Archive for May, 2009

President Obama Nominates Judge Sonia Sotomayor to Supreme Court

May 28, 2009

Sonia_Sotomayor_6_sitting,_2009Second Circuit Judge Sonia Sotomayor has been nominated to fill the seat of retiring Justice David Souter.  Judge Sotomayor has a rather sparse record on patent and IP issues.  Since the Second Circuit does not hear patent appeals, this is not surprising.  Prior to her elevation to the appellate court, Judge Sotomayor served as a trial judge in the Southern District of New York.

Thanks to Hal Wegner for providing the following information on patent experience of Judge Sotomayor.  His research includes cases reported by Westlaw.

District Court Patent Cases Appealed to the Federal Circuit: Judge Sotomayor had two cases that reached the Federal Circuit on appeal.  In one case, the appellate panel agreed with her where she held a patent unenforceable based upon inequitable conduct, REFAC Intern., Ltd. v. Lotus Development Corp., 887 F.Supp. 539 (S.D.N.Y. 1995) (Sotomayor, J.), aff’d, 81 F.3d 1576 (Fed. Cir. 1996)(Lourie, J.).  In the other, the court disagreed with her claim construction ruling, Intellectual Property Development, Inc. v. UA-Columbia Cablevision of Westchester, Inc., 336 F.3d 1308, 1317 (Fed. Cir. 2003)(Schall, J.), initial claim construction ruling, 1998 WL 142346 (S.D.N.Y. 1998) (Sotomayor, J.)(Markman ruling), subsequent rulings by different trial judge, 2002 WL 10479 (S.D.N.Y. 2002).

Second Circuit Patent Contact: Her brief experiences with patent issues while sitting as a Circuit Judge were in Innomed Labs, LLC v. Alza Corp., 368 F.3d 148, 161-62 (2nd Cir.2004)(Sotomayor, J.) (Robinson-Patman Act antitrust issue implicating patent exhaustion); Nadel v. Isaksson, 321 F.3d 266, 273 n.3 (2nd Cir. 2003)(Sotomayor, J.)(distinguishing novelty in court action under dispute from patent law novelty); and In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124 (2nd Cir. 2001)(Sotomayor, J.)(class certification of antitrust claims).

Earliest Reported Patent Case: As a trial judge, Judge Sotomayor was also involved in Dow Corning Wright Corp. v. Biomet, Inc., 1993 WL 60571 (S.D.N.Y. 1993)(Sotomayor, J.)(denying summary judgment motion of noninfringement on the basis that prosecution history estoppel did not limit scope of protection).

In addition to her patent experience, Judge Sotomayor has been involved in several copyright cases of note.  She was the trial judge in New York Times Co. v. Tasini, where freelance writers sued the New York Times and LexisNexis for copyright infringement based on the re-printing of their articles in electronic form on Lexis.  Judge Sotomayor ruled that the publishers were within their rights in doing this.  Her decision was reversed by the Second Circuit and the Supreme Court affirmed the Second Circuit decision.  The Supreme Court decision held that the writers were entitled to compensation if their stories were re-printed without their permission.

In Castle Rock Entertainment Inc. v. Carol Publishing Group, Judge Sotomayor ruled that a trivia book based on the television series Seinfeld infringed the copyrights held by the shows producers and did not constitute fair use.  She ruled that the content was not unprotectable facts, but rather protectable expression under the Copyright Act.  The Second Circuit affirmed her decision.

In private practice from 1984-92, Judge Sotomayor worked for the litigation boutique Pavia & Harcourt where she specialized in intellectual property and copyright litigation.


Federal Circuit Clarifies Interpretation of Product-by-Process Claims

May 19, 2009

A product-by-process claim is a claim to a new product that claims the product according to the process by which it is made.  An example of such a claim follows.

A widget made by the following process:

step A;

step B; and

step C.

Normally a claim like the one above would only be written if the claim to the structure or properties of the product itself would be difficult or impractical.  Such is sometimes the case in the chemical or pharmaceutical field.

The Federal Circuit had a split of authority on how such a claim should be interpreted in an infringement suit.  One set of cases indicated that this type of claim could only be infringed by a product that was made according to the claimed process.  Another set of cases indicated that since this type of claim is a product claim, it is irrelevant for infringement purposes how the infringing product was made.

In the consolidated appeal of Abbot Labs. v. Sandoz, Inc., the Federal Circuit has chosen the former approach.

