Medical Device Daily Washington Editor

WASHINGTON — With the case of NTP v. Research in Motion as one of the more conspicuous drivers for patent reform — that case threatening the continued operation of the world’s Blackberries — Congress is drafting legislation to address what some say are weaknesses in U.S. patent law.

Both houses of Congress are working on their versions of the Patent Reform Act of 2007, and the Senate Judiciary Committee held a hearing Wednesday to get more input from industry and the U.S. Patent and Trademark Office (PTO).

Sen. Patrick Leahey (D-Vermont), the committee chair, said, “[o]ver the years, our patent laws have served our inventors and our economy well, but they were crafted for a different time, when smokestacks rather than microchips were the emblem of industry.”

He described the previous iteration of this bill, the Patent Reform Act of 2006, sponsored by Sen. Orrin Hatch (R-Utah), as “the first step down a road to real, constructive patent reform,” and that the current version incorporates the suggestions “of all manner of interested parties.”

Sen. Arlen Specter (R-Pennsylvania), ranking minority member, described patent reform “as a matter of vital concern to this country and, really, the world.”

He said that “the productivity and wealth of the United States is attributed in large measure to intellectual property,” and that Congress is aware of “substantial difference of opinion among those who rely on patents” as to the impact of several of the proposed provisions, listing software companies, pharmaceutical firms and universities as those who have provided input.

He described the work in crafting the law as “a lawyer’s paradox,” but said that the issue has “the full attention of this committee.” Specter said he was confident that the Senate will move on a bill this session.

Hatch said, “This is a very important piece of legislation,” but “not everything I’d like to have” in a patent reform bill. “I am hoping between now and mark-up to bring up some of the ideas that should be in this bill,” he said, but not defining those ideas.

Jon Dudas, the director of PTO, the sole member of the first witness panel, said PTO’s accelerated patent exam program has taught applicants that “better written and oral information from applicants improves patent application quality and processing timeliness” but that applicants often hold back on providing data “for fear that it will limit the scope of the patent.”

On the other hand, many applicants bury PTO with data because “the legal doctrines of inequitable conduct and unenforceability may unfairly punish them with draconian penalties for innocently omitting information.” He said that he wanted to be sure that “inadvertent mistakes are not punished.”

Under existing law, any omissions could invalidate the entire patent, even if the filing is otherwise legitimate, and this all-or-nothing environment “has a perverse effect on the actions of applicants and their attorneys,” Dudas said.

The administration’s position is that the bill should be “amended to address the doctrine of inequitable conduct and unenforceability to ensure that applicants are not discouraged” from fully disclosing relevant information.

Dudas also said that the Senate should add a provision for “micro-entities,” which would be defined as those with incomes below a specific threshold and lacking any previous applications or legal counsel. These criteria could be used to reduce fees for “entry-level inventors.” However, he did not offer a threshold for qualification as a micro-entity.

Regarding prior art submissions, Dudas pointed out that under current law, PTO can accept information about potentially competing existing patents, but those filings cannot include “comments or explanations concerning the submitted patents or printed publications.”

PTO can accept prior art submissions from two months after publication of the patent or before the mailing of a notice of allowance, but the Senate bill would expand the window to the earlier of the mailing date of a notice of allowance or, alternately, six months after the pre-grant publication date or the first rejection of any claim, whichever is later.

By some accounts, this constitutes a 12-month window. (PTO issues a notice of allowance if it concludes that the application has sufficient merit to warrant a patent. Upon receipt, the applicant must pay the fee within three months or PTO will deem the application abandoned, which would require the applicant to re-start the entire process.)

However, the Senate bill, which is purported to mirror exactly the language of the House bill, would also allow a challenge to an existing patent at any time if the plaintiff can make a case for significant economic harm or for a claim of infringement.

PTO, Dudas said, has rolled out a pilot program that would subject applications to peer review by current patent holders, lawyers and academicians, perhaps via a web site. “The pilot program will test whether this peer review can effectively identify prior art that might not otherwise be found by our examiners,” he said.

Dudas said that the 1970 case of Georgia Pacific v. United States Plywood might already address the concerns behind the amendment addressing apportionment of damages. The bill would instruct courts to consider whether the violating component of that product is the primary driver of the product’s value on the market. Should a judge conclude this is not the case, any damage awards would be adjusted to account for the portion of the product’s market value that is dependent on the violated patent.

Dudas said that while “concerns have been raised that patent awards based on the entire market value are overly generous,” courts already “consider numerous factors in determining royalty rates.” He also told the panel that PTO could not comment on the provisions for interlocutory appeals because the Department of Justice has several technical questions to examine.

Interlocutory appeals are those that would be filed with a federal appeals court after a pre-trial hearing on claim construction.

The second article, in tomorrow’s issue of MDD, will review industry’s comments on S. 1145.