IP UPDATE: Judiciary Committee Leaders Introduce Patent Reform Bills In The House And Senate

    1 March 2009

    On March 3, leaders of the Judiciary Committees in the Senate and House of Representatives introduced S. 515 and H.R. 1260, the Patent Reform Act of 2009. Sponsors include Senators Patrick J. Leahy (D-Vt.) and Orrin G. Hatch (R-Utah), and Reps. Lamar S. Smith (R-Texas), and John Conyers Jr. (D-Mich.). Click here for copies of S. 515 and H.R. 1260.

    The bills are based on legislation that was extensively debated but not passed last session. The 2009 bills, however, removed the requirement that all patent applications be published 18 months after they are filed as well as a provision for “Applicant Quality Submissions” of search data. In addition, neither the House nor Senate bills eliminate the best mode requirement, something that the previous House bill included. The bills also do not include any provisions relating to inequitable conduct. The statements of the Senate and House sponsors, however, indicated that inequitable conduct would be the subject of negotiations.

    The provisions of the legislation include:

    • The U.S. would adopt the first-to-file rule, with patents being granted to applicants who are first to file applications rather than first to invent, as in the current system, subject to a prior user rights defense to earlier inventors. There are differences in the Senate and House bills relating to the timing of a transition to the
    • Interference proceedings would be ended. The legislation would create a “derivation proceeding” in which a later applicant could request that the PTO determine whether the earlier applicant derived the claimed invention from the applicant requesting the proceeding.
    • Third parties would be able to submit to the PTO any patent, published application or other potential relevant publication relevant to examination. A submission would have to be made within six months from the publication of the application.
    • Inter Partes Reexamination proceedings would be modified and heard by an administrative law judge. An oral hearing may be required at the request of any party.
    • A post-grant review process would be added, allowing a petitioner to seek cancellation of any claim of an issued patent as unpatentable. A petition could only be filed within 12 months from issuance or reissuance of the patent or if the patentee consents.
    • The venue provisions for patent infringement cases would be limited and standards for transfer of cases would be codified.
    • District Court Markman rulings would be subject to immediate interlocutory appeals to the Federal Circuit.
    • The legislation sets forth standards for calculating reasonable royalty damages for infringement. The District Court, not the jury, would decide (a) whether damages could be awarded under the “entire market value” rule or (b) whether there was an established royalty based on marketplace licensing. If the Court determined that the showings required under (a) or (b) could not be made, the Court would be required to conduct an analysis to ensure that a reasonable royalty is applied only to the economic value of the invention’s specific contribution over the prior art.
    • To show willful infringement, the bills would require proof by clear and convincing evidence that the alleged infringer acted with “objective recklessness”, essentially codifying the Federal Circuit decision in In re Seagate Technology LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc). Willful infringement may not be pled by the patentee until after the Court determines that the patent-in-suit has been infringed and is not invalid or unenforceable. The Senate bill provides that the willfulness determination will be made by the Court and not a jury; this provision is not included in the House version.

    The Senate Judiciary Committee held the first hearing on the legislation on March 10. 

    For more information, contact Sue Statz.