Patent Reform Act of 2007

On April 18, 2007, bipartisan legislators in both the Senate and House of Representatives introduced sweeping patent reform measures in legislation termed the Patent Reform Act of 2007. The reform measures include the following provisions: 

  • First-to-file rights and elimination of interference proceedings;
  • Reform to make it easier to file a patent application without the inventor’s cooperation;
  • Limitation of damages to only the economic value of the improvement as compared to the prior-art;
  • Specific limitations on when damages may be trebled for willfulness;
  • Post-grant opposition proceedings and a reduction in the litigation estoppel effect of reexaminations;
  • Limitations on patent venue;
  • Authority to the PTO director to create further regulations.

Although couched in terms of the importance of patents and patent quality. The thrust of many of the measures are clearly directed at “limiting litigation abuses.”  The two versions (Senate and House) are appear virtually identical in substance.

Analysis:

  • Inter Partes Reexamination: Many patent litigators have warned clients against filing inter partes reexamination requests because of the litigation estoppel created by by 35 USC 315(c). That provision estopps later validity challenges on grounds that a third party “raised or could have raised” during the reexamination.  The Patent Reform Act would limit the estoppel to only issues actually raised — striking the “could have raised” language.

Legislative Documents:

Congressional Players:

  • The Senate version was introduced by Senators Leahy, Hatch, Schumar, and Cornyn
  • The House version was introduced by Representatives Berman, Smith, Conyers, Coble, Boucher, Godlatte, Zoe Lofgren, Issa, Schiff, Cannon, and Jackson-Lee

Lobbying Players:

  • www.innovationalliance.net (Tech Companies who want strong patents)
  • www.ipo.org (Industry group — Formerly supported strong IP rights — now a consensus builder — noting that “the battle-of-the-industries description of patent reform is simplistic and sensationalist.”)
  • www.phrma.org (Big Pharma: Strong patent rights)
  • www.patentsmatter.com
  • www.patentfairness.org (“Over-broad patent grants stifle future innovators, while unjustified lawsuits that aim to extort settlements”)
  • www.aipla.org (Group of lawyers who are, for the most part, unwilling to take a stand)
  • www.bsa.org (Microsoft, Apple, HP — all supporting dramatic patent reform that curbs litigation in favor of the more genteel cross-licensing).

Who is writing about patent reform:

News & PR:

Call for Papers:

  • I would like to publish a couple of well written editorials on patent reform within the next two weeks. Feel free to submit yours to dcrouch@gmail.com.

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

16 thoughts on “Patent Reform Act of 2007

  1. David French writes:

    In answer to mrbellie’s Section 102(a)(1)(b) question, the pending bills still require that the applicant be either the inventor or have derived their rights from a true inventor. Thus a chain of title requirement will still exist rooting the patent in a true inventor.

    The intention is to parallel the Canadian provisions whereby a self-originating public disclosure occurring less than a year before the actual US filing date, or possibly eventually the priority date, will not be counted against a US application. I have some interesting situations in Canada that relate to the meaning of a “self-originating public disclosure”. The jurisprudence in Canada is not yet fully developed.

  2. Taking Mark Lemley’s statement that “most cases settle” after Markman, and applying common sense that, indeed, most cases ought to settle when the parties have a definitive pronouncement as to the meaning of the claim, isn’t it a GOOD thing to have recourse to the CAFC on the Markman point alone? Will it not lead to early settlement of most of the residue of cases that, today, fail to settle after the Markman hearing?

  3. I’m with Richard Cauley on the interlocutory appeals issue. Most cases settle after Markman. If we have interlocutory appeals as a matter of right, not only will the Fed Cir patent caseload triple, but settlements will be delayed 18 months in many cases, and in those cases that weren’t going to settle trial (and therefore any hope of patentee remuneration) will be similarly delayed.

  4. I always thought that the concept of maintenance fee payments is like paying dues to the mob. Pushing forward the first payment would be the least they could do to improve their image.

  5. While we’re playing with 35 U.S.C., I propose we amend Section 41(b) such that maintenance fees are due based on the time of grant plus the term extension, effectively moving the term extension to the begining of the patent life instead of the end. This way patents that are most valuable at the begining of their lives also reap the benefits of term extensions.

  6. Chris, the bills were merely introduced in Congress yesterday. The versions that you see on this site are drafts, which haven’t even been through committee yet. There are typos and some technical inconsistencies throughout, which surely will be ironed out later on.

  7. This may be a small semantic issue, but it is interesting that the amendments to section 112 mention “joint inventor” only in the singular. Could it be argued that for a joint invention the bill requires disclosure of the best mode as contemplated by only one of the joint inventors? I’m sure this is not what is intended, but it shouldn’t even be arguable.

