Tech vendors disagree on patent reform
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(InfoWorld) - Legislation that would overhaul the U.S. patent system would hurt innovation and decrease the value of patents, representatives of two tech companies said Wednesday. Though the legislation is supported by many large IT vendors, two bills now being considered by the U.S. Congress, both called the Patent Reform Act, go too far in watering down the patent system, said representatives of Texas Instruments (TI) and AmberWave Systems, a New Hampshire semiconductor manufacturer. While both companies support large chunks of the bills, one in the House of Representatives and one in the Senate, provisions that would change the way courts apportion damages in patent lawsuits and allow new ways to challenge existing patents would hurt their businesses, said Christopher Gallagher, a lawyer representing AmberWave. "For more than 200 years, the [U.S. patent] system has worked well," Gallagher said during a debate sponsored by the Congressional Internet Caucus. The patent reform debate is often portrayed as high-tech vs. large pharmaceutical companies, but TI and AmberWave are among the tech companies asking Congress to scale back its efforts to change the patent system. Representatives of CiscoÂ and the Business Software Alliance (BSA), a trade group representing Microsoft, Dell, and IBM, called for Congress to pass the patent reform bills. Cisco spends $45 million a year defending itself against patent lawsuits, said Matt Tanielian, director of government relations for the company. The company currently is defending against a dozen patent lawsuits, "most of them by companies that have never built or sold anything," he said. Patent reform is the company's top priority in Congress this year, Tanielian said. "There's a lot of bad patents out there," he said. "When you get sued, you ought to get a fair shake." Among the most controversial issues: The bills would change the way courts apportion damages when a company is found to infringe a patent. Currently, courts generally consider the value of the entire product when a small piece of the product infringes a patent, but Cisco and other supporters of the bills want Congress to base damages only on the value of the infringing piece. The current system encourages lawsuits by patent holders hoping to win a legal "lottery," said Emery Simon, a lawyer for the BSA. The awards are unfair because the small piece patent holders often add to a larger product "is less than what they're trying to claim," he said. But Amy Burke, TI's director of government relations, said the apportionment changes would take away from the value of patents. "This language would trivialize damages and actually encourage infringement," she said. Another major issue in the bills is a new way of challenging patents after they're issued, called post-grant review. The bills would allow companies sued for patent infringement to file challenges with the U.S. Patent and Trademark Office (USPTO) The post-grant review would create a continuing question about whether a patent was valid, making it difficult for small companies like AmberWave to get funding, Gallagher said. "If we can't get venture capital, we can't function," he said. Instead of a new way to challenge patents after they're granted, Congress should focus on giving the USPTO more money, he said. "The way to ensure patent quality is to get it right the first time," he said. BSA's Simon said worries about a new post-grant review watering down the value of patents are overblown, because there are several ways to challenge patents now. But the USPTO's current patent-challenging mechanisms don't work well, and the most common way of challenging a patent, in a lawsuit, can cost millions of dollars, he said. "We think administrative challenges are good things," he said. "It saves time, it saves money."
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Biotech and high technology, two key Massachusetts industries, are often seen as allies -- innovation-driven businesses that depend on a highly educated workforce. But this week they're on opposite sides of a fight playing out in Washington: How to overhaul the nation's patent system.
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Lawmakers returning from their summer break are expected to consider patent law changes that have pitted two of America's most invention-dependent industries against each other.
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WASHINGTON - Technology and financial services firms won a key patent reform victory yesterday when the House approved legislation, 220 to 175, that the industries have pushed for years.
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Blog: The companies are about to face off in a federal appeals court over their ongoing patent dispute.
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Maintaining that patent lawsuits can stifle innovation, the Linux software vendor warns that it could wield its own patent portfolio as a defense.
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The Software Freedom Law Center says the "junk patent" threatens open-source projects. The holder says it's willing to deal--but the group asks too much.
