July 20, 2007 7:12 AM PDT

Patent law changes power ahead in Congress

The U.S. patent system transformation long sought by high-tech industry players like Microsoft, Amazon.com and Cisco Systems may finally be gaining momentum in Congress.

On Thursday evening, the Senate Judiciary Committee approved by a 13-5 vote an amended version of the Patent Reform Act of 2007. Supporters say the proposal would go a long way toward staving off expensive court litigation, limiting what are perceived as excessive damage awards, and keeping questionable patents off the books in the first place.

"We have reaffirmed our commitment to ensuring that our nation's patent laws promote and protect the inventiveness of all of our industries," Chairman Patrick Leahy (D-Vt.), who co-sponsored the bill with Sen. Orrin Hatch (R-Utah), said in a statement after the vote.

The Senate action followed incremental changes at earlier committee meetings and arrived just one day after a similar bill cleared the House Judiciary Committee by a unanimous voice vote.

The bills were identical when they were unveiled with some fanfare at a press conference back in April but are now slightly different, thanks to various amendments. Those inconsistencies will have to be reconciled if the full slate of House and Senate politicians ultimately approve the bills in floor votes.

The relatively swift action by both committees comes in sharp contrast to the direction of patent law debates in previous sessions of Congress. The last attempt at such massive overhauls sputtered and ultimately died over intense disagreements mostly arising from differences in how various industries incorporate patents in their business models.

Arguments for and against
Whether a single, unified patent bill will actually make it to the president's desk this time around still remains to be seen. Both proposals continue to face considerable resistance from a broad swath of companies, from major manufacturers (think General Electric, 3M and Procter & Gamble), pharmaceutical makers, biotechnology and nanotechnology companies, venture capitalists, some universities and research institutions, and companies like Qualcomm that rely heavily on licensing their patents.

"The bill will still erode, not strengthen, patent protections thereby dampening innovation and stifling entrepreneurship," a group called the Innovation Alliance said of the Senate bill's approval. The group, whose members include Qualcomm, Tessera and AmberWave Systems, voiced similar reservations about the House version.

Meanwhile, high-tech companies have applauded the bills' passage. They counter that the system has become skewed in favor of patent holders, spurring the rise of so-called "patent trolls" that exist solely to extort disproportionate damage awards or royalty payments out of deep-pocketed companies like theirs.

Enactment of the bills "is essential to future innovation and prosperity in America," Robert Holleyman, president of the Business Software Alliance, said in a statement Friday. BSA's members include Adobe Systems, Apple, Dell, Intel, Microsoft and IBM.

Both measures that passed this week share a number of core components, some of which have been the source of considerable controversy among the warring industries.

Addressing litigation tactics
Each bill would establish a "first to file" patent system, which all other foreign patent systems currently possess. Critics argue that the existing "first to invent" standard has posed problems because the identity of an inventor can be hard to prove. The bills lay out a process for contesting a patent applicant's entitlement to that protection under the new system.

They also call for creation of a "post-grant opposition" board within the U.S. Patent and Trademark Office that would serve as a replacement for what can be costly, time-consuming court challenges of newly issued patents. Conflicts remain, however, over the bills' approaches to how long outsiders should be able to use that process. High-tech companies have been advocating for few limits, while their opponents in the patent debate say unlimited windows for challenging patents could jeopardize their value.

Both bills also pay considerable attention to recurring gripes from the tech industry about the state of patent litigation. For instance, they would restrict acceptable venues for filing such suits in an attempt to prevent companies from shopping around for the most favorable courts.

Some of the thorniest debates over the bills have centered on how much money infringers should be forced to pay to patent holders. The high-tech industry has argued that because its products can rely on thousands of components, it's often inappropriate to be forced to pay damages based on the entire value of a product if only one piece is infringed. But opponents in other sectors, whose offerings often rely on fewer patents, argue such a policy could diminish the value of their inventions and deprive them of damages they are rightfully owed.

