soon. He mentioned the Office's involvement in supporting the Committee staff, which appears to be a positive step. The positions of interest groups continue to differ, with some groups willing to compromise and others unwilling. Patent law reform legislation is unlikely to advance to the Senate floor unless the Senate leaders can predict support by 60 or more Senators. Unless that level of agreement is reached soon, the prospect for such legislation in 2010 is likely to dim, because this is an election year and other issues before Congress will demand more attention.

January 21, 2010 - The PatentlyO blog reported a recent Email from USPTO Director Kappos to Office employees. (A copy of the Email is here.). Kappos said there is "simply no way to get the backlog under control in a reasonable period of time without significant hiring given current attrition rates" and described the Office's infrastructure needs as "so dire that President Obama referenced the USPTO's antiquated IT systems in his remarks last week on modernizing government."

Kappos told the USPTO staff that it is imperative to "work with Congress to develop long-term financial solutions," especially noting the provisions in pending patent reform legislation for giving the USPTO with fee-setting authority, and that immediate and urgent funding needs require short-term assistance.

January 4, 2010 - Increasingly, at the end of 2009 and beginning of 2010, some interested persons have suggested that much of the "reform" in the pending patent law reform legislation is misdirected to litigation; because the biggest need for reform is in the USPTO, especially the need to adequately fund the steps necessary to improve its operations.

Responding to USPTO budget provisions in the Congressional Conference Committee's December 8th Report (see below), USPTO Director Kappos wrote on this date to the chairs and minority leaders of the [House and] Senate Appropriations Committees, politely pointing out that the Office is in dire financial straits and that, although income projections have increased, the Office will not be able to meet its urgent needs if Congress does not act. In particular, the letter suggested three short-term and long-term funding solutions that require Congressional action: "(1) ensuring appropriation amounts provide for full access to fees collected; (2) instituting a temporary surcharge to support operations; and (3) providing authority to adjust our fee structure." Except for the temporary surcharge and possibly reinstituting the authority to spend up to 100 million dollars above budget, if justified by income; the proposed solutions ma be difficult to achieve because of a desire to appear to control government spending (especially in an election year) and the Appropriation Committees' desire to maintain strict control over the use of government income. [One of those letters] is here.

December 8, 2009 - As 2009 drew to an end, reinsertion of a limit on inequitable conduct allegations, the absence of which had caused Senator Hatch to withdraw his support for and sponsorship of S. 515. Consideration of the controversial damages proposals had diminished, due to the compromise in that bill, as approved in April 2009 by the Senate Judiciary Committee. However, behind-the-scenes lobbying and debates reemerged regarding first-inventor-to-file, granting the USPTO fee setting authority without "anti-diversion" provisions and granting the USPTO substantive rulemaking authority. The good news is that pending legislation does not have to start over in 2010; however, the competition with other legislation (especially economic and health care issues) for debate in the Senate and the politicization that occurs with the approach of the 2010 election diminish the prospects for patent law reform as the year progresses. Perhaps we can hope that a bipartisan compromise can be reached on at least a few points, to let most of Congress go home and say they accomplished patent law reform.

Perhaps the worst news for the U.S. patent system in 2009 occurred on this date. On the final day of negotiations for the 2010 fiscal year budget (which began October 1, 2009), the Congressional Conference Committee, responsible for reconciling the budget bills that had passed the House and Senate, reduced the USPTO's spending authority. The Office received a budget permitting it to spend up to 1.887 billion dollars out of its fee income, reflecting the USPTO's reduced income estimate of that amount last September. However, the Conference did not continue the authority that the Office had had in recent years to increase spending by up to 100 million dollars above the budgeted amount, if justified by greater income, as now appears likely in FY 2010. The Joint Explanatory Report in the Conference Report accompanying the "Consolidated Appropriations Act, 2010" (H.R. 3288) was critical of the USPTO and warned about funding projects to be performed in future years with 2010 income (not at all likely this year), but did not explain how the amount to be appropriated would help solve the Office's problems. Some hope for modification of the appropriation was offered in these words, "The conferees direct the UPSTO to provide quarterly reports on its fee collection projections and to notify the House and Senate Committees on Appropriations during any month when significant changes in such projections prompt serious concern or require drastic budgetary responses." Excerpts from the Report are here.

The Office's request for authority to increase fees on a temporary basis, announced October 6, 2009, also has not been addressed by Congress.

