Sen. Orrin Hatch (R-UT) spoke last week at a symposium on the Federal Circuit at the National Press Club. In the speech, Sen. Hatch addressed not only the contentious damages reform provision, but also spoke about how inequitable conduct reform is important for the new bill.
Regarding damages, Sen. Hatch believes there was agreement at the recent Senate hearings on several points. These include the judge acting as a gate-keeper in instructing juries on the issues to consider for damages calculations and that damages should be calculated based on the economic value of the invention to the infringed product or process.
On the inequitable conduct issue, Sen. Hatch noted that the defense is “frequently pled, rarely proven, and always drives up the cost of litigation.” Every mistake by the patent owner is painted as fraud. There is virtually no downside for an accused infringer to raise the issue. Examiners are buried in references by patent applicants for fear that they will be found to have withheld something. If the applicant does anything to try to focus the examiner on the closest prior art, this is also considered fodder for inequitable conduct claims.
Rather than codification of the current practices, Sen. Hatch argued that an objective and clearer standard for what consitutes inequitable conduct is needed. He also referred to the potential of different sanctions from simply holding the patent unenforceable as under current law.
[S]anctions should be commensurate in scope with the misconduct. Reform to the inequitable conduct defense should focus on the nature of the misconduct and not permit the unenforceability of a perfectly valid patent on a meritorious invention.
Sen. Hatch believes that once agreement is reached on the damages and inequitable conduct issues, the other issues relating to patent reform will quickly fall into place.