IP Experts Question Patent Reform Provisions

Patent reform in Congress is a little like the movie "Groundhog Day." In each Congress, legislation is introduced, fails to pass, and re-emerges the following Congress.

Whether this year will be any different remains to be seen, but panelists this morning at a Newseum event in Washington weighed in on the strengths and weaknesses of the current proposed bill and the impact it might have if enacted.

The event, sponsored by Analysis Group, McKool Smith, and Georgetown University, was moderated by Paul Michel, who stepped down as chief judge of the U.S. Court of Appeals for the Federal Circuit on May 31.

Michel seemed dubious about many of the provisions in the pending Patent Reform Act, which was introduced by Sens. Patrick Leahy (D-Vt.) and Orrin Hatch (R-Utah) and reported by the Judiciary Committee to the full Senate for consideration more than a year ago.

“If some legislation passes and it increases cost and uncertainty and risk, won’t it decrease the value of the one million-plus patents out there?” Michel asked. “The value of patents is the most important ball for us to keep our eyes on, and it seems to me this is not a step in the right direction.”

The bill would effect the first major change to the U.S. patent system in 55 years. One fundamental shift: the Patent and Trademark Office would no longer award a patent to the first person to come up with an idea, but instead would give it to the first who files for a patent – a move that would bring the patent system here in line with the rest of the world.

That provision proved uncontroversial to the panelists. It was other details that got them going.

For example, patent litigator Brian Riopelle, a partner at McGuire Woods, objected to a provision that would require sequencing, also known as bifurcation—that is, the trial court would have to determine infringement and validity issues before holding a second proceeding to determine damages.

The result, Riopelle said, would be to “increase the time of a trial and the burden on a juror. Patent trials are long, and this will just increase the time John Q. Citizen will have to sit in a jury box.”

Michel chimed in, “From a judge’s perspective, the whole idea of Congress micromanaging litigation procedures is a recipe for trouble. When you get right down to what sort of motion is filed at what time and how it’s handled, it doesn’t seem like Congress’s strong suit.”

Economist John Jarosz of the Analysis Group also questioned the perception that juries hand out excessive awards in patent cases. He noted that a PricewaterhouseCoopers study found the “middle of the road” damages in patent suits were less than $4 million. “We don’t see the median award changing dramatically over time,” he said.

Jarosz added that large verdicts are sprinkled throughout the country, not concentrated in any particular district, including the Eastern District of Texas.

Jarosz also said the average cost of litigation in 2009 for patent cases with less than $1 million at risk was $967,000. For cases with up to $25 million on the line, the average cost was $3.1 million. And for suits with more than $25 million at stake, the average cost to litigate was $6.2 million.

Comments

[N. T.]

For the record, with regard to First to File, the statement, "That provision proved uncontroversial to the panelists" is an outright misstatement of fact!

There were a number of panelists who pointed out there are numerous problems and objections to FtF particularly for small inventors.

The author should get a hearing aid.

They should have recorded and published a transcript to avoid this sort of obfuscation.

[staff]

"One fundamental shift: the Patent and Trademark Office would no longer award a patent to the first person to come up with an idea...That provision proved uncontroversial to the panelists."

None of the panelists were small entity inventors. If they were, they would think otherwise. As the Constitution says, the purpose of the patent system is to "To promote the Progress of Science and useful Arts". As the lion's share of groundbreaking discoveries come from small entities (not to mention new jobs), any changes in the law that does not give proper consideration to small entities would only further cripple our economy.

Patent reform is a fraud on America. It is patently un-American.
Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.

[Dale B. Halling]

D.C.,

The question is not whether your patents are important to the world, but whether a strong patent system is critical to our economic growth. The evidence is overwhelming that a strong patent system is critical to economic growth. Until the advent of the modern patent system technological growth was so slow that people lived in a Malthusian economy, meaning that population expanded until people were on the edge of starvation. Only with the advent of property rights for inventions (patents) were people given sufficient incentive (and justice) to invest in new technology, which is the only way to increase real per capita income. For more information see http://hallingblog.com/2010/05/11/source-of-economic-growth/

First to File
I strongly disagree that changing to a First-to-File system is uncontroversial. This change will result in poorly thought out patent application, increasing the workload of the PTO. It will also favor large companies. All countries with a First-to-File system have significantly fewer patent applications by small entities and individual inventors. Finally, the First-to-File system is unjust. The inventor is not the first one to file a patent application, it is the first person to reduce the invention to practice.

[Gena777]

It's time for the USPTO to give more consideration to a multi-tiered approach to patent examination. The traditional one-size-fits-all approach doesn't meet the needs of today's environment. If Congress ever actually passes a patent reform bill with teeth, then maybe we'll see significant change for the better in patent law someday. If some kind of patent reform does indeed pass this year, then hopefully it will at least be a version of the legislation that prohibits fee diversion and stops permitting Congress to deplete the coffers of the USPTO. That would be a start -- though I'm afraid that, for any substantial and significant reform of the patent law system, we'll have to keep waiting much longer.
http://www.washingtontimes.com/news/2010/may/25/patent-reform-misses-the-mark/

[D. C. Sessions]

"If some legislation passes and it increases cost and uncertainty and risk, won’t it decrease the value of the one million-plus patents out there?” Michel asked. “The value of patents is the most important ball for us to keep our eyes on, and it seems to me this is not a step in the right direction."

Silly me, I would have thought that the patent system had other objectives than maximizing the value of millions of patents. Such as, oh, increasing innovation, boosting the economy, or promoting the progress of science and the useful arts.

FWIW: I hold upwards of 20 US patents. If none of them had been awarded, the world would be no worse off.