SAN JOSE, Calif. The U.S. Senate will kick off a national debate on patent reform Tuesday (March 10) as five industry executives and one academic testify in a one-day congressional hearing broadcast over the Web.
Participants include Steve Appleton, chief executive of Micron Technology, Inc. (Boise), a member of the Patent Fairness Coalition backing the latest bill; and Taraneh Maghame, head of government affairs at Tessera, Inc. (San Jose) a member of the Innovation Alliance that opposes the bill.
Other speakers will include David J. Kappos, assistant general counsel at IBM; Philip Johnson, chief intellectual property counsel at Johnson & Johnson; Herbert Wamsley, executive director of the Intellectual Property Owners Association; and Mark Lemley, a professor at Stanford Law School.
Last week, Senators Patrick Leahy (D-Vt.) and Orrin Hatch (R-Utah) introduced the Patent Reform Act of 2009 (S.515). As reported revently, the Act in most respects picks up where the debate left off in Congress.
At the center of the controversy is the bill's aim to limit damages in patent infringement cases to the proportion of the value of a product's infringed patents. The so-called apportionment provision is one of many in the bill that also appeared in HR 1908 that was passed in the House in September 2007 and its companion bill--S.1145--that failed to make it to the Senate floor for a vote in 2008.
Senator Leahy "recognizes that the contentious damages provision of the new bill needs work, but optimistically predicted that Congress 'will find the right language' in view of 'several positive developments since the committee voted to report the legislation in July 2007,'" said Bill Rooklidge, co-chair of the intellectual property practice at Howrey LLP.
"IBM's Kappos proposes injecting into the patent reform bill [language from the recent court decision on the Quanta case, but ] use of that language will not help resolve the deadlock over patent damages" he added.
"We strongly disagree with the bill's reformulation of the method for calculating damages for infringement," said Hank Not haft, president of Tessera in a prepared statement. "It is a significant substantive change that will devalue all patents and innovation, and invite infringement from Big Tech multinationals as well as foreign competitors. As a result, we'll have more litigation, not less."
"We are the constant target of patent lawsuits, many of which are frivolous and more than half are filed by non-practicing entities," said Mike Holston, general counsel of Hewlett-Packard and a member of the Coalition on Patent Fairness."We have to divert significant time and money to deal with these lawsuits," he said in a recent press conference sponsored by the group.
Pat Choate, an economist and author on IP issues, disagreed. He showed an analysis based on SEC filings that suggested the number of patent infringement cases and damages have not gone up in recent years. The top 14 members of the Patent Fairness group have paid a total of about $1.9 billion in patent infringement damages from 1996-2006, Choate said. .
"That works out to be one-ninth of one percent of their total revenues and that has been constant over the ten year period," Choate said. "During the same time, their R&D and sales have tripled, so this issue has had no gnawing impact," he added.