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In April 2007, major patent legislation, the Patent Reform Act of 2007, was introduced to the House and Senate. The modifications to the patent system are the first in more than 50 years. It is widely believed that this legislation will be signed into law this year. The changes will address mounting patent infringement lawsuits, which have increased significantly over the past 10 years. Additionally, it focuses on the difficulty of ensuring accurate decisions by patent examiners. The controversial legislation has many critics and supporters.

Regardless of the view, there are many key factors to recognize and understand. Below is a summary of select portions of the proposed changes.

  • Conversion to First-to-File. Presently, the United States stands alone in granting priority for a patent to the first inventor as opposed to the first person to file a patent application. The Patent Reform Act proposes to convert the United States patent system to a first -to-file system. The proposed system would replace the interference proceedings under current law with derivation proceedings that would be used to resolve disputes when one applicant believes that another applicant derived his or her ideas from the other applicant's work.
  • Changes to Remedies for Infringement and Affirmative Defenses. The Patent Reform Act will affect infringement awards in three significant ways. First, it would require that any damage award reflect the economic value of the specific contribution of the patented invention over the prior art. Consideration of existing license arrangements would be bolstered in a court's determination of a reasonable royalty. Second, the act would minimize the negative incentives to a company for reviewing issued patents. Under the proposed act, willfulness would arise only where the infringer had been placed on specific notice of infringement by the patent owner or the infringer intentionally copied the patented invention with knowledge of the patent, or after having been found to infringe a patent an infringer began to infringe it again. Third, the act would establish a new defense of prior user rights that would be applicable to all patents. This defense would require that the accused infringer had commercially used the patented subject matter prior to the effective filing date of the patent.
  • Institution of a Post-Grant Review Procedure. Under current United States patent law, once a patent issues, the only way a third party can challenge the patent is to institute a reexamination based on publications or become engaged in litigation. The Patent Reform Act would add a new mechanism whereby the general public could challenge the validity of a patent in a first one-year window or anytime during pendency of the patent, if the challenger could establish that the continued existence of the patent would create significant economic harm to the challenger or if the challenger had received notice from the patent owner alleging infringement.
  • Submissions of Prior Art by Third Parties During Prosecution. Current United States law provides that all patent applications are maintained in confidence, however, applications become public 18 months after filing if the applicant is seeking patent protection outside the United States. The new act would make all applications public18 months after the filing date and would provide a mechanism by which the general public can submit prior art to the Patent Office that affects the patentability of the invention under review.
  • Venue and Jurisdiction. In order to minimize the impact of forum shopping, the new act would restrict the venue of patent infringement cases to those jurisdictions in which either party resided (i.e., in its state of incorporation or where it has a principal place of business) or in which an act of infringement had occurred and the accused infringer had a regular place of business. In addition, the new act would permit appellate review of trial court patent claim constructions prior to a trial on the merits on the patent infringement claim in order to ensure that the claim construction used at trial was appropriate.

The provisions of the Patent Reform Act are under legislative review. It is likely that some modifications will be made to some or all of the key provisions set forth above. Buchanan Ingersoll & Rooney will monitor the progress of the legislation and provide updates when appropriate.

Our Intellectual Property and Government Relations attorneys and professionals are actively monitoring and tracking the Patent Reform Act of 2007 and will continue to educate and alert clients when needed.

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