Industry gives mixed reaction to patent reform deal

"While we see certain improvements in the bill, we cannot support it," said Keith Grzelak, chairman of the IEEE-USA's intellectual property committee. "We remain concerned that small businesses have not been heard on this patent legislation and that, if enacted, S. 515 is likely to have a negative impact on our members' employment prospects and U.S. competitiveness," he said.

The bill still "abandons the American First-to-Invent system without receiving any significant concessions from other countries to adopt some of the recognized benefits of our traditional US patent system," Grzelak said. In addition, the "bill does not end [permanently] the diversion of patent user fees," he added.

In recent years, Congress granted the patent office the ad hoc right on an annual basis to keep all its fees to support efforts to reduce its backlog. IEEE-USA and others want that policy to become permanent.

Historically, the IEEE-USA did not take a position on patent reform because its membership includes a diverse range of engineers with conflicting views. More recently, the group has decided to take a stand representing the interests of members from relatively small companies and individual inventors.

Even in its amended form the bill "will be devastating to startups, individual inventors and universities," said Steve Perlman a serial entrepreneur vocal on patent reform. "The First-Inventor-to-File measure [in the draft bill] turns the U.S. system into a race to the patent office that heavily advantages companies with unlimited resources," he said.

"Recent studies have shown that, beyond the harm caused by such a change, it actually further distances us from international harmonization," which is the goal of the measure, said Perlman.

The first-to-file provision "will further clog the patent office with more soft patent applications that are not completely thought through, and consequently the average processing time which has doubled over the past 20 years to 35 months will become even longer " said Pat Choate, a former vice presidential candidate and a spokesman for some electronics companies.

In addition, the amendment does not address a so-called ex partes review process that is subject to abuses, said Pat Choate, a former vice presidential candidate and a spokesman for some electronics companies.

Ex partes exams now take an average of 4.8 years to complete, constitute 60 percent of all patent office exams, and is "the principal source of [so-called] patent assassination filings," said Choate.

"The watered-down post-grant review compromise they came to hugely benefits large companies," added Perlman. "A company with extensive resources can just wipe out small entities by burying them in legal fees," he said.

IBM and at least two industry alliances organized to lobby on patent issues gave the amendment their support.

"I think this compromise moves the bill in the right direction and goes much further on protecting the rights of patent holders," said Taraneh Maghame, a private practice attorney who testified before the Senate on patent reform last year. "We now need to see when the bill will go to the Senate floor and what the House does with this language," she said.

"This is not the bill we would have written, but everyone should understand that is the nature of compromise," said Brian Pomper, executive director of the Innovation Alliance in a prepared statement. "In its current form, we will not oppose its passage this Congress," he said, warning the group could withdrawl its support if the bill is changed again.

Gary Griswold, chairman of the Coalition for 21st Century Patent Reform, a broad ad hoc alliance of companies, praised the compromise. "The fair and balanced amendments to S. 515 outlined by Senator Leahy will improve the patent system for all inventors and help strengthen our economy and create jobs," he said.

IBM said it endorsed the compromise and urged legislators to pass it into law. The new amendment strikes "a careful balance among various users of the U.S. patent system, while updating a system that has not kept pace with the dramatic changes in technology and innovation," said a press statement from IBM which has been the largest recipient of U.S. patents for each of the past 17 years.

Some sources said they felt excluded from the process of hammering out the latest compromise.

"We only recently through a third party got the language of the compromise--we knew something was coming down the pike," said Grzelak of the IEEE-USA.

The group issued a position statement on patent reform in January in an attempt to influence the Senate discussions. "We are not in the process per se so the best thing we can do sometimes is follow rumors and try to respond, but it doesn't mean everything we hear is right," said Grzelak.

"This has been a secretive process," said Choate. "Bit by bit, companies that had really strong opinions were excluded," he said.

For example, the American Association of Universities was a party to the talks but "that's a very high level group" and does not necessarily represent the views of the core universities involved in research and patent work, he said.