October 8, 2009 - The USPTO announced withdrawal of the controversial proposed rules regarding continuing applications and number of claims, indicating that the Tafas case would be dismissed by stipulation. This leaves patent law reform as the only way to address the issues concerning USPTO rule-making authority, potentially creating further delay in that legislation.

October 6, 2009 - In a press conference following up on Secretary Locke's October 5th letter, USPTO Director Kappos emphasized the Office's $200 million revenue shortfall and announced that the Administration would seek a temporary 15% increase in fees in the patent law reform legislation.

October 5, 2009 - Commerce Secretary Locke wrote a five page letter to Senate Judiciary Chairman Leahy, saying, "We believe S. 515 incorporates the essential elements of patent reform; and, therefore, the Department of Commerce supports the bill with additional recommendations…." He also referred to the need for a "limited interim fee adjustment,."

In reply, Senator Leahy said he appreciated the commitment of Secretary Locke and Under Secretary Kappos to this legislation. "Now that the administration has indicated its support for the Patent Reform Act, I look forward to working with Majority Leader Reid to schedule Senate debate before the end of the year."

As usual, the devil is in the details, many of which have not yet been revealed. In the area of USPTO operations, the USPTO's request for fee-setting authority is not likely to be controversial; however, it will renew its request for rule-making authority, at least for "procedural rulemaking authority over proceedings in the agency," which could require new hearings. Secretary Locke's letter also looks forward to working with Congress to fine-tune the post-grant review and inter partes reexamination procedures.

The Commerce Department supports a transition to a first-to-file system, but will seek revised implementing and transitional provisions. The Administration opposes the "sovereign function" provisions that would require search and examination by the U.S. government, as inconsistent with necessary work-sharing arrangements with foreign governments and use of U.S. vendors.

Not surprisingly, assessment of damages leads the list of litigation issues. Secretary Locke's letter acknowledges the substantial work that has been done to bring together competing interests and endorses the "gatekeeper" approach in S.515. It also suggests a need for clarifying language to ensure a fair enhanced damages standard for cases of willful infringement.

On several other subjects, the letter expresses general support for legislation, but expresses technical concerns over the bill's current language. They include telework by examiners, a reduced inventor's oath requirement, expanding third-party pre-issuance submissions of prior art, extending the prior users defense, removing sanctions for failing to comply with the best mode requirement, interlocutory appeals, venue challenges and creating aq pilot program to enhance judges' patent expertise.

September 14, 2009 - "The time is now to get patent reform done," said USPTO Director David Kappos in his first major speech, before the Intellectual Property Owners annual meeting. Click here for a link to Kappos' prepared remarks.

Kappos reported that the USPTO is seeking solutions to its projected 200 million dollar underfunding and actively participating in patent reform discussions on Capitol Hill. "Without significant improvements to our patent system, we put at risk a major source of job creation, financial security and global competitiveness," he said. However, details of specific reforms that will be supported by the USPTO under Kappos have not yet been disclosed.

Although not in his prepared remarks, press reports say that Kappos also indicated that the patent continuation and claim limitation rules pushed by his predecessors are unlikely to be implemented. Unfortunately, he noted, the case challenging those rules is now called Tafas v. Kappos. He also indicated that the issues related to whether to pursue the case (which addresses the breadth of the agency's rulemaking authority) are distinct from his past, personal opposition toward the proposed rules themselves. Of course, to the extent USPTO rule-making authority is limited; the Office may have to seek additional legislation from Congress.

September 11, 2009 - The question of whether legislation is required to reform the calculation of reasonable royalty damages has been a major stumbling block in the path to patent law reform. Federal Circuit Chief Judge Michel and others have said this is an issue that the courts can adequately address. The Lucent v. Gateway opinion by Judge Michel for a three judge panel including Judges Newman and Lourie overturned a jury award of over 357 million dollars against Microsoft, after a meticulous review of reasonable royalty methodology under the abuse of discretion standard. Although this opinion is not likely to satisfy all of the contending interest groups, it may help satisfy a majority in Congress that this issue is best left to the courts, at least for now.

July 10, 2009- Congress and the administration appear to be preoccupied with other matters. It is unlikely that patent law reform legislation will be addressed again before Congress' August recess.

June 19, 2009- In a state of the court speech prepared for the Federal Circuit Bar Association Bench-Bar Conference, Chief Judge Michel characterized the interlocutory appeal provisions in the patent reform bills pending in Congress as "the greatest threat to speedy dispositions" in the Federal Circuit. He predicted that permitting interlocutory appeals of claim constructions at the option of the trial judge could double the number of patent appeals and might increase the average disposition time in patent appeals to as much as twice the current average of about one year from filing to disposition.

