Sens. Patrick Leahy (D-VT), Arlen Specter (R-PA), and Dianne Feinstein (D-CA) announced yesterday that they “are closer than ever to final agreement” on patent reform initiatives. The language of the proposed agreement is still being drafted, but they plan another hearing for Thursday. They specifically announced the following:
1. On the contentious damages issue, they have stricken the provisions from the bill related to apportionment of damages. Instead, they seek to give the trial judge a gate-keeping role to determine the evidence that may be presented on the issue of damages. In other respects, the reasonable royalty calculation would follow existing case law.
2. The “best mode” requirement of patents will be maintained, but omitting the best mode will no longer be a basis for invalidating a patent (then what’s the point of the requirement?).
3. Interlocutory appeals of claim construction opinions will require “additional findings by the district court.”
4. The willfulness standard of In re Seagate will be codified.
5. Venue selection for infringement cases will be reformed to follow the Federal Circuit’s “convenience of the parties” standard enunciated in In re TS Tech USA Corp.
6. The standard for the PTO to conduct a post-grant review of an issued patent was changed from the current reexamination standard of “a substantial question” of patentability to “an interesting question” of patentability. Presumably, this is a lower standard. My experience is that the PTO already grants the vast majority of reexamination requests. The new standard will mean that nearly all requests for post-grant review will be granted.
7. Reexamination or post-grant review will not be allowed for issues other than prior art. An earlier proposal had suggested that such reviews could be granted for prior sale or public use.
8. The Bayh-Dole Act would be amended to increase the amount of royalties that universities and other non-profits can keep from patents, even after they’ve received government funding for the invention.
9. The ability of patent examiners to telework would be expanded.
Sen. Specter suggested that he wanted to hear from any and all interested parties at the Thursday hearing to resolve any objections.
Sen. Kyl’s Views
Sen. Jon Kyl (R-AZ), who had earlier introduced his own patent reform bill, expressed a dissenting view on the situation. He expressed support for the proposed changes to the damages calculations, but he opposed the anticipated changes in post-grant review, interlocutory appeals, and willfulness, and complained generally that the reform contained “almost nothing to enhance the rights of patent owners and improve the system.”
He argued that the PTO should have been a party to the patent reform negotiations. By leaving them out, it is unknown whether the PTO may be able to successfully implement some of the changes, such as the post-grant review. This could actually make the patent system worse.
Sen. Kyl further argued that the reform does nothing to address the problems with the patent system that exist within the PTO. Without doing anything to help them address the backlog and patent quality issues, there will not be significant changes to the system. Congress is unlikely to address patent reform again in the near future once this round of reform is successfully completed.
I tend to agree with Sen. Kyl that if these provisions are actually adopted, the changes to the patent system will not be as significant as previously thought. In my mind, this isn’t necessarily a bad thing. It will be interesting to see if any of the interested parties have significant problems with these provisions at the next committee hearing on the bill.
IP Watchdog has a good summary of the issues as well. He notes that the onerous post-grant provisions being thrust on the PTO may accelerate the passage of additional rules packages that create additional significant burdens on applicants. Otherwise, the PTO may simply be overwhelmed by the number of post-grant requests and find that it has an even greater backlog than it currently has.
Perhaps the committee decided there was no way to reach agreement on how to reform the PTO and they wanted to pass something, given the recent failures at passing PTO reform.