Patent Reform Debate Begins; Bush Signals Opposition to Key Elements

As debate on patent reform began this morning on the floor of the US House of Representatives, twelve amendments made their way through the Rules Committee, all of which appear to be designed to tweak the bill's language rather than insert any "poison pills" that would ensure its failure. The only significant opposition appears to have come yesterday from President Bush, whose office came out yesterday condemning H.R. 1908's key provision limiting damage awards in infringement suits.

"The Administration continues to oppose H.R. 1908's limits on the discretion of a court in determining damages adequate to compensate for an infringement," reads a statement from Office of Management and Budget issued yesterday (PDF available here from Patently-O). "Making this change to a reasonably well-functioning patent legal system is unwarranted and risks reducing the rewards from innovation - a result that would undercut the other useful reforms in this bill. The Administration therefore opposes H.R. 1908 unless it is appropriately revised to address this concern."

But just one minor amendment relates to the language of the post-patent review process - an indication that although the OMB promised the President wishes to work with Congress to see this and other reforms implemented in patent reform legislation prior to its final passage, the feeling may not be so mutual.

Four of the amendments under debate were offered by one congressman, Rep. Louie Gohmert (R - Texas), who represents the state's 1st congressional district. Collectively, those amendments would loosen restrictions on a plaintiff's rights to file infringement suits in particular jurisdictions, such as the plaintiff's or defendant's own, instead enabling a plaintiff to produce a perfunctory explanation for why he'd want to file suit someplace else.

The 1st district is along the state's northeasternmost border, and includes the town of Marshall - already widely hailed as the nation's leading host for patent infringement lawsuits, by an overwhelmingly lopsided ratio.

Left non-amended, H.R. 1908 would place fairness restrictions on a plaintiff's ability to set the site of a lawsuit, especially for smaller defendants for whom simply the travel costs have historically been enough of an inconvenience to provoke them to settle.

But if that's the major bone of contention, then at least the House version of patent reform may be well on its way to passage. Like any other new bill, the Senate version would need to pass next, then committees would be formed to work out differences in the language. It would be in these committees where the Bush administration would have its greatest opportunity to make a stand, if it has one at all.

"The Administration supports the establishment of a post-grant review procedure to serve as a lower cost alternative to costly litigation as a means of reviewing questions of patent validity," reads yesterday's OMB statement on behalf of the President. However, it then gently added, the President isn't too hot on the idea of something called inter partes re-examination, which it didn't bother defining before simply calling it just a bad idea that it would like to be rid of.

The basic premise is to present a wider opportunity for third parties to issue patent challenges. Conceivably such third parties might be able to spot areas where a would-be patented technology would overlap or conflict with prior art. It isn't quite the same as the "peer-to-patent" concept with which the US Patent and Trademark Office is currently experimenting, the notion there being that an informal body of patent reviewers may be called upon to examine the validity of applications and make challenges where they see fit. An inter partes challenge is a formal court proceeding, though the costs are borne by the inventor or patent holder rather than by the third party or by a government agency.

Parties experienced with this issue will recognize that the Administration is bringing up the issue which killed the last two attempts at patent reform: When should parties' abilities to keep questioning patents' validity be stopped? The new bill's original language would have enabled a kind of "second window" of opportunity for aggrieved parties, which could conceivably go on forever as losers in a dispute could simply keep refilling. Substitute language since then has limited the second window by increasing reliance upon inter partes challenges, which would give a losing complainant a way to bring someone else to the table to make a challenge on its behalf later.

The Bush administration's opposition to this alternative was not explained, though the OMB letter did say it was supportive of some way to limit the second window - whatever that might be. But just the notice of that opposition may have been an attempt to re-inject into the reform debate the bone of contention that killed it in Congress the last two times - once in 2006, and once long before that in 1980.

The way the debate is currently being managed -- at least as of this morning- - that contention may not be a serious issue this time. Instead, one of the more potent amendments being addressed comes from the bill's original co-author himself, Rep. Howard Berman (D - Calif.).

Having apparently learned from the outcome of the 2003 Rambus case -- where victory was overturned after the court learned Rambus misled the patent office about its dealings with a standards body at the time it made its applications -- Rep. Berman suggests new language be inserted enabling the USPTO to declare a patent unenforceable if it's discovered that the holder failed to disclose vital information.