June 18, 2009- President Barack Obama nominated David Kappos as the new Under Secretary of Commerce for Intellectual Property and Director of the U.S Patent and Trademark Office (USPTO). Kappos is currently Vice President and Assistant General Counsel for Intellectual Property at IBM Corporation.

Although a minority of the members of the Judiciary Committees had suggested that patent law reform legislation should await testimony from the new USPTO Director, there may be less justification for that now. Kappos' has previously testified on the proposed legislation and he is likely to be questioned on the subject during his confirmation hearing before the Senate Judiciary Committee.

April 30, 2009 - The House Judiciary Committee held a 2-3/4 hour hearing today on the House's version of the "Patent Reform Act of 2009," H.R. 1260. This action apparently reflects a decision not to await action by the Senate and, possibly, the committee's interest in completing work on this legislation. The hearing quite possibly was the last hearing of testimony in Congress on the patent reform proposals.

Several committee members made introductory comments. Six witnesses testified and answered questions. They were: David Simon (Intel), Philip Johnson (Johnson & Johnson), John ("Jay") Thomas (Georgetown Law School), Jack Lasersohn (venture capitalist), Dean Kamen (inventor), Mark Chandler (Cisco) and Bernard Cassidy (Tessera). Each of the witnesses submitted written statements that are available, along with the hearing Webcast, http://judiciary.house.gov/hearings/hear_090430.htmlhere.

In opening, Chairman Conyers stated that the committee will look at the issues independently of amended S. 515, passed on April 2nd by the Senate Judiciary Committee, saying "This body is not a rubber stamp for the Senate." However, his opening statement and those of several committee members indicated that they share the same goals and that a bipartisan compromise is possible. Most participating committee members appeared interested in adopting a patent reform bill this year.

A summary of principal topics follows:

  • The main issue remains how to address the dispute over how to determine a reasonable royalty. Prof. Thomas pointed out that there were both procedural issues and substantive issues, and that the "gatekeeper approach of amended S. 515 addresses only the procedural side. However, no one offered any other, potentially viable compromise.
  • There appears to be growing support for adopting the Senate committee's compromise on post-grant proceedings. (Keep reexamination, with post-grant opposition within one year of patent issuance, but excluding issues of prior public use and sale).
  • There was strong agreement among Representatives and witnesses that it is important to strengthen the PTO and give it the necessary resources, which should include an end to patent fee diversion (now deleted from S. 515). Rep. Sherman suggested that fee diversion was the stupidest thing done in Washington, especially in the context of other efforts to increase innovation. Rep. Issa noted ongoing discussions with the Senate Judiciary Committee and with both appropriation committees on this subject.
  • Several Representatives appear interested in adopting limits on inequitable conduct litigation, now deleted from S. 515. Chairman Conyers noted he had agreed to work with Senator Hatch on developing a proposal on that issue.
  • Most substantial opposition to first-inventor-to-file legislation has disappeared outside the blogosphere; the committee must consider whether or not to continue the requirement in HR. 1260 that those provisions would not be effective until Europe and Japan adopt a compatible grace period. Internal committee discussions will continue regarding whether (1) the Senate committee's venue-transfer provisions suffice, (2) stronger venue-limiting laws-as in HR. 1260-should be adopted, or (3) venue legislation is unnecessary in the light of recent court decisions.
  • Other topics discussed were whether is it is necessary to legislate concerning injunctions and business methods, especially tax-related methods, and what action should be taken concerning best mode.

The next steps are likely to be the filing of proposed amendments and a mark-up meeting of the committee to discuss and vote on amendments.

April 2, 2009 - The Patent Law Reform Act of 2009 was approved today in a 15-4 vote of the Senate Judiciary Committee. The bill now moves to the Senate floor.

The bill now includes provisions from a compromise,"Manager's Amendment. A redline copy of the bill, as amended, is here.

