May 22, 2007

A Rocky Road to Patent Reform
By Roy Mark

WASHINGTON -- U.S. Rep. Adam Schiff (D-Calif.) predicted today that patent reform "won't be easy" in the 110th Congress given the diversity of industries weighing in on the increasingly controversial topic.

Nevertheless, Schiff, a member of the House Judiciary Committee overseeing the Patent Reform Act of 2007, said he was optimistic "we'll finally pass patent reform this year." Similar legislation has been introduced in the Senate.

"There are real ways to reduce the inefficiencies in the patent system, but we don't want to reward one industry or penalize another," Schiff said at a breakfast gathering organized by the Information Technology and Innovation Foundation.

The current proposal before the House and Senate would allow reviews of patents after they have been granted, creating a so-called "second window" to challenge the validity of a patent. The bill would also narrow the definition of willful infringement, which brings treble damages in infringement lawsuits.

The legislation also calls for limiting infringement damages to the economic value of the patent's contribution to an overall product. Currently, damages are based on the entire market value of the product.

The technology sector widely supports the bill while pharmaceutical, bio-technology and manufacturing companies are lining up to oppose the key portions of the reform legislation. Universities with significant research facilities have also voiced opposition to the bill.

Schiff said the trick to patent reform would be to create maximum efficiency without doing damage to "radically different business models" that depend on patents. "There are many competing interests who share the common goal of improving the system."

The National Association of Manufacturers (NAM), for instance, sent a letter to House Judiciary Committee Chairman John Conyers (D-Mich.) last week pointing out NAM has a "keen interest in meaningful patent reform."

But NAM members, who hold 60 percent of the patents granted in the United States, warned Conyers the Patent Reform Act of 2007 could "have a significant, negative impact on research and innovation."

NAM opposes the apportionment of damages in infringement lawsuits and raised questions about the post-grant patent-review process outlined in the legislation.

Schiff, whose Southern California district includes Cal Tech, said he, too, has concerns about the bill as currently written, including that the second window portion of the legislation may be "too broad." He also questioned the allocation of damages in infringement judgments.

Schiff's concerns echo the statements of a number of Democrats and Republicans who voted to move the bill out of a House Judiciary subcommittee last week. With the intent to move the legislation before the entire Judiciary Committee, members of the panel agreed to approve the bill only after Conyers and subcommittee Chairman Howard Berman (D-Calif.) promised changes.

"There are things not currently in the bill [that need to be in it]," Schiff said. "This process won't be easy. There is a diversity of viewpoints."