In an attempt to respond to those concerns, each bill would allow courts to award damages based solely on the "contribution" that the patent in question made to a product, unless the patent holder could show the patent was the "predominant" reason for the product's market demand. The bills also attempt to limit findings of "willful" infringement, which require violators to pay triple damages, by placing new obligations on patent holders to show the alleged infringers were aware they were copying the inventions.

Even if the measures do not ultimately move forward in Congress this year, some of the tech industry's concerns have already been addressed by U.S. Supreme Court decisions in the past two years. Most recently, the high court issued a ruling designed to loosen the requirements for determining that a patent is too "obvious"--and thus doesn't warrant protection.

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13 comments

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entrepreneurs response
First thank you for contacting me about my comments in Fortune and your
offer of assistance relative to the on going efforts to change our patent
system.

After visiting your web site it appears that your group is only composed of
large companies. Where are the entrepreneurs that are creating the jobs here
in America through innovation and their patents? I do not agree with your
ideas to make our patent system like Europe. When ever venture capitalists
talk to entrepreneurs their first question is "What are your competitors
barrier to entry" They want to see patents that provide some reasonable
expectations for being successful. Who will fund the new ideas created by
the little guy?

Many of these changes favor the large companies who can afford the legal
fees that the new proposal will require in defense of the patent owner.

Our patent system was established to support the inventor not the large
companies. The very companies you represent were started by entrepreneurs
whose only protection were the patents they held. Your 40 members are large
corporations run by people who never started their own company or had to
compete with the giants of industry. How can they speak about innovation
when they have to purchase new technology from entrepreneurs who out
innovate them and patent these innovated transformations.

Look at the Fortune 500 list today and see the changes entrepreneurs have
created. Where would Microsoft,Apple, Intel, Cisco, Google, Yahoo be today
if not for their patents? These companies have replaced many of the former
members of this elite club.

When America is loosing many of our industries to the outsourcing of
traditional American jobs the only thing keeping us alive are the
entrepreneurs who create new technology, get a patent, get funding and are
then are able to hire employees. Government reports explain that
entrepreneurs are the only thing keeping us competitive globally.

No sir we entrepreneurs are not willing to hand over the only protection our
forefathers provided for us when they established their idea of a fair and
just patent system dedicated to the inventor not the corporation.They
rejected the European system which favored the rich in favor of one that
favored the inventor.

When I look at many of the 40 members I see companies being run by CEOs who
only perform half of their responsibilities. A CEO has two responsibilities.
The first one is being able to increase their companies business through
growth. Their second responsibility is to remain profitable. Downsizing
occurs when a company is loosing market share and the CEO is not able to
grow his business.

In my opinion downsizing is exactly the opposite of what CEOs have been
chartered to achieve. The natural goal for almost any business is upsizing.

Downsizing programs to me are clear admissions of the CEOs failure.

If I misunderstood what your organization is about please enlighten me.Below is what I was responding to.

James Fuller
Managing Director
Public Strategies, Inc.
607 14th Street, N.W. Suite 500
Washington, DC 20005
Direct: (202) 354-8239
Cell: (240) 393-1369
Instant Messaging:
AIM: Jamesfullerindc
MSN Messenger: Jamesfullerindc@hotmail.com
Yahoo IM: Jamesfullerindc
<a class="jive-link-external" href="http://www.pstrategies.com" target="_newWindow">http://www.pstrategies.com</a>
http:/www.wpp.com
Posted by jrmitchell (1 comment )
Reply Link Flag
How many software patents are novel and nonobvious?
Every time I have read software patents in my field (computer
graphics), I have encountered claims to ideas that I have then
easily and quickly found in the literature of the field dating from
years to decades prior to the filing of the patent. The assignees
of the patents are typically large companies. The most recent
example I have seen is patent number 7028023, entitled "Linked
list". Its first claim is for a two-way linked list. I didn't even have
to look that one up, as it has been a well-known technique for
decades. As for its later claims on multiple linked lists, I found a
paper from a couple of decades ago concerning simulations of
complex processes which describes a programming technique
which uses multiple linked lists. So the claims are not novel. I
also think they are obvious, but that's just me. The assignee is
LSI Logic Corporation in this case.

