C.A.G. Insights

Ding-Dong! The Witch of Patent Reform is Dead…Or is She?

Many in the patent community are singing the joyous news that the Patent Reform Act of 2007 is dead.

Recent events in Congress lead to this conclusion. The departure on May 1, 2008 of the former Solicitor of the U.S. Patent and Trademark Office, John Whealan, from his temporary position with Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) is a strong indicator that patent reform legislation will not pass in 2008.

Whealan’s departure was not the only sign that the bill is finished. On April 10, 2008, Senator Arlin Specter (R-Pa.), ranking minority member of the Senate Judiciary Committee, commented on the floor of the Senate that the Republican caucus may refuse to act on pending patent reform legislation “as a matter of leverage to get fair and equitable treatment” in regard to the confirmation of federal judges. On the same day, Senate Majority Leader Harry Reid (D-Nev.) stated that he was “disappointed we are not going to be able to move to the patent bill . . . we are not going to do a patent bill now.”

The two most controversial portions of the bill are the apportionment of damages and the Applicant Quality Submissions (AQS) provisions.  The current damages apportionment provision in the bill provides for a reasonable royalty to be calculated based on the economic value attributable to an invention’s specific contribution over the prior art. This provision is opposed by the Bush Administration, the Court of Appeals for the Federal Circuit, and the PTO.

The AQS provision of the bill would burden patent applicants with a duty to search and describe the prior art in connection with filing an application. The patent bar vehemently opposes the AQS provision, while the Bush Administration and the PTO are strongly in favor of AQS.

Hal Wegner, a prolific commentator and former director of the intellectual property law program atGeorge Washington University Law School, suggests that the AQS provision “is a major reason why many in the patent community have moved away from Senator Leahy’s bill.”  He also opines, “Indeed, it is hard to understand responsible members of the patent community supporting this provision.”  A system similar to that of AQS has already been tested in the PTO’s accelerated examination program initiated in August 2006.  According to PTO statistics, 85% of all petitions for accelerated examination during the first eight months of the program were dismissed or denied.  This was for applicants who voluntarily elected to apply for accelerated examination.  Although a portion of the failure rate may be attributable to the learning curve associated with a new program, the statistics do not bode well for the success of an involuntary AQS program.

Almost a year ago, the PTO attempted to implement rules designed to limit the number of claims in a patent application to five independent claims and twenty-five total claims. The rules also limited the number of continuation applications that could be filed absent a showing of good cause. Although these rules were blocked by a permanent injunction on April 1, 2008 in the Tafas v. Dudas litigation in the Eastern District of Virginia, the Patent Reform Act provides for a legislative override of the permanent injunction.  The PTO has also appealed the court’s injunction to the Federal Circuit.  The PTO’s attempt to strong arm the patent community into accepting the new rules along with the PTO’s tireless lobbying for AQS has angered many in the patent bar.

Although the supporters of patent reform legislation promised on numerous occasions over the past several months that she would live, the witch is most sincerely dead. The year 2008 will probably pass without patent reform legislation. In any event, it is unlikely that the bill would be signed into law without major revisions.

This is not good news to the groups who lobbied Congress for patent reform. The Coalition for Patent Fairness, a group of technology companies desiring to limit the damage awards and legal costs associated with patent litigation, spent $2.5 million on lobbyists during the past fifteen months according to the New York Times. The group’s antithesis, the Coalition for 21st Century Patent reform, spent $1.8 million. Apparently, the groups were unwilling to compromise on the major portions of the bill as reflected by the inability of the Senators to come to an agreement.

Although the Patent Reform Act of 2007 may be dead, reform of the patent system will be proposed again.  While change may be necessary to keep up with the times, change for the sake of change or to protect the special interests of lobbyists is not the solution.  As noted by Abraham Lincoln: “The patent system . . . added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.”  Before making major changes to our patent system, we should encourage an open and honest debate about the best means for accomplishing a productive change. Otherwise, we could end up harming the very system that has led to unprecedented innovation during the United States’ short history.

Vincent Allen is a shareholder at Carstens, Allen & Gourley, LLP. He focuses on the litigation of intellectual property disputes and the prosecution of patent and trademark applications.

This blog is maintained by Carstens, Allen & Gourley, LLP to inform readers of recent developments in intellectual property. Solely informational in nature, this blog is not intended to create an attorney-client relationship or to be used as a substitute for legal advice or opinions.