Reformer. Representative Lamar Smith (R-TX) introduced a patent reform bill that would make sweeping changes in the way U.S. patents are applied for, granted, and litigated.

Overhaul of U.S. Patent System Proposed

Sweeping changes in the way U.S. patents are applied for, granted, and litigated are in the wind. A reform bill introduced today by Representative Lamar Smith (R-TX) would create a new system of challenging patents that would reduce the adverse impact on companies of such infringement claims. The bill would also change the standard for awarding a patent from first-to-invent to the near universal first-to-file.

Calling it "the most comprehensive change to U.S. patent law since Congress passed the 1952 Patent Act," Smith says that his Patent Reform Act of 2005, if passed, would "enhance the quality of patents and increase public confidence in their legal integrity." Two years in the making, the 63-page bill reflects the work of a number of expert panels, including a study by the National Academies, that have pointed to such problems as low-quality patents, long waits in obtaining patents, and the rising cost of litigation. In the meantime, the bill defines the ground rules for a high-stakes battle between the information technology and the biopharma sectors over what should happen commercially pending the resolution of a patent lawsuit.

Under the current system, the holder of a valid patent that has allegedly been infringed can generally convince a judge to issue an injunction to stop a firm from selling the product that incorporates the process or technology covered by the patent. While the pharmaceutical and biotechnology industries generally welcome the exercise of such powers, large computer and software companies have seen entire product lines jeopardized after another company lays claim to one piece. The larger company often agrees to a significant payment to avoid facing a suit that could trigger an injunction.

An earlier draft of Smith's bill would have prohibited judges from granting such injunctions unless the patent holder showed such action would mean irreparable harm for their business–-a very high bar that biotech attorneys feared would mean their patents would be unenforceable. But that's been changed to language that simply urges judges to consider the "relevant interests of the parties." Testifying this morning before a patent subcommittee that Smith chairs, the American Intellectual Property Law Association complained that the new language "would devalue the property right of patentees." Carl Gulbrandsen, executive director of the Wisconsin Alumni Research, urged the committee "to keep the present law" or risk interfering with the growing number of spinoff companies spawned by faculty inventions. Other aspects of the bill are much less controversial, however, including language that clarifies damages for patent infringement or removes ambiguities that have extended patent disputes. Experts in a variety of fields also support the move to a first-to-file system, which would bring the U.S. in line with the majority of overseas systems. Smith called his bill "a good-faith first cut" and promised to work with all sides to iron out the kinks.

Related site
Smith's home page