Changes include:

  • The prior reasonable royalty proposal was replaced by provisions that would make the district judge a gatekeeper who would instruct the jury regarding the methodologies and factors that have a legally sufficient evidentiary basis;
  • Prior use and sale provisions have been removed from the post-grant review procedure, conforming this bill with language in the bill passed last year by the House;
  • The existing best mode requirement would continue for patent applications, but failure to disclose the best mode could not be used to invalidate a patent or hold it unenforceable;
  • Interlocutory appeal of patent claim construction would be conditioned on the district court's statement that (1) there is a sufficient evidentiary record, and (2) that an immediate appeal may either materially advance the ultimate termination of litigation or will likely control the outcome;
  • The standard for finding willful infringement would be codified;
  • The prior proposal for limiting venue has been replaced by a provision for transfer of patent cases on a showing that the transferee district is clearly more convenient, (based on a recent Federal Circuit case, In re TS Tech, Inc., 551 F.3d 1315 (Fed. Cir. 2008)); and
  • The bill incorporates S. 299, corresponding to H.R. 628 which passed the House last month, establishing a pilot program for district courts to direct patent cases to interested judges, to create greater judicial expertise in patent litigation.

According to Senators Leahy and Feinstein, the compromise amendment received broad support from IP and industry organizations. For Mr. Leahy's introductory statement, click here.

Prior to the vote on the bill, Senator Hatch opposed it because of its lack of limits on inequitable conduct allegations and its failure to adequately address the concerns of Hi-Tech companies by requiring allocation of damages. For his statement today, click here.

Senator Kyl was the principal opponent to the bill. His oral remarks primarily objected that the standard for initiating reexamination and post-grant review would be too low, that the PTO would be overburdened and that the PTO had not been heard on this issue. His proposed amendment, which also addressed other issues, was rejected by the committee.

Senator Coburn proposed an amendment to preclude diversion of PTO fee income, with a five-year sunset provision. Mr. Leahy suggested that this issue might be better addressed in debate by the full Senate. The proposed Coburn amendment was rejected by the committee.

Chairman Leahy indicated his willingness to continue discussions before the bill is debated on the Senate floor, particularly with respect to inequitable conduct and consultation with the PTO regarding workability of the bill's provisions.

March 25, 2009 - The Senate Judiciary Committee unanimously adopted an amendment to S. 515, including a number of technical changes. The only major, substantive change would permit patent marking of products to refer to a website for details. Statements by Senators from both parties emphasized that the committee will send a bipartisan, compromise bill to the Senate floor fairly soon. Further, substantial amendments will be proposed, starting at a session on March 31st.

March 20, 2009 - In a split decision in Tafas v. Doll, the majority of a Federal Circuit panel holds that the PTO proposals for new rules to limit the number of claims that can be prosecuted without an applicant's search report and Examination Support Document, and to limit requests for continued prosecution and continuation are almost all procedural and, therefore, within the PTO's rulemaking authority. Although this litigation is expected to continue for some time, it is possible that Congress will return to the question of PTO rule-making authority in its current legislative work. For more information about the Tafas v. Doll decision, click here.

March 19, 2009 - Senator Specter requested and received a routine extension of time that postpones the next Senate Judiciary Committee meeting on S. 515 for one week, until March 26, 2009. Senator Leahy apparently believes enough time has been devoted to this legislation and intends to move ahead with mark-up of the bill on that date.

March 18, 2009 - Senator Kyl (R. Az.), now the Senate Minority Whip, reintroduces his patent reform proposal as S. 610. (Last year's Kyl bill is discussed in the September 24, 2008 entry, below). Among the distinctive provisions in the Kyl bill are: (1) a damages provision that essentially would allow the court or jury to consider any relevant factors, but would make the judge a gatekeeper who could identify those factors supported by legally sufficient evidence and instruct the jury to consider only those factors, (2) a different post-grant procedure from S. 515 and H.R. 1260, (3) a provision permitting the Patent Office to "offer incentives to applicants who submit a search report, a patentability analysis, or other information relevant to patentability"; and (4) an inequitable conduct provision that would remove determinations of inequitable conduct from the courts and would authorize the PTO to penalize parties responsible for inequitable conduct.

March 10, 2009 - The Senate Judiciary Committee hears testimony from five witnesses regarding the "Patent Reform Act of 2009": Steven R. Appleton, Chairman and CEO of Micron Technology, Inc.; Philip S. Johnson, Chief IP Counsel of Johnson & Johnson; David J. Kappos, VP and Ass't GC of IP Law and Strategy at IBM; Prof. Mark A. Lemley of Stanford Law School; Taraneh Maghame, VP of Tessera, Inc.; and Herbert C. Wamsley, Executive Director of IPO. Click here for a link to the hearing webcast, and prepared statements of Senator Leahy and the witnesses.

