Senate Panel Approves Patent Reform Bill

The Senate Judiciary Committee, on April 2, voted 15–4 to approve a compromise patent reform bill after a trio of senators announced that they had found a way to resolve several contentious issues, including how to calculate damage awards in patent infringement lawsuits.

The legislation (S.515), which will now be considered by the full Senate, was quickly embraced by a variety of interest groups that have been fighting for more than six years over how to revise U.S. patent law, which has not been changed significantly since 1952.

"Patent reform is urgently needed," said Sen. Patrick Leahy (D-Vt.), committee chairman and one of the bill's co-sponsors. "The agreement this committee has reached to move forward with patent reform is the culmination of months of arduous negotiations and compromise. Working together, we can make the necessary, long-overdue improvements our patent reform system requires."

The reform effort has been pushed by high-tech companies in the computer software and electronics hardware industries who want to reduce patent litigation and limit damages for infringement to deter frivolous lawsuits. But they have been opposed by biotechnology, pharmaceutical, and manufacturing firms who fear the changes would reduce the value of their intellectual property and invite more infringement.

Leahy and Sens. Dianne Feinstein (D-Calif.) and Arlen Specter (R-Pa.) amended the bill to include a key compromise that will allow judges to act as "gatekeepers" and help juries identify appropriate damages.?? If a company is found to have infringed a patent, the judge will help determine if the patent is critical to the product, as is usually the case with pharmaceuticals, or just plays a minor role, as is more typical with software and electronics products that can have hundreds of patented components.

"BIO commends the Senate Judiciary Committee for its success in developing a more consensus-oriented approach to patent reform legislation--one that makes encouraging progress toward reforms that will help strengthen and improve our nation's patent system," Biotechnology Industry Organization President James C. Greenwood said in a statement.

"While no compromise is ever perfect, we believe the committee's product breaks the logjam on the major issues that have held up patent reform for the past several Congresses and will clear the path for a bill to be completed without undue delay," Greenwood added.

The Coalition for 21st Century Patent Reform, a broad group of nearly 50 global corporations, including Dow Chemical, DuPont, Eli Lilly & Co., and Novartis, called the compromise amendments "a major breakthrough" that should move the bill "towards consensus and, hopefully, ultimate enactment by the Congress."

The measure was also endorsed by the Coalition on Patent Fairness, a group representing Silicon Valley giants such as Microsoft, Google, Apple, and Cisco. "The bill begins to address the flaws in the patent litigation system that allow patent abusers, companies that do not produce or invent anything, to force our country's most innovative companies to divert billions of dollars away from innovation and job creation into litigation costs and hold-up settlements," the coalition said.

Similar patent reform legislation (H.R. 1260) is awaiting action in the House.