A House committee approved patent reform legislation that technology companies sought for years as a way to reduce costly patent-infringement lawsuits. Pharma, however, opposes the bill, which will now be sent to the full House. And the Senate Judiciary Committee, which began considering its own version last week, is scheduled to continue its own debate tomorrow.
The House legislation aims to improve patent quality by setting up a process to re-evaluate patents after being granted. Supporters argue such post-grant reviews would help weed out bad patents by allowing companies to challenge them without having to go through litigation, which can result in large financial penalties and stifle innovation, the Associated Press reports.
"Our patent system is badly in need of repair," says Howard Berman, a California Democrat, who sponsored the bill.
Because many high-tech products, such as Apple's iPod, may include hundreds of patented components, technology industry groups say they are easy targets for patent infringement suits based on inadvertent or minor violations. But drug and biotech companies rely on as few as one or two patents for meds that can yield $1 billion or more in revenue. They argue the legislation would weaken the protection afforded by those patents, making it riskier to spend hundreds of millions to develop the drugs.
Some technology firms that rely heavily on licensing patents, such as Qualcomm, which licenses its wireless technology to cell phone makers, share pharma's concerns and oppose the House and Senate bills.
The committee approved several amendments to the bill in an effort to assuage the concerns of some opponents. But a group of pharma and manufacturing companies, known as the Coalition for 21st Century Patent Reform, are only partly satisfied with the changes. "While there is still much work to do before the Coalition can support the legislation, we are encouraged by the incremental progress made (today)," Gary Griswold, a 3M patent lawyer said in a statement. The coalition also includes General Electric, Johnson & Johnson, and Pfizer as members.
One of the biggest changes, proposed by Berman, alters the post-grant review process by eliminating a provision that allowed open-ended challenges to a patent's validity. The bill now largely limits such challenges to the first 12 months.
The committee also amended a controversial provision regarding how courts can calculate damages in patent suits. The original bill required courts to more closely tie damages to the actual value of the patented technology, rather than the value of larger goods that include the patented item as a component.
The committee amended the bill to allow judges to choose between those and other methods, depending on the facts of the case.
Another amendment by Rick Boucher, a Virginia Democrat, would bar the increasing practice of patenting tax-planning strategies. Already, sixty such strategies have been patented, with 85 more pending. "This is not something that should be patented," he says.