March 9, 2009 - Seven senators write to Senators Leahy and Hatch, expressing their hope that the Judiciary Committee will not rush the consideration of this legislation. In particular, they cite the need for careful consideration of the provisions regarding calculation of damages and suggest that it would be helpful to hear from the new PTO Director, when one is confirmed. The seven are Senators Coburn, Kyl, Grassley, Brownback, Feingold, Wyden and Bond.

March 3, 2009 - Very similar versions of a "Patent Reform Act of 2009" were introduced in both houses of Congress by Judiciary Committee Chairmen Conyers (H.R. 1260) and Leahy (S. 515), the ranking minority members of both committees, and co-sponsors from both parties. These bills appear to be based on last year's S. 1145, rather than the bill passed by the House in the last Congress (H.R. 1908). The two new bills are organized differently and the House bill includes additional provisions for PTO studies and reports on the first-to-file procedure, public use provisions, reexamination proceedings, special masters in patent cases, work place conditions for the PTO examiners and patent damages. Except as noted, references here are to S. 515.

A flurry of statements, for and against all or part of the bills, by other members of Congress and various organizations, commenced promptly following the bills' introduction. The statements largely repeat earlier positions, with an elevated protectionist tone in some cases. Click here for a Wikipedia page that includes a list and links to the statements.

The main point of controversy remains how to reform the determination of a reasonable royalty for patent infringement. Senator Hatch, a co-sponsor of S. 515, commented at the joint press conference, "We all agree that more work needs to be done." Senator Specter (R. Pa.) wrote to Senator Leahy (D-VT) on March 3rd, requesting that the bill "not be placed on the Executive Business Agenda until late May, after the Court of Appeals for the Federal Circuit hears oral argument in Lucent Technologies, Inc. v. Gateway, Inc.," which the letter suggested "has the potential to facilitate a compromise or clarify the applicability of damages theories in various contexts." The letter also noted that the Senate could benefit from hearing the views of the new PTO director, when one is appointed.

A brief summary of S. 515 and some of the changes from S. 1145 in the last Congress is provided below For more information, including the Senate Committee's section-by-section summary and list of significant changes, click here.

  • First-to-file, with a one year grace period only for the inventors' own work, continues as a feature of the legislation. The Senate version omits the proposal in last year's House bill, tying the first-to-file effective date to availability of a grace period in Europe and Japan having substantially the same effect as the U.S. amendments, but H.R. 1160 maintains that limitation. As in the bills in the last Congress, interferences would be abolished and derivation proceedings would be established. (Sec. 2).
  • Oath or declaration requirements would be simplified. (Sec. 3). Reasonable royalties, in the current version, would be based on the invention's "specific contribution over the prior art." The "Entire Market Value" rule would be limited. The law concerning lost profits would be unchanged. (Sec. 4(a)).
  • Willful infringement could not be pled before a court determination that that the patent in suit is not invalid, is enforceable and has been infringed by the infringer. Willfulness law would be codified, based on In re Seagate. "The court's determination of an infringer's willfulness shall be made without a jury.'' (Sec. 4(a)).
  • The Prior user defense provisions would slightly modified, but the subject matter limitations of existing law would remain. (Sec. 4 (b) & (c)).
  • Post-grant review of three types would be available. Both ex parte and inter partes reexamination would be retained, and cancellation proceedings could be initiated within 12 months of patent grant with respect to patents issued after the effective date of the new law, which is to be 12 months from the date of enactment. Cancellation proceedings would be before administrative law judges. Grounds for both types of reexamination would still be limited to prior art, but expanded to include prior use or sale and patentee statements, adopting the approach in the legislation passed by the House, rather than introducing a new post-grant review for second window challenges. Estoppel would bar: (1) asserting invalidity of any claim determined to be valid in inter partes reexamination on any ground raised in the reexamination; and (2) instituting an inter partes reexamination proceeding after a district court judgment on patent validity. (Sec. 5). Any ground of invalidity, other than failure to disclose the best mode, could be used in seeking cancellation. Limited discovery may be permitted in cancellation proceedings on order of the PTO Director. There would be no presumption of validity; instead, the challenging party would bear the burden of proof by a preponderance of the evidence. Cancellation proceedings ordinarily would be concluded within one year, extensible by the PTO Director up to six months.
  • A Patent Trial and Appeal Board will replace the present BPAI. It would be responsible for (1) appeals in applications and ex parte reexamination proceedings, (2) derivation proceedings, and (3) inter partes reexamination and cancellation proceedings. (Sec. 6).
  • Quality Enhancements would include a mechanism for third parties to submit pre-issuance information relevant to the examination of an application, but the earlier proposals that would have required searching by applicants and "Applicant Quality Statements" have been dropped from this year's bills. (Sec. 7). Further, the new bills clarify that search and examination functions are to be performed by the United States Government.
  • Venue in patent infringement litigation would be based on (1) the place of defendant's principal place of business or incorporation, or that of the primary U.S. subsidiary of a foreign defendant corporation, (2) where the defendant has committed substantial acts of infringement and has a regular and established physical facility that the defendant controls and that constitutes a substantial portion of the operations of the defendant; (3) where the primary plaintiff resides, if it is an institution of higher education, or a nonprofit patent and licensing organization; or (4) the residence of a sole plaintiff, individual inventor who qualifies as a "micro-entity." (Sec. 8(a)). Transfer of venue would be somewhat easier for the defendant to obtain.
  • Federal Circuit jurisdiction would be expanded to permit interlocutory appeals of claim construction orders when certified by the district court. (Sec. 8(b)). A similar provision in past proposals was opposed by Federal Circuit Chief Judge Michel, because of the potential burden on the court and because initial claim constructions are subject to change. (A copy of Judge Michel's May 3, 2007 letter is available here.)
  • PTO regulatory authority would permit setting or adjusting patent and trademark fees to reasonably compensate the USPTO for the services performed. (Sec. 9). The bills do not address the issue of procedural or substantive rule-making by the PTO, now under consideration by the Federal Circuit in Tafas v. Doll, which would have been authorized by some earlier proposals.
  • The limitation on Federal Circuit judges residence, now a 50-mile radius from Washington, DC, would be repealed (Sec. 10). The repeal would open the door to appointment of Federal Circuit judges from a larger pool. That could be significant, because a majority of the active Federal Circuit judges are, or soon will be, eligible to retire or take senior status with full pensions.