[P]rocess terms in product-by-process claims serve as limitations in determining infringement.

The court held that it was bound to this outcome by Supreme Court precedent.

This is not to say that old products can be repatented based on their preparation by a new process.  The PTO has never taken this approach.  The Manual of Patent Examination Procedure (MPEP) § 2113 states that such products are not limited by the steps recited in the processes, but by the structure implied by the process steps.  The Federal Circuit appears to have sanctioned this procedure for determining patentability of product-by-process claims.

[E]ven though product-by-process claims are limited by and defined by the process, determination of patentability is based on the product itself.

Thus, this decision means that if an old product is made by a new process, the product cannot be patented again, even using a product-by-process claim.  The new process for making the product may be patentable if it is non-obvious.  If an accused infringer determines a new way to make a product covered by a product-by-process claim, the accused infringer does not infringe the product-by-process claim.


Judge Newman, joined by Judges Mayer and Lourie, filed a lengthy dissent.  She argues that the procedure for taking a small part of the opinion en banc without notice to the parties violates the Federal Rules of Appellate Procedure, the Federal Circuit’s own rules, and principles of fairness.  She argues that the parties should have had notice and the opportunity to specifically brief the issue for the en banc court to decide.  She also continues by arguing against the court’s result as well.  She argues in favor of the rule that infringement of the process steps are not necessary to infringe a product-by-process claim.  She argues that the court is taking away a long established right with little or no notice to interested parties.

Judge Lourie filed an interesting dissent where he acknowledged the Supreme Court precedent, but argued that since all of those cases were old they could be disregarded.

I agree that there is substantial Supreme Court precedent that holds that product-by-process claims require use of the recited process for there to be infringement. . . . The Court years ago did not have occasion to consider today’s innovations or decide whether a distinction should be made between a new chemical-biological product and an old product made by a new process.

Bottom Line

The bottom line is to only use such claims when absolutely necessary, such as when the product is difficult or impossible to describe without resort to the process by which it was made.

ACLU Files Suit Against Gene Patents

May 18, 2009

American_Civil_Liberties_Union_logoLast week, the ACLU and a number of other groups filed suit against the U.S. Patent and Trademark Office, Myriad Genetics, and the University of Utah Research Foundation to invalidate patents on human genes linked to breast and ovarian cancers.  The lawsuits allege that the patents are invalid as violating the right to free speech under the First and Fourteenth Amendments to the Constitution.

As you might expect, the ACLU issued a number of statements to the press on the lawsuit:

“Knowledge about our own bodies and the ability to make decisions about our health care are some of our most personal and fundamental rights,” said ACLU Executive Director Anthony D. Romero. “The government should not be granting private entities control over something as personal and basic to who we are as our genes.”

“It is absolutely our intent that upon victory this will rend invalid patents on many other genes,” said Dan Ravicher, executive director of the Public Patent Foundation and a patent law professor at Yeshiva University’s Benjamin N. Cardozo School of Law. “We just had to pick one case as our case.”

The ACLU would have you believe that patents are being granted that cover the naturally occurring genes in the human body.  This is obviously not the case because such patents would not be novel or non-obvious (human genes have been around for many years).  Instead, the patents cover novel methods of detecting, screening, isolating such genes, and isolated, altered versions of the genes.

This means that the medical research that is being done to develop cures for diseases, such as breast and ovarian cancer, has led to many new discoveries for which patents have been granted.  The ACLU lawsuit alleges that such patents stifle innovation and keep further research from proceeding.  Most advocates of IP rights would argue, however, that such discoveries and cures would not be disclosed to the public without the patent grant.  Indeed, such discoveries may not take place at all.  Instead of stifling free speech, as the ACLU alleges, patents actually promote a public flow of information that would otherwise be kept secret by those making the discoveries (if they even make them at all).

Gene Quinn of IP Watchdog has an excellent analysis of the issues of the case including the complaint and the patents involved.  He characterizes the suit as frivolous, which I agree with.  He attributes this to a lack of understanding of patents on the part of the ACLU.  In general, I do not agree with this part of his opinion.  The Public Patent Foundation of the Benjamin Cardozo Law School is representing the plaintiffs in the case.

Instead, I believe that the purpose of the lawsuit is to misinform and inflame the public as to the issues of the case.  This is yet another attempt to scare the public into believing that patents are bad and that patents on medical research are especially bad.