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As a standards-setting body readies a protocol for radio frequency identification, known as RFID, a bid for royalties from a holder of critical patents has threatened to disrupt the smooth rollout of a technology that could spawn one of the decade's biggest industries.
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(InfoWorld) - Five consumer groups have given their support to legislation that would overhaul the U.S. patent system, saying the bill would create fairer penalties for infringement. The Patent Reform Act of 2007 could come before the U.S. House of Representatives for a vote as soon as this week despiteÂ objections from some labor unions, small inventors, and some small tech vendors. The bill, backed by several large tech vendors, also found support from Consumer Federation of America, Electronic Frontier Foundation, Knowledge Ecology International, Public Knowledge, and U.S. Public Interest Research Group. "Numerous flaws have emerged within the current patent system that can foster poor quality patents and invite uncertainty that inflates the risk and cost of litigation, especially in the areas of software and online services," the consumer advocacy groups said in a Friday letter to congressional leaders. The groups support two controversial sections of the bill that allow for a new way to challenge patents after they've been granted and change the way patent awards are calculated based on apportionment of damages. Currently, courts generally consider the value of the entire product when a small piece of the product infringes a patent, but supporters of the bills want Congress to base damages only on the value of the infringing piece. The apportionment provision would "encourage courts to limit damages for infringement so that they bear some relationship to the actual value of the damage to the patent owner," the groups said. The bill's post-grant review process would allow challenges within a year of a patent being granted by the U.S. Patent and Trademark Office. "This provision would provide a comparatively inexpensive and quick means to ensure the validity of issues patents before litigation becomes necessary," the groups said. Tech vendors, including Microsoft, IBM, and Cisco, have argued that the USPTO often approves questionable patents and that it's too easy for patent holders to sue, collect huge damages, and shut down product lines that have a small infringing piece. But since late July, three labor unions, including the giant AFL-CIO, have written letters to congressional leaders raising objections to the patent-reform legislation. The United Steelworkers letter said nearly 70 percent of patents filed in the U.S. come from manufacturing firms. "These bills would allow an endless loop of legal challenges after patents are awarded that will make it more difficult for U.S. patent holders to prevail against frivolous challenges," the letter said. The Coalition for 21st Century Patent Reform, whose members include Motorola, SanDisk, and Texas Instruments, has also opposed the legislation. "We believe a number of senators and members of Congress ... have expressed concerns with the bill and a desire to further work on the bill," coalition spokesman Bill Mashek, said earlier this month. The Senate Judiciary Committee has approved its own version of the Patent Reform Act, and that bill is awaiting action in the full Senate.
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Experts tell lawmakers the broken patent system chills innovation and feeds lawyers and trolls. Will something finally be done? Luke O'Brien reports from Washington.
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Industry organizations see opposition to patent reform legislation and step up the debate.
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It's not business as usual: the two partners could be headed to court over alleged patent infringements and, depending on the outcome of their dispute, may choose to go their separate ways.