The following are not in the current bills:

  • Universal 18-Month Publication has been omitted from the new bill because of concern expressed by labor unions and small inventors that applicants not seeking protection abroad would see their inventions used overseas without compensation.
  • Patent notice and marking would be unchanged from current law. The bills do not include the proposal that was in S. 1145 to limit damages for patent infringement, when there has been no notice or marking, to two years.
  • A late-filing provision, that would have given the PTO authority to waive applicant deadlines, is not in the present bills. (This provision was associated with one particular patent term extension application that was late-filed.)
  • The Check 21 provision, which would have immunized companies practicing the industry standard established by the Check 21 Act of 2003 from patent infringement suits, is omitted in the new bills
  • Patent fee diversion will not be barred by the new bill, in the face of strong opposition both from leaders of the Senate Appropriations Committee and the union representing patent office examiners, who said it would impair Congressional oversight that comes with the appropriations process. (Last year, S. 1145 would have created creating a revolving fund that would permit the PTO to retain automatically the fees it collects.)
  • Inequitable conduct provisions added to the bill in Senate Committee in the last Congress are omitted from the current bills. Senator Leahy's introductory message does not give a reason for the omission; however, at the press conference, Senator Leahy said he would confer with Senator Hatch on an inequitable conduct provision.

February 10, 2009 - The recently formed Manufacturing Alliance on Patent Policy (MAPP) released a letter to President Obama. The letter claims that, contrary to the statements of some who call for drastic change, there is no crisis in patent litigation or patent damages. It argues that the proposals to reduce penalties for patent infringement would reduce incentives for creativity and investment among innovators. Rather than legislation, MAPP suggests that a consensus approach lies in improving the resources and operations of the U.S. Patent and Trademark Office. For a link to the MAPP letter, click here.

February 9, 2009 - Observers generally agree that patent legislative activity is likely to start in the Senate this year, rather than in the House of Representatives, which passed its version of the patent reform bill in the last Congress. Senate Judiciary Committee chairman Patrick Leahy (D-Vt.) said today that he plans to introduce a patent reform bill soon. He said that the bill will be quite similar in some areas to his bill in the last Congress.

January 6, 2009 - The 111th Congress reconvenes for its second one year term. The leadership of committees responsible for patent reform legislation remain the same as in 2008: Patrick Leahy (D-Vt.) chairs the Senate Judiciary Committee and Arlen Specter (R-Pa.) is the ranking minority member. John Conyers (D-Mich.) again chairs the House Judiciary Committee, with Lamar Smith (R-Tex.) as the ranking minority member.

