Patent Reform Update

Last week, several news items arose that could have a bearing on the patent reform debate.  These include the Senate Judiciary Committee’s report on S. 515, the union letter responding to the report, and Chief Judge Michel’s comments on the testimony before the judiciary committees.

On May 12, Senate Judiciary Committee chairman Patrick Leahy (D-VT) filed the committee report on S. 515.  The report provides details on the purpose, history, and section-by-section analysis of the bill.  It also contains additional and minority views of members of the committee.  In a press release accompanying the report, Sen. Leahy noted that:

The Patent Reform Act is ready for Senate consideration, and I hope the Senate leadership will schedule a vote on this important legislation as soon as possible.

BNA (subscription service) is also reporting that 13 labor and trade unions sent a letter to Senate Majority Leader Harry Reid (D-NV), urging him to bring the bill to the Senate floor as soon as possible.  The letter praised the compromise on damages reached by the committee.

The main concern that the unions expressed with the amended bill is with the post-grant opposition and inter partes reexamination procedures.  The unions request that proper safeguards be included that do not lead to duplicate challenges that place may undue burdens on patent holders and the PTO.

Finally, Chief Judge Paul Michel of the Federal Circuit spoke out at the AIPLA Spring Meeting in San Diego on the issue of patent reform.  Specifically, Judge Michel addressed what he perceived as misstatements made at the congressional committee hearings.  His remarks focused on testimony of Stanford law professor Mark Lemley and George Washington law professor John Thomas.

Judge Michel noted that courts may only use the entire market value rule, i.e., may only take the entire market value of the infringing product into account in the damages calculation, if “the patented invention be the reason for consumer demand.”  He criticized Prof. Lemley’s remarks that courts refuse to apportion damages and that the entire market value is “required” to be used in reasonable royalty calculations.  Judge Michel said that these statements are not true.  Apportionment takes place frequently in litigation and the courts don’t require anything in reasonable royalty calculations.

Judge Michel also criticized statements made by Prof. John Thomas.  Prof. Thomas had stated that systematic overcompensation is quite a problem in patent infringement cases.  Judge Michel noted some jury outliers, but did not agree that this is a systematic problem.  He noted that, contrary to Prof. Thomas’ testimony, courts often adjust jury awards and are capable of advancing the law of damages.  Testimony by these witnesses, as well as others before the committees, was simply not supported by facts.

Judge Michel also criticized Sen. Leahy’s committee report that the new bill would permit courts to exclude certain evidence from reasonable royalty calculations, including prior to trial.  Judge Michel argued that courts have been doing this for decades, so the bill doesn’t really change anything on this front.  The only potential change by the bill is to “pin courts down too tightly to preclude flexibility” on these issues.

The issuance of Sen. Leahy’s report and the union letter may indicate that the legislation could move to the floor of the Senate in coming weeks.

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One Response to “Patent Reform Update”

  1. PTO Inter Partes Reexamination May Give Insight on Post-Grant Opposition « INVENTIVE STEP Says:

    [...] current patent reform bills pending in Congress, including the bill passed by the Senate Judiciary Committee, contain various forms of post-grant opposition procedures.  Critics of post-grant opposition [...]

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