This is similar to the February 2007 New York Times editorial by the late Michael Crichton where he argued that people are going to die because the PTO is granting patents on human genes.  Crichton argued that “one-fifth of the genes in your body are privately owned.”  Medical research companies own not only your genes, but also the pathogens that lead to many common illnesses.  Therefore, you can’t get treatment or testing for such illnesses unless you pay exorbitant royalties to the research company, if at all.

Like Crichton’s editorial, the ACLU seeks to get headlines from this suit.  On that front, they are succeeding.  It is highly unlikely that any of the patents in this suit will be invalidated and, if they are, it certainly won’t be because they are unconstitutional.  Let’s tone down the inflammatory rhetoric on patents and try to educate the public on what they are actually all about.

Patent Reform Update

May 18, 2009

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.

PTO Publishes Rules Agenda for 2009

May 13, 2009

uspto_sealAll executive departments and agencies are required by Executive Order to publish a regulatory agenda every six months indicating regulations that the agency will be promulgating in the next six months.  These agendas, from the various Federal agencies, are combined into what is known as the Unified Agenda of Federal Regulatory and Deregulatory Actions.  The purpose of the Unified Agenda is to include the public in an agency’s rule making activity by providing a description of the rule, its timeline for completion, and anticipated publication dates for finalization.

The Spring 2009 Edition of the Unified Agenda was published in the Federal Register on Monday.  It included several interesting proposals by the PTO.

First, the PTO seems to be proceeding with the new rules to limit Markush claims that were first published in August 2007 and then put on hold in October 2008.

Also on the agenda are the extremely controversial proposed IDS rules.  These rules were first proposed in 2006 and put on hold a number of times while the patent bar protested their harshness.  Apparently, the PTO is continuing its push for their implementation.

Next, the PTO plans to adjust fees for RCE’s, 18-month publication, and certain other fees, noting that:

[t]he rules of practice . . . do not set a fee that recovers the USPTO’s costs for these processes or services.  The USPTO is proposing to adjust . . . these fee amounts such that they more accurately relfect the Office costs for these processes or services.

In these times when the PTO is struggling with reduced filings and reduced revenue, they certainly won’t be reducing these fees.  This sounds suspiciously like the rumor about a significant raise to the RCE fee.

The PTO is also amending the procedures regarding enrollment and discipline of registered attorneys.  Specifically, the PTO is replacing the UPSTO Code of Professional Responsibility with the USPTO Rules of Professional Conduct.  Of significant note is the new annual fee requirement for registered attorneys and agents, as well as the PTO’s continued push for a continuing education requirement.  The former has already passed, while the agency continues to push for the latter.

The PTO also continues its push for new Appeal Brief rules.  The PTO published proposed rules in mid-2008, but then issued a notice delaying their implementation 5 days prior to the scheduled date.  The notice now refers to new rules being published in October 2009 with comments accepted until December, with final action taking place in May 2010.  It would seem that the PTO is preparing new rules, perhaps in response to the huge outcry over the previous version.

On a postive note, the PTO is also proposing electronic publication of issued patents and reexamination certificates.  The notice indicates that electronic publication would shave about two weeks from the pendency of patents and reexaminations.  This doesn’t seem like a lot, but any amount of time is a step in the right direction.

What does this mean?

Hopefully, the PTO is just putting the controversial rules in the notice in case it decides to do something with them some time in the future.  It would be really disheartening for a new PTO director to come in and have all of these rules take effect at the same time.  Let’s hope they do a better job of listening to comments and revising any proposed rules to work together with its customers, inventors and the patent bar.

Justice Souter to Retire From Supreme Court

May 11, 2009

DavidSouterLast week, Justice David Souter announced that he would retire from the Supreme Court at the end of the Court’s current term in June.  Justice Souter, 69, was appointed to the Court by President George H.W. Bush in 1990.

Justice Souter did not leave a large impact on patent law or intellectual property law in general, but the opinions that he wrote on the subject are significant.

Those in the patent field will remember Justice Souter as being the author of the unanimous Supreme Court opinion in Markman v. Westview Instruments, where the Court held that construction of patent claims is exclusively within the province of the court, as opposed to the jury.  The case marked one of the rare times where the Supreme Court affirmed a decision of the Federal Circuit.

