Tuesday, April 24, 2007

patent reform enters congress

It looks like patent reform has a good chance of getting through Congress this year, with a reform bill introduced in both houses. According to Public Knowledge, the bill would replace the first-to-invent system with first-to-file, allow for review of patent grants after the grant has been made, provide for third parties to file patent-defeating documents and promulgate new rules on where suits can be instituted.

The Patent Reform Bill of 2007 would change the way damages due to a patent owner are calculated and require that they bear some relation to the value of the patent infringed. Under current law courts do not distinguish between the value of the patented technology and the larger goods containing it.

Case in point here is the $1.52 billion verdict against Microsoft for infringing on Alcatel-Lucent patents on parts of MP3 technology. The damages were calculated on sales of Windows, although the infringing patents represented a very small part of the Windows distribution.

The bill also changes the burden of proof. Currently the accused infringer has to show that his infringement was not "willful" in order to avoid being hit with punitive damages. Under the bills, the burden would shift to the suing party to prove that infringement was willful.

Other provisions of the bill create new procedures designed to reduce litigation. Parties affected by issued patents would be allowed to file a post grant “cancellation petition," within 12 months of the issue explaining why the patent or claims in the patent should not have been granted. If they succeed, the patent office would cancel the whole patent or the challenged claims.