April 18, 2007 3:13 PM PDT

Congress takes new stab at patent system overhaul

WASHINGTON--Politicians from both parties of the U.S. Congress on Wednesday unveiled a new proposal designed to make the most sweeping changes to the nation's patent system in decades.

The latest attempt at a so-called Patent Reform Act borrows many ideas from earlier versions that died before votes, thanks in part to disagreements among various sectors--including high-tech companies, the pharmaceutical industry, venture capitalists and independent inventors--about the extent to which the system needs fixing.

The lead sponsors of the bill, all chairmen of key committees dealing with intellectual property issues, vowed at an afternoon press conference that this year would be different. For starters, they said, this year's proposal is more likely to succeed because politicians attempted to approach the issue in a more unified way: A handful of co-sponsors from both parties have already signed on, and identical bills were scheduled to be introduced simultaneously in both the House of Representatives and the Senate.

The bill's backers said they would push for the measure, subject to minor adjustments, to pass both chambers and be signed into law within the next few months. One hearing has already been scheduled for next Thursday in the House's intellectual property panel, said Rep. Howard Berman (D-Calif.), the panel's chairman.

It's high time to enact new legislation because existing patent laws were "crafted for an earlier time, when smokestacks rather than microchips were the emblems of industry," Sen. Patrick Leahy (D-Vt.), one of the Senate bill's chief sponsors along with Sen. Orrin Hatch (R-Utah), told reporters.

Supporters said the bill would improve the patent system by putting in place mechanisms aimed at weeding out bad or obvious patents, imposing new limits on monetary damages awarded in infringement lawsuits, and setting up an alternative to litigation.

Like earlier efforts, the bill also attempts to bring the U.S. patent system in line with those of foreign countries by shifting to a system that grants patents to the first person to file for them, as opposed to the current "first to invent" standard, which critics argue is hard to prove. The bill lays out a process for contesting a patent applicant's entitlement to that protection.

The new bill "is going to help individuals and businesses across the spectrum," from garage inventors to large high-tech companies and everyone in between, said Rep. Lamar Smith (R-Texas), who co-sponsored the House version along with Reps. Howard Berman (D-Calif.), Rick Boucher (D-Va.) and others.

A long list of large hardware and software makers and Internet companies--including Amazon.com, Microsoft, Cisco Systems, Intel, Oracle and Symantec--were quick to rave about the bill's approach.

IBM Senior Vice President John Kelly said the effort "will help maintain our country's innovation leadership, reduce excessive litigation and damages awards, and improve patent quality." Big Blue has amassed the largest quantity of patents of any U.S. patent filer each year for 14 years running.

The joint bill appears to address several complaints about the patent system lodged by the high-tech industry in recent years.

One chief gripe is that the current system allows for winners of patent infringement suits to obtain disproportionately high sums of court damages. Microsoft, for instance, was ordered by a federal jury earlier this year to pay more than $1.5 billion to Lucent Technologies in a dispute over MP3 audio technology patents used in Windows. That amount was derived from the number of Windows PCs sold since May 2003.

The new bill attempts to answer that complaint by rewriting the law to dictate that courts may generally only award damages based on the patent's "specific contribution over the prior art"--that is, the extent to which the patent at issue improves on previous inventions. The bill would also raise the bar for when patent infringement is considered "willful"--a determination that results in tripling the damage award.

Much like several of its predecessors, the bill would allow patents to be challenged within a year of their issuance through a special "post-grant review" process, consisting of a special board within the Patent Office, in an effort to substitute for expensive and time-consuming court litigation. It would also restrict the scope of the court districts in which patent infringement cases could be filed--arguably a direct response to widespread reports that certain federal district courts, particularly one in eastern Texas, provide more favorable treatment to patent holders.

In an attempt to aid patent examiners trying to determine whether applications for new patents are obvious, the bill would also direct the Patent Office to set up a system by which third parties can submit prior art, although that's not a new idea. The Community Patent Review--partnered with the Patent Office and organized by the New York Law School and companies like Red Hat, IBM and Microsoft--plans to launch a yearlong pilot project with a similar aim in June.

Support for the bill from some of Silicon Valley's biggest players may not be a guarantee of the bill's success. A pronounced rift over how far patent system changes should go persists among high-tech companies, independent inventors and venture capital firms, and the powerful pharmaceutical lobby.

The new bill received a more lukewarm response from a group called the Coalition for 21st Century Patent Reform, whose members include corporate giants 3M, Caterpillar, General Electric, Johnson & Johnson, Eli Lilly and Procter & Gamble. The coalition said it was pleased to see the first-to-invent provision, but Procter & Gamble Vice President Steven Miller said he was concerned that the bill omitted "several critical reforms."

A coalition spokesman said he was concerned, among other things, that the new way of calculating damages suggested by the bill would not adequately compensate owners of infringed patents.

And venture capital firms have already voiced resistance to several ideas supported by high-tech companies, such as the post-grant review process, which they claim would inject uncertainty into the validity of their patents and make it tougher to attract investors.

Politicians behind the new effort admitted they expected to receive some opposition to the current draft, but they promised to press on, making slight changes to the language if necessary. "Now, more than ever, it is important to ensure efficiency and increased quality in the issuance of patents," Hatch told reporters, "and this bill does that."