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(InfoWorld) - Technology industry executives are pushing the U.S. Congress to reform the way patents are issued in order to process them more quickly while also making sure they are legitimate. Patent reform was one of the major issues discussed at the Tech Policy Summit Monday in San Jose, California. Patent reform legislation considered, but not passed, in Congress last year is expected to be reintroduced. Among the key provisions sought is the hiring of more patent review specialists by the U.S. Patent and Trademark Office, which one critic at the conference said has a backlog of as many as 1 million applications. Another provision would make it more difficult for so-called patent "trolls" to acquire a patent, claim another company infringed on it and then force the company to pay a settlement in order to keep its business going. Lastly, reform advocates seek an improvement in the quality of patents, pointing to cases where patents are issued for innovations that are not unique. They also propose a post-patent review process. In a speech Monday night at the summit, Deborah Platt Majoras, chairman of the U.S. Federal Trade Commission, endorsed the idea of post-patent review. "Patents are not a driver of innovation, they are an impediment to innovation," said Mark Lemley, a professor of law at Stanford University Law School, speaking at the summit. "Everyone has an example of silly patents, such as the cat exerciser laser pen," Lemley said, but the problems with the patent law are more serious than that. Often, one company asserts a patent right against another company and forces that company to stop production until the patent issue is resolved. "The patent holdup forces the company to settle for more money than the patent is worth," Lemley said. There are also delays in the process of approving patents. SAP AG, the enterprise software maker, once had to wait 44 months until a patent application was approved, said Tim Crean, chief intellectual property officer and a member of the Coalition for Patent Fairness, an industry group advocating reform. An official of the U.S. Patent and Trademark Office said the agency is planning to hire 1,200 patent specialists in fiscal year 2008. The patent office receives half of its patent applications electronically and wants to increase that number. Last year it approved 350,000 patents. But some at the summit want Congress toÂ move cautiously on patent reform. A group called the Innovation Alliance was recently formed to protect companies that patent technology but don't manufacture it. Taraneh Maghame, vice president and emerging technologies counsel for Tessera Technologies, said attempts to limit the rights of companies to defend patent rights could harm legitimate patent protection efforts of some companies. Tessera develops chip packaging technology and licenses it to chip manufacturers, such as Intel. "Not all of the tech industry is behind patent reform," Maghame said. Close to 300 people, including tech executives, advocacy groups and government officials, were expected to attend the Tech Policy Summit, which continues Tuesday.
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(InfoWorld) - The House Committee on the Judiciary approved far-reaching legislation to reform the nation's patent system Wednesday. The Patent Reform Act of 2007 largely reflects the IT sector's lobbying effort to curtail lengthy, expensive patent infringement lawsuits, but Wednesday's committee deliberations centered on finding compromises acceptable to opponents â namely the pharmaceutical and biotechnology industries, manufacturers, and large research universities â so that the bill could win approval. Committee Chairman John Conyers, D-Mich., described the current patent system as inefficient, bogged down by inappropriate litigation rules, unreliably funded, and resulting in patents of "questionable quality."Â  The bill would make it harder to secure a patent and easier for rivals to challenge one, and it would change how courts determine an infringed patent's value.Â  However, the version approved by the committee does not go as far on any of those fronts as the IT industry would have liked, and continued negotiations are underway. "Needless to say, our journey has been rugged," Conyers said, urging members to pass the bill out of committee. "We meet here today with the realization that we haven't finished the discussions. The meetings have gone on almost endlessly in some people's minds because compromises are necessary." The proposal Conyers brought forward addresses two of the most controversial provisions under discussion:Â  How courts determine the damages paid to patent holders by infringers and whether challengers are allowed to review patents after they've been granted. Assessing damages Calling the damages provision the most complex issue, the bill's original sponsor, Rep. Howard Berman, D-Calif., said that allowing judges to determine damages by assessing the value of a component within an invention that was infringed â rather than the value of the entire product â would correct "bizarre and wrong-headed trends" in patent litigation.Â  Originally, the bill mandated that courts calculate damages by such an "apportionment" formula, which the IT industry largely supported.Â  However, the committee agreed to give judges the discretion to decide whether damages should be determined by apportionment, by the market value of the entire invention, or by other means.Â  Several committee members, including Rep. Tom Feeney, R-Fla., said they would like to see further refinement of the provision because Congress canât predict the consequences of the apportionment analysis. "It would be important to give the court flexibility," Feeney said, adding that the bill could unduly diminish the value of some patents.