  8. I hadn’t noticed this until I just looked through the bill again — the bill would give the Federal Circuit jurisdiction to hear interlocutory appeals to Markman orders and would stay the district court action during the pendecy of the appeal. I think this would be massively disruptive to the litigation process and would introduce gamesplaying on a unbelievable scale in addition to probably tripling the workload on the Federal Circuit, since everyone who lost a Markman would appeal [whereas now you at least have to wait until you lose at summary judgment or at trial, by which time many or most cases have settled].

    Thoughts?

  9. Anon – the problem, however, is that it allows someone to attack a patent piecemeal and drag the patent owner through the muck, repeatedly. File an inter partes reexamination on just one issue – probably not your best one – and see what happens. Meanwhile, the patent is held up at the PTO for who knows how long, and any enforcement attempt by the patent owner may likely be stayed. Also, the patent owner is forced to spend quite a bit of money on the reexam. Then, even if the challenge fails, the challenger/infringer can still claim invalidity in court on some issue not raised in the reexam. This sort of piecemeal attack on a patent should NOT be permitted.

  10. There’s a few good things here, a few bad. But the one I like the most is:

    Inter Partes Reexamination: “The Patent Reform Act would limit the estoppel to only issues actually raised — striking the “could have raised” language.”

    If you have a good case, the patent office is a much more logical place to challenge a complex patent compared to a jury of laymen. A lot of clients seem to have an aversion to the re-exam process. Perhaps this will ease their fears a bit…

    -D

  11. In answer to “Inventor’s” question — I think the additional data we would need is what is the increased profit CarMaker made on the “new” models vs the old ones. This, presumably, would give the value of the invention [at least the value to CarMaker] over the prior art — the additional amount he could charge for it. Thus, in the hypothetical negotiation, this would be the upper limit of what CarMaker would be willing to license the invention for as a “reasonable royalty.”

    Personally, I don’t think the Patent Reform Act’s damages model is substantially different than the way damages are supposed to be computed under the present law — the problem is that most lawyers and judges don’t seem to understand or apply the law properly — Microsoft in the Lucent case as the most recent debacle.

  12. 102. Conditons for Patentability: novelty
    (a) NOVELTY: Prior Art – a patent for a claimed invention may not be obtained if –
    (1) the claimed invention was patented, described in a printed publication, or in public us or on sale –
    (B)one year or less before the effective filing date of the claimed invention, other than through
    disclosures made by the inventor or a joint inventor or by others who obtained the subject
    matter disclosed directly or indirectly from the inventor or a joint inventor

    I understand this to mean:
    – you or others can publish information *about your own work* during the grace period, and those publications will not preclude your patent
    However,
    – you cannot swear behind any publications that contain information *about the work of others* that are published during the grace period.

    This provision doesn’t eliminate the requirement that an applicant has to be an inventor. Thus, someone cannot steal your invention and obtain a patent for themselves.

  13. “ Limitation of damages to only the economic value of the improvement as compared to the prior-art”

    Arguendo:

    (A) A lone inventor patented an Improved Collision Avoidance, ICA, system for a car that could be incorporated into a car on a production line for $50.

    (B) Patent Pirate CarMaker Co. ripped off the inventor and incorporated ICA into its new models and did not offer ICA as an add-on for older models.

    (C) Car buyers flock to CarMaker’s showrooms and buy the new models in droves — allegedly because of the new ICA safety feature, but not provable — and the profit per new model to CarMaker is $5000.

    Question:
    If lone inventor sues CarMaker and prevails, what damages would he be entitled to under the Patent Reform Act of 2007?

    Of course, after the eBay debacle, he’s not entitled to an injunction, so he’d be stuck (pun intended) with the limitation imposed under the Patent Reform Act of 2007.

  14. Could someone please interpret the Senate and House versions of 102(a)(1)(B) for me?

    102. Conditons for Patentability: novelty
    (a) NOVELTY: Prior Art – a patent for a claimed invention may not be obtained if –
    (1) the claimed invention was patented, described in a printed publication, or in public us or on sale –
    (B)one year or less before the effective filing date of the claimed invention, other than through
    disclosures made by the inventor or a joint inventor or by others who obtained the subject
    matter disclosed directly or indirectly from the inventor or a joint inventor

    The way I’m interpreting this, a person can not obtain a patent if the invention was described
    in a printed publication that is less than one year old. However, certain exceptions are listed, one
    being, of course, that the invention may be patented through disclosures made by the inventor
    or joint inventor.
    The exception that seems most interesting is “others who obtained the subject matter
    disclosed directly or indirectly from the inventor or a joint inventor.”

    I think the intention here is that employers, who obtain the invention from employees, may
    file for a patent. The way this is worded, it seems to allow someone to “steal” the invention
    (say by reading a printed publication) and still apply for a patent. There no mention of the “others”
    being assignees.

    I’m sure there is wording elsewhere that precludes this scenario. Is it clear what “obtained” means?

  15. To the extent Dennis’s $$$ reference to the IP Law & Business article implied that you needed to pay to get access, I discovered that you can register for free at this site and get access to this article.

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