While the decision certainly has its critics, it had a significant effect on way patent infringement suits are tried.  Prior to this decision, juries had to determine what the words of a patent claim meant before determining whether the patent was infringed.  This often led to contradictory decisions in different cases.  After this decision, most patent infringement cases include a “Markman Hearing” prior to trial where the court hears arguments as to the meaning of disputed claim terms.  The court then gives a ruling as to which meaning it favors.  Many cases settle shortly after the court makes its “Markman Ruling.”

Justice Souter also wrote the Supreme Court opinion’s in Campbell v. Acuff-Rose Music and MGM Studios v. Grokster.  In Campbell, the Supreme Court held that a commercial parody can still qualify as fair use under the Copyright Act.  In that case, the Court held that 2 Live Crew’s parody of Ray Oribson’s “Oh, Pretty Woman” qualified as fair use.  In Grokster, the Supreme Court held that peer-to-peer file sharing companies could be sued for inducing copyright infringement for their marketing of file sharing software.

Obviously, intellectual property is not a high political priority when naming a successor to the Court.  Given that the Supreme Court is reviewing Federal Circuit cases with greater frequency in recent years, however, it would be nice to have a new justice who understands the value of intellectual property.

Who Will be the Next Director of the PTO?

May 5, 2009

There’s been a lot of rumor and speculation in recent weeks that since Gary Locke was confirmed as Secretary of Commerce, Pres. Obama is going to shortly nominate a new director of the PTO.  Then, there was some discussion that has come from patent commentator Hal Wegner that a candidate had been chosen and was being vetted by the administration prior to a public announcement.

Some of this momentum may have gotten side-tracked by the announcement that Justice David Souter will be retiring from the Supreme Court at the end of the current term and by Sen. Arlen Specter (D-PA), previously the ranking member of the Senate Judiciary Committee, switching parties.  Clearly, a new Supreme Court justice is bigger political news than who will be the new director of the PTO.

Possible Nominees

First, it is worth noting that there have not been any leaks (to my knowledge) as to whom the administration plans to nominate.  Thus, the following is conjecture and rumor.  That being said, three names continue to dominate the discussion.

Q. Todd Dickinson

dickinsonThe first potential nominee has been discussed since at least January (and probably earlier) as a possible director.  As I noted previously:

Another name that has been mentioned is former PTO Director Q. Todd Dickinson.  Dickinson is the recently-named executive director of the American Intellectual Property Law Association (AIPLA) and is a registered patent attorney.  Prior to his tenure as PTO Director, Dickinson was Chief Counsel for Intellectual Property and Technology at Sun Corporation and also worked in the IP departments at Chevron and Baxter Travenol Labs.  Dickinson clearly meets the desire for a patent savvy director.

Dickinson was director of the PTO from 1998-2001 under President Clinton.  With Dickinson at the helm, the PTO was allowing patents at rate of over 70%.  Depending on the side of the issues that you are on, some may argue that this was the hay day for innovation and invention, while others would argue that this was the beginning of the problems with the patent system with the allowance of too many “bad” patents.  I don’t intend to get into that debate here, but it is worth noting that this would be a significant change from the current system with rates barely over 40%.

AIPLA has always been fairly pro-patent on the issues.  With Dickinson as executive director, AIPLA has continued this stance on the issues, filing an amicus brief in support of the petitioner in Bilski and urging the Federal Circuit not to proscribe patents for biomedical diagnostic tools, among others.

David Kappos

KapposThe second name that has generated a lot of speculation is David Kappos, vice president and assistant general counsel in charge of intellectual property for IBM.  Mr. Kappos has been at IBM since 1983. He is also a member of the board of directors of the Intellectual Property Owners Association (IPO).

IBM perennially leads all corporations in the number U.S. patents obtained.  Mr. Kappos testified at the Senate Judiciary Committee hearing on patent reform in March where he argued that the reform bill should include provisions related to the “essential features” of the invention to determine damages.  He cited the Supreme Court’s opinion in Quanta Mechanics v. LG Electronics, a case having nothing to do with damage apportionment, relating instead to patent exhaustion.

Let’s face it, the PTO is a mess.  Mr. Kappos is clearly qualified to lead the clean up efforts, such as fixing the failing IT infrastructure.  He also clearly has the management experience necessary for the job.