Members of Congress generally will be very busy with other matters in the next few months. In particular, much of the time of the Senate Judiciary Committee will be devoted to confirmation hearings for members of the new administration and to fill the backlog of judicial vacancies.

January 5, 2009 - New Mexico Gov. Bill Richardson announced that he was withdrawing his nomination to be the Commerce secretary. This development may delay the entry into office of a new Undersecretary and PTO Director, and the adoption of positions on patent law reform by the administration of President-elect Obama.

December 19, 2008 - The U.S. Chamber of Commerce released a 31-page report entitled "Recommendations for Consideration by the Incoming Administration Regarding the U.S. Patent and Trademark Office." All but one of the ten authors are former PTO officials. The suggestions represent the general consensus of the contributors; however, the report indicates that the suggestions were not unanimously supported by the contributors.

Although the report focuses primarily on the challenges facing the Patent organization within the PTO, several suggestions relate to the patent reform legislation that is expected to be reintroduced in the 111th Congress. These suggestions, while useful, may further complicate the patent legislative debate.

To address the problems of providing adequate resources for the PTO, the report suggests consideration of advocacy for a permanent legislative end to future fee diversion, transforming the PTO into a government corporation, and rethinking the fee schedule. "The PTO should consider proposing to Congress a restructuring of current fees to account for revenue shortfalls, to create incentives for more timely consideration of applications, and to improve the quality and quantity of information received."

Perhaps the most surprising section of the report is the one saying: "If the PTO cannot reduce its backlog through other means and the number of patent filings continues to increase, consideration should be given to allowing patent applicants to defer examination of their applications for perhaps up to three years." In recent years, the private sector has been generally opposed to deferred examination, in the expectation that examined patents would be a more useful guide for third parties than applications with broad, unexamined claims. Query, however, whether three years deferral would be more than a "quick fix" to the backlog problem, rather than providing sufficient time for applicants to decide to abandon a significant percentage of applications.

One section of the Report urges President-elect Obama to "Appoint a Well-Qualified Undersecretary and Director," saying that the next PTO director should have experience in patent prosecution and litigation. The choice of leaders for the PTO may have a significant effect on which patent reform proposals may move ahead in 2009.

Summary of Developments: April - November 2008

November 6: The Federal Trade Commission (FTC) announces a series of three hearings, starting December 5th, seeking feedback from a spectrum of IP professionals on how recent court hearings and legislative initiatives are impacting innovation, competition, and consumer welfare. Judge Michel will make the keynote address. Like its 2003 IP report, the FTC's hearings and probable report are likely to affect the legislative process.

November 4: Senator Obama is elected to be President, and the Democratic majority increases in both houses of Congress. While it had been rumored that Senators Leahy and Hatch might make one last attempt to pass a streamlined patent reform bill in the "lame duck" session of the present Congress, between the election and Inauguration Day, that now seems unlikely. In 2009, it is likely that the Senate Judiciary leaders will remain the same; however, Representative Berman is likely to give up his chairmanship of the House IP Subcommittee. PTO Director Dudas is expected to resign, and later in 2009 there will be a new Director.

September 24: While Senators McCain and Obama meet with President Bush to discuss the economic crisis, Senator Kyl (R. Az) introduces his patent reform proposal, S. 3600. It is seen as a "marker," laying out a point of view for future legislative negotiations. Senator Kyl was one of five Senate Judiciary Committee members to vote against sending S. 1145 to the Senate floor in July 2007.

S. 3600 is a very long and detailed proposal, leading some to question whether that degree of detail is appropriate in a statute and whether such a proposal could gain sufficient support for adoption. It omits and changes various portions of S. 1145 in important ways. First, it would remove the original legislation's requirement that applicants submit prior art search reports (known as "Applicant Quality Submissions") and instead invites the Patent Office to provide incentives for doing so. Second, the Kyl version would shorten the proposed first window for post-grant petitions from twelve to nine months, and add a second window for oppositions limited to novelty and obviousness based on patents and printed publications when litigation is threatened. Third, Senator Kyl's bill sharply toughens the standards for rendering a patent unenforceable due to inequitable conduct, mainly by providing the patentee with incentives to cure any inequitable conduct through a reissue proceeding. The Kyl version also involves changes to willful infringement, funding for the Patent Office, and residency requirements for Federal Circuit judges.