Â  "We are in a whole new world of uncertainty." Promoting higher quality patents In a move that would make it easier to challenge a patent without going through costly litigation â and simultaneously make it harder for inventors to secure patents â the bill allows the Patent and Trademark Office (PTO) to review patents after they've been granted. In response to concerns raised by research universities and others, however, it limits the timeframe for such review. The legislation also makes it harder to secure a patent by giving third parties more opportunity to submit information to the PTO during the application process to ensure that only innovative inventions are patented.Â  The bill moves the patent system from a "first-to-invent" to a "first-to-file" system, but in another nod to large universities, the committee clarified a grace period on filing patent applications for inventors who disclose or publish inventions in advance of seeking a patent. Discouraging excessive litigation In an attempt to reduce abuses in patent litigation and discourage frivolous cases from being filed and non-frivolous cases from being unnecessarily drawn out, two other provisions were heavily debated and amended before the bill was approved: The ability of alleged infringers to charge patent holders with "inequitable conduct," and the patent holder's flexibility in selecting a venue for a case. Currently, alleged infringers can argue that a patent is invalid on the grounds that the holder did not sufficiently disclose information about an invention and thereby engaged in inequitable conduct. The often-used tactic is widely seen as a way to divert attention from the merits of the patent itself.Â  The bill narrows the circumstances under which this defense could be used and gives courts a range of options to remedy such conduct when it is found.Â  In an effort to curb forum shopping, the bill restricts patent holders to four options when choosing a venue to file a suit in.Â  However, the bill provides leeway for individual inventors, universities, and "micro entities" to bring patent cases where they reside. Noting that members of Congress cannot predict the consequences of the sweeping reform legislation, Rep. Sheila Jackson Lee, D-Texas, proposed requiring the PTO to conduct periodic studies of the impact of the most controversial provisions.Â  The proposal was enthusiastically approved. The Senate Judiciary Committee is scheduled to continue deliberating its version of the patent reform legislation Thursday.
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(InfoWorld) - A group of five Republican senators is seeking a delay in legislation, supported by several large tech vendors, that would overhaul the U.S. patent system. The five, including Senators Chuck Grassley of Iowa and Sam Brownback of Kansas, have asked for more hearings before the Senate Judiciary Committee moves ahead with the Patent Reform Act, which is scheduled to be amended and approved in a Thursday hearing. The five sent a letter Monday to the Judiciary Committee asking for more hearings. "Many prominent American businesses on the cutting edge of innovation are expressing concerns about the impact of sweeping patent reform," said the letter, also signed by Senators Tom Coburn of Oklahoma, Jon Kyl of Arizona and Jeff Sessions of Alabama. "These concerns merit thoughtful deliberation." Many observers have called the Patent Reform Act the most sweeping reform of U.S. patent laws in decades. The bill would make it tougher for inventors to obtain new patents, make it easier to challenge patents, and reduce the legal penalties for patent violations. Microsoft Corp., Cisco Systems Inc. and IBM Corp. have praised the bill, saying it's too easy for the owners of questionable patents to sue tech companies and collect large damages or shut down entire product lines with court injunctions when one small piece of a product allegedly infringes a patent. "This important measure ensures that our patent system continues to foster innovation and economic growth by promoting improvements in patent quality [and] discouraging litigation abuse," Microsoft said in a statement when the bill was introduced. But five Republican senators raised concerns about the bill, echoed by some small tech companies and other members of the Coalition for 21st Century Patent Reform, a group calling for less sweeping changes to the U.S. patent system. The senators questioned the bill's attempt to apportion patent award damages. The bill would limit the damages a patent holder can collect when an infringing technology is part of a larger product, based on the value of the patented technology itself, instead of the value of the larger product. Courts now generally consider the value of the larger product when assessing damages. The senators also questioned the bill's provisions to allow new ways to challenge patents after the U.S. Patent and Trademark Office has granted them. These changes "need to be more carefully examined to ensure that they do not undermine innovation, increase frivolous litigation, or undermine property rights," the letter said. The letter also calls on the committee to look harder at ways to improve patent quality.
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IP lawyers find support for IP laws Businesses and academics would oppose any watering down of the patent examination process, a new report has found.â¦
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LAS VEGAS - For the digital lifestyle to become a reality, consumer electronics makers need to overcome one major consumer frustration: incompatible technologies, a panel of experts agreed Friday.