Senate Judiciary Approves Patent Bill 15-4, Losing Hatch Support

Chairman Patrick Leahy, D-Vt., criticized absent lawmakers as the committee prepared to vote. “I hope other senators might drop by,” he said with a raised voice, prompting Ranking Member Arlen Specter, R-Pa., to “compliment you on your forceful statement.”

Committee leaders have received “uniformly positive” responses to their manager’s amendment, offered late Wednesday (WID April 2 p1), from industry groups at odds till now, Specter said. Among them are the Coalition for Patent Fairness, which includes Google and Symantec, and the Coalition for 21st Century Patent Reform, composed of pharmaceutical companies. The amendment incorporates “gatekeeper” language by Sen. Dianne Feinstein, D-Calif., that would have judges allow only “those methodologies and factors as to which there is a legally sufficient evidentiary basis” in jury determinations of damages.

The amendment would block a determination of “objective recklessness” in infringing a patent, if there’s “sufficient evidence” that an infringer had an “informed good faith belief” that the patent was invalid or unenforceable. Courts would be required to transfer cases to another jurisdiction if the “transferee venue is clearly more convenient” for parties and witnesses, codifying a December decision in the U.S. Court of Appeals for the Federal Circuit. The amendment would remove the requirement that patents be “in public use or on sale” in the U.S. to allow for inter partes reexamination by the PTO. It would have judges certify that specific standards have been met to allow for interlocutory appeals. A patent owner’s failure to show the “best mode” for a patent’s use wouldn’t be grounds for invalidation. The amendment also sets up a pilot program for training judges in patent law in at least six district courts from at least three judicial circuits.

Amendment sponsors have reached a “delicate compromise” to satisfy industry groups and it shouldn’t be weighed down with more amendments, Leahy said. “If you break it apart, the whole thing falls apart” until lawmakers come back after the spring recess. Leahy said his staff would meet with PTO officials over recess in response to Kyl’s concern, reiterated Thursday, that the bill’s lowered standard for post-grant review would overwhelm that office with patent challenges (WID April 1 p5).

Hatch said he couldn’t support the manager’s amendment because it could undermine the “stimulatory effects” of the patent system, a point he said was reinforced in meetings with business leaders Wednesday. The amendment has been “watered down” to exclude any reform of the inequitable conduct standard, which lets “non-innovators … walk away as infringers” by letting them correct infringing behavior before trial starts. “To me that’s unconscionable.” Hatch said the goal of the bill to help high-tech companies, which historically enjoy short patent terms, had been hurt by the rejection of his proposed “bifurcated approach” that would leave alone the patent system for the life-sciences industry. Leahy promised Hatch to work on inequitable conduct once the bill goes to the Senate floor. Feinstein said she was open to “tweaks” on inequitable conduct, but “we've got what we need to move this bill now.”

Kyl complained that House-approved language last Congress on post-grant review had been deemed “sacrosanct” in the Senate bill, but would only flood the PTO with patent challenges under the “interesting question” standard. His failed amendment would create a standard of “prima facie invalidity,” requiring a request for post-grant review to show that a patent claim was “unpatentable.” Kyl’s proposal would make it much harder to challenge a patent, Feinstein said. There’s been little use of the inter partes reexamination process since it was enacted -- 53 challenges in the past five years -- so Kyl’s fear of an overwhelmed PTO is unfounded, she said.

Kyl also said he heard from experts that the gatekeeper language would needlessly prolong infringement trials. He objected to the “recklessness” standard in the amendment, which he said goes beyond the Supreme Court Seagate decision that it’s supposed to codify. “Informed good faith” is a subjective standard, countering the objective standard the amendment purports to define, he said. By giving a pass to infringers who rely on “advice of counsel,” the amendment aids the “cottage industry” of lawyers who write “opinion letters” to justify their clients’ infringement, Kyl said.

Coburn’s amendment to put a “lockbox” on fees collected by the PTO was tabled. Leahy said he supported the prevention of fee diversion, so the PTO would have adequate resources, but added that keeping all user fees wouldn’t keep the PTO afloat anyway. Approving Coburn’s proposal could set up jurisdictional conflict with the Appropriations Committee, Leahy said.

Wisconsin Sen. Russ Feingold, the only Democrat to vote against the bill, said in a written statement he couldn’t live with the post-grant review provision. Inventors, startups, small businesses and research universities “don’t have the resources to mount a continual defense of their patents against repeated requests for inter partes reexamination that the bill allows,” he said. “I need to be confident that [the bill] will not stifle innovation or reduce the likelihood of new jobs being created from the creativity of our citizens.”

The Business Software Alliance praised the committee’s passage of the bill. But it was evident the group was less enthused with the gatekeeper provisions, which it said would “make a contribution” to addressing lawsuits by so-called patent trolls. As the bill moves forward, the BSA urged lawmakers to “pay special attention” to treating fairly companies that used technologies before they became patented, leaving in sanctions against patent filers who “mislead” the PTO and compensating patent owners for “the actual harm they sustain” in infringement.