Industry gives mixed reaction to patent reform deal

Inside the compromise
SAN JOSE, Calif. — Members of the U.S. Senate released details of their latest compromise on patent reform, hammered out behind closed doors over the last several months. Early reaction to the proposed amendment is mixed from a range of electronics industry groups with conflicting views on the issues.

The compromise makes changes to several aspects of a bill (S.515) that was approved by the Senate Judiciary committee in April, but has yet to be scheduled for debate and a vote by the full Senate. A companion bill in the House is in an earlier stage of the process.

It's unclear whether the current compromise has strong enough backing to win passage of the draft bill which has been on the back burner during the protracted debate in Congress over health care.

Even backers note the draft bill marks the third attempt by Congress over the last five years to hammer out acceptable legislation. Although the patent system has been under fire on several fronts, Congress has not enacted any major patent reforms in 55 years.

Changes in the latest compromise limit the process for challenging issued patents. They also make it harder to win a ruling of willful infringement in a patent suit. In addition, they potentially would give small companies a break on patent fees.

The proposed amendment does not change aspects of the original bill including a shift to a first-to-file system and the so-called gatekeeper compromise on how infringement damages are calculated. The full text of the substitute amendment is available online.

Specifically, the new compromise shortens a new "first window" for a post-grant review from 12 months to nine months. It also raises the threshold for starting a review to showing that it is "more likely than not" that at least one claim is un-patentable.

The agreement also makes several small changes in the language about the so-called inter partes post-grant review process. The bill still contains a measure that allows third parties to comment on pending patent applications.

The compromise also would make it more difficult to obtain a ruling of willful infringement which carries a penalty of treble damages. At least six new additions to the compromise are intended to raise the bar for proving willful infringement.

In addition, the compromise would require the U.S. Patent and Trademark Office to reduce fees by 50 percent for small entities and by 75 percent for the new classification of "micro-entities" created by the bill. The compromise does not change a measure in the original bill that gives the patent office new rights to raise its fees to help deal with a historic backlog of applications.

"With this agreement, we are closer than ever to advancing patent reform legislation through the Senate," said Patrick Leahy (D., Vt.) who has spearheaded several patent reform efforts. "This compromise may not be everything that everyone wants, but it makes important reforms to the outdated patent system, and I hope the leaders will soon schedule floor time for this important legislation," he said in a prepared statement.

"This bill doesn't include all the changes I originally sought, but I believe we must come together to reform our patent system," said Orrin Hatch (R., Utah). The compromise also has backing from Senators Jeff Sessions (R-Ala.), Chuck Schumer (D-N.Y.), Jon Kyl (R-Ariz.), and Ted Kaufman (D-Del.).