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Sounds good.
Especially the part about weeding out bad patents. Should cut
down drastically on the seemingly high proportion of software and
system and method patents that are trivial and/or obvious.
Posted by billmosby (536 comments )
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This wont fix anything and you must be insane to think this will cut down on trivial patents. The only way to fix it is to null and void the entire system and make companies and people really work again instead of sueing.
Posted by TomboSlicko (23 comments )
Link Flag
Oh, crap...
"[i]Like earlier efforts, the bill also attempts to bring the U.S. patent system in line with those of foreign countries by shifting to a system that grants patents to the first person to file for them, as opposed to the current "first to invent" standard, which critics argue is hard to prove. The bill lays out a process for contesting a patent applicant's entitlement to that protection."[/i]

Hooray! Now we'll see companies cranking out 'patents' for damned near everything under the sun, without fear of prior art to keep them in check.

Thanks, guys... we really appreciate that high, hard one...

Posted by Penguinisto (5042 comments )
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I don't know what I think about this...
There should never be anything that keeps a good idea from being used. Make a new tax for patent holders if you must, but I never want to see that a product I want doesn't exist because of licensing fees. That's crap.

Almost every good idea is obvious to those with the right background. And I say there should be no exclusivity for good ideas. Just a mad rush to implement them. How many sweet ideas do we have as a society that never went anywhere? And how well will patents work with open source hardware? If they're going to preclude that kind of shift, screw them. If everybody in the tech sector had as much sense as the people at MIT, the world would be a better place.

Maybe after closed source software is out of the way, OSH will have a better shot. Does anyone here know much about the relationship between patents and the public domain? ethana2@gmail.com
Posted by ethana2 (348 comments )
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This IS, the worst case scenario...
Most people understand that "the patent system" is hopelessly broken. The problems..?

-The biggest (multi-billion dollar) businesses in IT the industry file thousands of obvious, ridiculously-simplistic, derivative and. far too often, previously-used, ideas every year (you know, things like... pushing a button twice to perform a "new function"... "checking-out" of a retail web-site, by clicking a "single" icon... using a "table" to "index" stored-data... "plugging" additional "modules" into an "application" to extend its "functionality"... using a "public network" to update "continuously-changing live data"... etc, etc, etc.).

-These companies then hoard such patents, as weapons against all competition (and genuine creativity) as well as looking upon them as potential, forcefully-extracted, revenue-streams...

-Then, there are the "Patent Trolls" who do NOTHING but try to abscond with every single, broad or vague, -notion- that they can, in any way what-so-ever, commandeer... by misusing such "Patents" and other claims of, so-called, "IP".

This has resulted in the sad-state that...

-Its usually cheaper to pay-off (with a "license" from) a BOGUS "Patent holder", than to try and "invalidate" an obviously "bad Patent" (I believe it actually costs about a million dollars now).

-The Patent-Office has proven itself completely-incapable of effectively assessing (or in any way weeding-out) these vile, and disruptive, artificial-attempts at market-manipulation...

-And, there are so many (overly-broad) "patents" now (and in "new applications" from the biggest companies each year) that it is nearly impossible for anyone, but the richest interests, to even hope to hold-on to, or actually use, nearly any "idea" (whether innovative, OR... obvious).

...the solution (as supported by some of the biggest benefactors of this very system)..?



-Install such barriers as "First To File". Then it wont matter who invented it, or when... All that WILL matter is who had the resources to "File First".

-Allow a whole "year" for "independent challenges", ...even though, MOST "patent disputes" actually take far longer than that to actually occur (So, you invented it? Sorry, but they filed "first", and that was over a year ago... so...).

-Thus, the "Patent Office" will be effectively divorced from having any responsibility for issuing, or challenging, "bogus Patents".

In short... take the VERY WORST problems, and ABUSES, in the current system and make them the norm... all at the behest, and benefit, of those that are, often, at the very root of the problem.

Sadly, it simply doesnt matter that virtually everyone, else, is diametrically opposed to these changes... The exact same (clearly, in-pocket) representatives (who always seem to demonstrate their absolute-enslavement to big-money interests) ARE going to RAM this down our throats... whether we like it, or not.

...for our own good, of course.
Posted by Gayle Edwards (262 comments )
Reply Link Flag
I thought from reading the article that a lot of the things you cite
were being addressed by the new legislation. I am apalled by the
present state of the patent system and hoped that congress was
going to try to fix things. Actually, I had hoped that "system and
method" patents would be barred completely, along with
mathematical formula and algorithm patents, but there's probably
too much ill-gotten gain tied up in them by now. But look on the
bright side, how much worse can it get? Just kidding, what else can
we do at this point?
Posted by billmosby (536 comments )
Link Flag
And the Answer is.....
What? It is easy to find fault (which your post does very well). Much harder to offer solutions.

Change is needed in patent law - here is a change introduced in Congress. Unless you have a better solution to suggest you are wasting the time of everyone who read your rant.

Personally, I think the legislature is a step in the right direction. Look what happened to Vonage under the current system. Under this proposal, even if they are not first to file, the damages they owe would be capped. How about that - a step in the right direction.
Posted by ts6307 (4 comments )
Link Flag
You are correct. You should have your posting as an article for CNET. I propose scrapping the entire system. Yes, no more patents. First come first serve. First guy with the idea and money backing wins. It takes more than idea. Ideas and inventions are a dime a dozen. Getting the idea to really be something is where the real value is. If you really think about the pros and cons you will see that this is not a radical idea but actually the only real solution.
Posted by TomboSlicko (23 comments )
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