His name has become a lightning rod of late for those that disfavor strong patent protection.  For example, patent pundit Greg Aharonian has compared a Kappos directorship to having Bernie Madoff run the SEC.  Aharonian argues that although Kappos purports to favor improvements in patent quality, his company continues to receive large numbers of “crappy” patents.

Patently-O has reviewed Mr. Kappos’s record and given a reserved endorsement of his potential nomination.  Prof. Crouch notes that Kappos clearly understands the value of innovation and would do a good job of healing the rift between patent examiners and applicants (not to mention PTO management).

His reservations against Kappos’s potential nomination include that he is too IBM-centric, having worked there for over 25 years.  The rest of the world does not operate as IBM does.  He may make changes that harm small companies and individual inventors to benefit large companies such as IBM.  Statements like “people no longer innovate individually” do not bode well for these groups.

James Pooley

pooleyThe third name that has been raised is James Pooley, litigation partner in Morrison and Foerster’s Silicon Valley office.  Mr. Pooley has a distinguished career as an intellectual property litigator and served as president of AIPLA from 2007-08.

There seems to be a good deal less information circulating about Mr. Pooley than about the other candidates.  This could be a good thing or a bad thing.

Bottom Line

Any of these candidates would be a significant improvement over the more recent political appointments for the PTO directorship.  In general, the Bush Administration used the post as a reward for political friends regardless of qualifications.  If these are indeed the candidates being reviewed, there is cause for optimism.

Of the two candidates about which more is known, Q. Todd Dickinson would be the more popular choice among members of the patent community.  He has done the job before and done reasonably well.  He may not want to have to fix all of the current problems that require fixing.

Let’s hope an announcement is forthcoming in the near future.

PTO Files Brief Opposing Cert in Bilski

May 5, 2009

The PTO has finally filed its brief in Bilski where it requests the Supreme Court to decline to hear the case.  As noted earlier, the PTO had been granted additional time to file its brief and was given even more time until May 1.

Quite unremarkably, the PTO argues in its brief that the Federal Circuit’s decision conforms with Supreme Court precedent in its interpretation of 35 U.S.C. § 101 regarding patentable subject matter.  The PTO further argues that the Federal Circuit’s “useful, concrete, and tangible result” test engendered confusion in the law.  Other questions not presented in the case, such as the patentability of software, should be left to future cases.  Thus, the Supreme Court should deline to hear the case.

As noted previously, a decision on the petition should come by the end of the current term of the Court in June.  If the Court agrees to hear the case, it will be during the October 2009 term with a decision coming by the end of that term in June 2010.

I previously wrote about whether the Supreme Court should hear this case.  The points in that post still remain.  The Bilski decision is terrible for business methods and other similar inventions.  Yet, Bilski’s particular invention is probably not patentable under other sections of the Patent Act (e.g., novelty, obviousness).  As the PTO noted in its brief, probably only Judge Newman at the Federal Circuit would have held Bilski’s method to include patentable subject matter.

We should find out in the next month or so.

House Panel Not Going to “Rubber Stamp” Senate Bill

May 1, 2009

Last month, when the Senate Judiciary Committee reached a compromise on pending patent reform legislation, many believed that Congress was finally ready to reform the Patent Act.  Some were even saying it could be done within a matter of months.  Not so fast, my friend!

Although it’s difficult to read the tea leaves from a highly orchestrated political event like the House Judiciary Committee’s hearing yesterday, it appears that the battle is not yet over.  BNA (subscription service) reported on the hearing.

Statements from the Chair

John ConyersChairman Rep. John Conyers, Jr. (D-MI), made it clear that the House will not simply “rubber stamp” the Senate bill, but will work to develop the best bill it can achieve.  Rep. Conyers specifically referred to the contentious damages issue.  The Senate removed language from its version of the bill that would have limited damages awards, but added a requirement that the court act as a gate-keeper for what evidence a jury may consider in determining an appropriate award.  Specifically, Rep. Conyers said he did not think the Senate necessarily reached the best compromise.

I shouldn’t have to tell you that we will not blindly accept or reject their work, but will work to ensure that we arrive at a damages provision that is right for everyone.

Lamar SmithRep. Lamar Smith (R-TX), ranking member on the Committee, also expressed concerns with the Senate bill.  He believes the Senate gate-keeping provision needs further review and that it may confuse jurors who have to apportion value fairly when calculating damages.  He also expressed disagreement with the Senate bill on the issues of venue and post-grant opposition, stating that the House version of the bill addressed these issues better than the Senate bill.