The one thing I most hope will come out of patent reform is an
inexpensive way to prevent patents like this from issuing. Just a
simple process to help the PTO find the relevant literature, in
case an "inventor" or his lawyers haven't got time to do a proper
search before spending money to file the patent application.

Let's have real innovation protected strongly and stop this
business of patenting everything programmers think up on the
spur of the moment, a process I liken to trying to copyright all
the words in the dictionary.
Posted by billmosby (536 comments )
Link Flag
Losing, not LOOSING
That is all.
Posted by ewelch (767 comments )
Link Flag
protection our forefathers provided?
"as we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously"

-- Benjamin Franklin

Not entrepreneurship is driving the economy. It's greed that is driving it ...
Posted by zolyfarkas (20 comments )
Link Flag
Proving software violation with DMCA around
Could you be violating the DMCA in your process of proving if a piece of software is violating patents on a certain component ??
Posted by hammc (45 comments )
Reply Link Flag
The Role Of The Patent Office Should Be...
The role of the Patent Office should be to screen out and disallow almost all patent applications.

If 99% of all patents were disallowed patent trolls and questionable patents would not exist.

Today almost all patents are NOT novel, unique or non-obvious. Patents are being granted for things that are trivial, incremental, and laughably obvious.

Start by making a patent almost impossible to get, that will insure that a patent is appropriate and has value.
Posted by sismoc (119 comments )
Reply Link Flag
I second that.
We already have enough patents on golf grip techniques,
techniques for using a child's swingset, linked lists, manipulating a
camera object in a 3-D model, manipulating a light source object
in a 3-D model, using the DeCasteljau algorithm plus a graphics
processor to evaluate Bezier curves, etc. I wish I were making all of
the above examples up, but I'm not.
Posted by billmosby (536 comments )
Link Flag
Stuck in normality
media compression:

was that the women in the red dress you were looking at neo
"i was just"
look again

Animal life:

ummmmmmmm
sexy 6
ummmmmmmm
sexy 6
ummmmmmmm

plant life:

sexy 6 ummmmmmmm
ummmmmmmmm
sexy 6 ummmmmmmm
ummmmmmmmm

brainwashing:

ummmmmmmmm
5
"uuuuuur"
5
ummmmmmm

mind research:

ummmmm sexy6 um sexy6 "what the"
ummmmm "im gonna get you"
sexy 6 ummm sexy 6
ummmmm "i mean it this time"
9.2
ummmmmmmmmmmmmmmmm

fractals:

my thats a pretty little pattern that flower is

economics:

shall i add that new thing to my stock or shall i just bump the price up here. Oh i've gotta sell this thing. Oh maybe i'll try adding that thing to my stock.

the universe:

wooooooo hold it together boys keep what you can
we're fading
wooooooo hold it together boys keep what you can
we're fading

that beep aljbra:

if you do this here you gotta do it there
ok al i'm geting what your saying by why all the rest of this stuff wheres the numbers

you know that big field of numbers we just forced our secutary to type in all last weekend

al your a beeeep

rienmans genious maths:

wow i finally got this log to follow this line but their slipping apart.
Thats ok i'll just frative this off here and hey presto it all looks kind of normal again and by the time they work out im speaking a load of crap i'll be long dead.

Eienstine:

there i was smoking pot reading some patents and it all started to become relative like the whole of time and space man, it was a 4 dimensional experience then some one turned the light on and it hit me.
you know not like wibbling at me like it hit me.
Arhh you mean like e=mc^2
Dude it's like you read me mind
Posted by wildchild_plasma_gyro (296 comments )
Reply Link Flag
 

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