SAN JOSE, Calif. Three U.S. senators struck a compromise deal on patent reform, but whether the rest of Congress—and the industry--will back it remains to be seen. The compromise spans a broad range of issues including how damages are calculated in patent infringement cases, the most controversial part of the current bill in the Senate (S.515).
Senators Patrick Leahy (D.-Vt.), Dianne Feinstein (D-Calif.) and Arlen Specter (R-Pa.) said they have agreed to take out language from the existing bill that called for juries to use apportionment. The approach calculates damages based on the fraction of a product's worth an infringed patent represents.
In its place, they agreed on language that instructs judges to provide juries with guidance on damages awards based on existing case law, often referred to as a gatekeeper function. The senators are expected to release details of their agreement on the Senate Judiciary Committee Web site. They may vote as early as Thursday (April 2) on whether to send the resulting bill to the Senate floor.
The "accommodation puts us on the verge of an agreement, [but] the tentative agreement has to be communicated to all the stakeholders" for review, said Specter.
"Not one of the sides got 100 percent of what they wanted, but we are about 90 percent there, and it's about as good as can be done to reconcile the different business models," said Feinstein. "I believe I have gone as far as I can to resolve these differences," she added.
The change potentially marks a huge blow for large electronics companies including Apple, Cisco and Intel represented by the Coalition on Patent Fairness. The coalition has advocated for apportionment, citing rising numbers of often frivolous infringement cases and damages.
The coalition did not provide any substantive response to the move, waiting until details of the compromise are published.
The Innovation Alliance, a competing group that represents technology licensing companies such as Qualcomm and Tessera, praised the change on damages, but said it has reservations about other proposed changes in the bill. Chief among the group's concerns is an amendment by the three senators to adopt language from a former bill that passed the House of Representatives in 2007 regarding ways to challenge a patent after it is granted, known as post-grant review.
Sen. Jon Kyl (R-Ariz.) said the trios changes on post-grant reviews would "be impossible [for the patent office] to administer" and would amount to "a death sentence for patents" owned by small inventors who lack the resources to defend their work. "It could cause a train wreck at the agency and hurt the patent owners we want to protect," Kyl added.
One district judge expressed guarded optimism about the gatekeeper approach to damages.
"Something that would give more discretion to trial judges would be welcome, we could use it and I think it would benefit the parties," said Federal District Judge Jeremy Fogel of the Northern District Of California (San Jose Division), speaking at the Intellectual Property Symposium (IPS) here.
Fogel said his main concern is whether the proposed law is clear on how a gatekeeper function would work. "You cannot deny people right to a jury trial but [patent damages are] not something juries are very good at analyzing in my experience," he said.
Several executives at the event said the chronically overwhelmed patent office, not the courts, should be the focus of patent reform
The patent office's problems are "long term more important," said Kevin Rivette, an intellectual property specialist who has been chairman of the patent office's advisory panel for the last two years.
"If we don't get [the patent office] right we wind up using a sledgehammer rather than a scalpel" to fix problems downstream in the courts, he said in a keynote address at IPS.