David Simon, chief patent counsel for Intel and member of the Business Software Alliance, and Mark Chandler, senior vice president and general counsel for Cisco, both argued in favor of eliminating the entire market value when calculating damages.  Specifically, they spent time disparaging non-practicing entities (NPE), or patent trolls, suggesting that change is needed to keep such entities from harassing companies like theirs.  Chandler prefers the House version of the bill because currently vague and unclear litigation standards tend to overcompensate plaintiffs and permit abuses of the system.

Dean Kamen, inventor of Segway and founder of DEKA Research and Development, argued for reform at the PTO in the form of reduced pendency and improved patent quality.  He also noted that his company is an NPE because it only license its patents and does not actually manufacture any products.

Phillip Johnson, chief IP counsel for Johnson & Johnson, and Bernard Cassidy, senior vice president and general counsel for Tessera Technologies, spoke against the limitations on damages in the current House bill.  Mr. Johnson also represents the 21st Century Coalition for Patent Reform, a group of significant pharmaceutical and biotechnology companies.  He urged the House to support the Senate’s gate-keeper provisions on damages reform.

Prof. John Thomas, of Georgetown Law School, spoke favorably about the gate-keeping role of the judge in the Senate version of the bill, but also supports comprehensive damages legislation such as in the House version.  He urged that damages should be calculated by comparison of the invention against “the next best alternative” available to the infringer.  Johnson responded that this is factor nine of the Georgia-Pacific factors used to calculate a reasonable royalty.  As such, it is one factor to consider; it should not be the starting point as urged by Prof. Thomas.

There was significant discussion between the witnesses and the panel members of how to limit the power of NPEs.  Neither the witnesses nor the panel seemed able to adequately define such entities.  Kamen does not manufacture the products claimed in his patents, but there seemed to be agreement that he should be allowed to assign or license the technology to others.

The only real agreement was that plaintiffs with bad intent should be limited in what they can do.  There did not seem to be a good way to determine the plaintiff’s intent or how to deal with it.

The hearing included discussion of a number of other provisions in the bill.  Rep. Conyers indicated that a provision to reform inequitable conduct is still needed.

Further, the witnesses and the panel were concerned with the Senate’s changes to the post-grant opposition procedures.  A major concern was whether the PTO is capable of handling a large number of post-grant opposition filings.  Most agreed that it would be difficult at best for the PTO to handle them at present.  Specifically, Kamen urged Congress to give the PTO the resources to deal with post-grant oppositions.

Other Reaction

Other news on the future of the bill is also not encouraging for those hoping for quick passage. Reps. Mike Michaud (D-ME) and Don Manzullo (R-IL), members of the House Manufacturing Caucus, issued a joint press release entitled “Patent Bill Would Hurt U.S. Manufacturers, Inventors.”  Reps. Michaud and Manzullo were responding to the written testimony submitted by the witnesses prior to yesterday’s hearing.

In the release, they argued that the damages provisions and post-grant opposition proceedings would hurt U.S. manufacturers by reducing the value of patents.  They urged that the Senate’s compromise on damages should be included in the House version of the bill.  Regarding post-grant opposition, they urged a number of changes to the current legislation:

·        an appropriate threshold for initiating administrative proceedings,

·        a presumption of validity in those proceedings so the challenger has the burden of establishing invalidity rather than requiring a patent holder to re-establish the validity already verified in the application process,

·        strong estoppel provisions to avoid serial challenges of the same patent by the same infringer or a group of infringers, and

·        a clear time-line for concluding administrative challenges.

What’s Next?

The main take away from the hearing seems to be that we are not as close to the passage of Patent Reform legislation as we had thought.  It will certainly not be sailing through Congress on its way to Pres. Obama’s desk in the coming weeks.  It is encouraging that the House invited a venture capitalist and an inventor to the debate.  These two important constituents to the debate were absent during the Senate hearings.

There was no representative of the administration present at the hearing.  This is hardly surprising considering that Pres. Obama has not yet nominated a new Director of the PTO.  There have been rumors in recent days that such a nomination is imminent; perhaps the nominee is being vetted.

This is the unknown quantity in the debate at this point.  If the new director and the Obama Administration support one version of the reform bill over the other, it may be much easier to pass.  Otherwise, it may be too early to tell what will happen with this legislation going forward.