U.S. patent bill still faces obstacles

Patent overhaul legislation that passed the U.S. House of Representatives Friday still faces significant opposition as it heads to the Senate, opponents said.

The House bill, supported by several large tech vendors, would tighten the way courts assess patent infringement damages and add a new way to challenge patents after they’ve been granted. Currently, courts generally consider the value of the entire product when a small piece of the product infringes a patent; the bill would allow courts to base damages only on the value of the infringing piece.

Despite support from such tech vendors as Microsoft, IBM, and Symantec, the bill faces significant opposition from small inventors, many pharmaceutical companies, several small tech vendors, and labor unions.

The tech supporters of patent reform have called for the changes for five years. “I would not throw a party just yet,” said Bobbie Wilson, director in the litigation department at the Howard Rice Nemerovski Canady Falk & Rabkin PC law firm, based in San Francisco. “Congress has tried to address patent reform before, starting off with a bang and ending with a whimper.”

Wilson, who supports parts of the bill and questions other parts, said she’s a “bit pessimistic” that patent reform legislation will pass before the November 2008 elections.

“Remember that there is a whole cottage industry, from the so-called trolls to the patent litigators, who are heavily invested in the status quo,” she added. “They will be lobbying hard and spending substantial sums of money to water down or dilute any reform.”

Opponents will focus hard on the debate in the Senate, added Ronald Riley, president of the Professional Inventors Alliance, a trade group that opposes the House bill. The 45-vote margin in the House is not enough for the Senate “to see it as a mandate,” Riley said.

Riley’s group was among those recruiting labor unions to oppose the bill. In July and August, three labor unions, including the giant AFL-CIO, came out against the House bill.

Groups opposed to the bill are going to target lawmakers who support the legislation during the 2008 elections, “regardless of what might happen in the end,” Riley said.

“We don’t care if they get mad,” he said. “They can’t do anything worse to us than they’re doing now. There has to be a price for being bought.”

Riley and other opponents of the bill argue that it would allow large companies to steal patented inventions from small companies without fear of repercussions. When large tech vendors steal intellectual property and “ship it off to India, everybody loses,” Riley said. “This is about jobs.”

Supporters of the bill argue it’s needed because the number of patent infringement lawsuits and size of awards have exploded in recent years. It’s too easy for patent holders to sue and collect huge damage awards when a small piece of a tech product is found to infringe, supporters argue.

The House passage of the bill was “a major victory for U.S. innovation and competitiveness,” John W. Thompson, chairman and CEO of Symantec, said in a statement. “This landmark legislation is the first comprehensive modernization and revision of the patent law in 55 years.”

But Wilson said the House bill largely ignores the biggest problem with the U.S. patent system — that an underfunded Patent and Trademark Office lacks examiners and often loses experienced employees due to poor salaries.

While the bill would make “sweeping changes” in the way patents are prosecuted and whether they are litigated, the bill’s post-grant review provision targets the wrong point of the patent-issuing process, she said.

“That’s kind of like closing the barn after the horse is gone,” she said. “Most of the problem is with bad patents.”

Representative Howard Berman, a California Democrat and main sponsor of the Patent Reform Act, has also introduced a bill to increase funding at the Patent and Trademark Office. He said Friday he will continue to push for the legislation to be passed.