House Passes Major Patent Reform Bill
By David Lawson — Edited by Wen Bu
On September 7, the U.S. House of Representatives passed H.R. 1908, a major patent reform bill, by a vote of 220-175. The bill is now on the Senate legislative calendar awaiting action.
The Washington Post identifies the players and summarizes the debate.
Peter Zura’s 271 Patent Blog focuses on the late amendments that proved necessary to the bill’s passage.
Patent Docs detail the arguments against the bill.
H.R. 1908, supported by a coalition that included of 160 Democrats and 60 Republicans, includes a broad variety of reform provisions. Most prominently, the bill as passed:
- In theory, replaces the existing U.S. convention of â€œfirst to inventâ€ with a â€œfirst to fileâ€ system similar to those used in most other countries, which should considerably ease the handling of multiple filings for the same invention. This portion is contingent upon a finding by the Administration that Japanese and European patent authorities have enacted a one-year grace period, which is somewhat unlikely, especially in the European case.
- Changes the formula for calculating damages for infringement. The bill explicitly states factors a court may consider in determining a “reasonable royalty.” In most cases, the billit mandates that royalty calculations be based only on â€œvalue… attributable to the patentâ€™s specific contribution over the prior art,â€ rather than the entire value of a product that includes a patented innovation. Also, the bill explicitly and narrowly defines willfulness for the purpose of awarding treble damages, clarifying a major point of controversy in litigation. The effect of these changes should be to considerably reduce awarded damages, as well as reducing the discretion of district courts in calculating those damages. The bill requires the USPTO to study the effectiveness of the changes after 7 years.
- Allows any party to submit prior art for any application, and to offer an explanation of why the prior art is important.
- Contains new venue provisions designed to limit â€œforum shoppingâ€ by parties suing for infringement. These provisions will likely limit the amount of patent infringement litigation in the Eastern District of Texas, a district famously friendly to infringement plaintiffs.
- Prohibits the patenting of new tax planning methods.
- Provides for a new post-grant review procedure initiated by a third party within 12 months of when a patent issues, in addition to traditional reexamination.
- Eliminates the opt-out provision for pre-grant publication so that all applications must be published within 18 months of filing.
- Codifies standards for inequitable conduct.
The bill was broadly supported by the high-technology and software industries, and broadly opposed by many patent holders, prominently including biotechnology and pharmaceutical industry groups, some large research universities, and individual inventors. The Bush Administration has consistently opposed legislation that would reduce district court discretion in awarding damages for infringement, although it has indicated support for â€œfirst to fileâ€ in negotiations with other countries.