The Senate has revived interest in the patent reform act with a substitute bill entitled the “Patent Reform Act of 2010.” The new bill is very similar to its predecessor, the Patent Reform Act of 2009.

First-To-File: The proposed reform would largely eliminate US’s unique first-to-invent priority system. The bigger deal is that the proposal would eliminate the one-year grace period unless the inventor was the “first-discloser.” A “derivation” proceeding would replace interferences.

False Marking: The proposed reform would eliminate the right of “any person” to file a false marking claim. Rather, those claims would be limited to individuals who have “suffered a competitive injury.” This change would apply to eliminate standing of already-filed cases.

Damages: The damages revision is no longer as major. Under the proposed revision, a court would be required to “identify the methodologies and factors that are relevant to the determination of damages, and the court or jury, shall consider only those methodologies and factors relevant to making such determination.” The parties would also be required to “state, in writing and with particularity, the methodologies and factors the parties propose for instruction to the jury in determining damages … specifying the relevant underlying legal and factual bases for their assertions.” The provision would also provide a right for summary judgment on damages if one party’s contentions lack evidentiary basis and only the approved-of methodologies would be allowed in court. It is already the law that the jury may only consider relevant information – this approach looks to primarily create a greater likelihood for appeal. The provision generally creates a better situation for accused infringers, but it does not necessarily limit damage awards.

Trial: Right to split trial into segments infringement & validity; damages; willfulness. This approach tends to favor defendants.

Willful Infringement: Spell out that the enhanced damages are for “willful infringement” that is at least objectively reckless by clear and convincing evidence. (current statute reads “the court may increase the damages up to three times the amount found or assessed.”). The statute would make clear that “knowledge alone” is not sufficient for a finding of willful infringement and that any “close case” should be decided against willfulness.

Post-Grant Review: The statute would provide for a whole new system of post-grant reviews that would be handled directly by the patent appeals board. [I will write more on this later]. The proposal also calls for a new “supplemental examination” to ensure that the patentee has fulfilled the duty of disclosure.

Pre-Issuance Submissions of Prior Art by Third Parties: These would be allowed.

Litigation Venue: Cases should be transferred to venues that are “clearly more convenient.”

Fee Setting Authority: The USPTO would be given authority to adjust its fees so long as the fees are “in the aggregate set to recover the estimated cost to the Office for processing, activities, services and materials relating to patents and trademarks, respectively.”

Federal Circuit Judicial Residency: Judges for the Federal Circuit would no longer be required to live in the DC area.

Micro-Entity: A new type of entity defined as a “micro entity” that has fewer than 5 patent applications that would qualify for even further reduced fees.

Best Mode Requirement: The best mode requirement would remain as part of the law. However, failure to fulfill the best mode requirement would no longer be an invalidity defense nor could it serve as a basis for holding a patent unenforceable.