September 23: In a speech before the annual meeting of Intellectual Property Owners (IPO), Federal Circuit Chief Judge Michel suggests that many issues in the patent law reform proposals can be addressed by the courts, an idea to which he had alluded before. Although earlier in 2008, Chief Judge Michel had pointed out the infrequent grant of en banc review by the Federal Circuit, in this speech he urged parties to seek en banc review of major issues. He said it was "interesting that [KSR] bypassed our en banc process." Judge Michel expressed surprise over the assertions to Congress regarding apportionment issues in damages calculations, saying that "in my 20 years on the court, I cannot remember a case raising these issues." In follow-up e-mail correspondence with BNA, he is reported as having said that 90 percent of the needed corrections to inequitable conduct rulings are "within the power of our court."

April 10: Senator Specter, ranking minority member of the Judiciary Committee, reports on the Senate floor that the Republican caucus may hold up S. 1145 "to get fair and equitable treatment" on the confirmation of federal judges. Senate majority leader Reid concedes that action on the bill appears unlikely.

Previous Developments

March 12, 2008: Chairman Leahy, Ranking Member Specter, and Senator Hatch release 15 possible amendments to S. 1145, in an effort to "address the concerns of the wide cross-section of interested parties" with whom they have been meeting since the bill was reported out of the Senate Judiciary Committee last July. The trio appear optimistic that the amendments will allow the full Senate to "work through the remaining issues."

For more information, please click here.

February 4, 2008: Nathaniel F. Wienecke, Assistant Secretary of Commerce for Legislative and Intergovernmental Affairs, sends a six page letter to Judiciary Committee Chair Leahy, which states the Administration will continue to oppose S. 1145 unless the damages provisions are significantly revised, and makes other comments. For the full summary of the Administration's response to S. 1145, please click here.

January 30, 2008: Two economics Biotechnology Industry Organization (BIO) consultants release apaper that reviews studies by the FTC, National Academies of Sciences, and National Research Council that have been used to justify the legislation and criticized those studies for lack of empirical data.

January 24, 2008: The Senate Committee releases S. Rep. 110-259 in support of the Patent Reform bill, S. 1145, which adds the minority views of several Committee members to the draft that was informally circulated earlier. The Report can be found here.

December 18, 2007: Amid media commentary that patent reform legislation is dead, Senate leadership reaffirms its commitment to passing patent reform legislation in 2008. See the statements entered into the Congressional Record (Cong. Rec. 12/18/07, p. S15898) by Senators Leahy and Hatch here. Both Senators highlight four areas of the legislation - damages, post-grant review, inequitable conduct, and venue - as areas on which they are continuing to refine in order to garner greater support for S. 1145. This comes, they said, after hundreds of meetings with interested stakeholders since the Senate bill was reported out of the Judiciary Committee in July.

September 7, 2007: The House passes HR1908.

July 26, 2007: Updated presentation incorporating the committee released versions of the House and Senate bills.

July 19, 2007: HR1908 was reported out of the House Judiciary Committee. The final version of the bill reported out includes the Manager's substitute and the adopted amendments. See: House Manager's substitute to H.R.1908. Adopted amendments to H.R.1908.

July 20, 2007: S1145 was Reported out of the Senate Judiciary Committee. The final version of the bill reported out includes the Manager's substitute and the adopted amendments. See: Senate Manager's substitute to S.1145. Adopted amendments to S.1145.

For Rep. Issa's Patent Pilot Program (HR34) passed by the house, click here.

June 15, 2007: The prepared remarks for the Judiciary Committee's hearing "Patent Reform: The Future of American Innovation" can be seen by clicking here.

May 7, 2007: "CRS Report for Congress Patent Reform in the 110th Congress: Innovation Issues" can be seen by clicking here.

May 23, 2007: A letter written by Federal Circuit Chief Judge Paul Michel to the Senate dated May 3, 2007 and commenting on patent reform legislation was made public. The letter opposes two sections of the patent reform bill: (1) immediate appealability of patent claim construction rulings and (2) the current formulation of the requirement for "apportionment" of patent damages. A copy of the letter is available here.

May 16, 2007: The House IP subcommittee approved by voice vote H.R. 1908, sending it to the full Judiciary Committee. Only James Sensenbrenner (R-WI) voted "no."

April 18, 2007: Patent Reform Bill text Senate version; House version.

The House and Senate bills are substantially similar. To see a redlined comparison comparing the Patent Reform Act of 2007 (S. 1145) against the Patent Reform Act of 2006 (S. 3818), please click here.

To view developments prior to 2007, please click here.