Legislation would overhaul U.S. patent system

Tech groups cheer re-proposed change to first-to-invent system

A group of U.S. lawmakers have introduced legislation that would overhaul the U.S. patent system, earning them praise from a number of technology groups.

The Patent Reform Act was introduced Wednesday in the Senate and the House. It would award patents to people who first file for the patents, instead of those first to invent, it limits damages patent holders can collect in infringement lawsuits, and it creates a new procedure for those questioning the validity of a patent to challenge it after it's been granted. The U.S. has the only first-to-invent patent system worldwide.

"If we are to maintain our position at the forefront of the world's economy and continue to lead the globe in innovation and production, then we must have an efficient and streamlined patent system to allow for high quality patents that limits counterproductive litigation," Senator Patrick Leahy, a Vermont Democrat and chairman of the Senate Judiciary Committee, said in a statement. "This bill is an important step towards achieving that goal."

Other sponsors of the bill included Senator Orrin Hatch, a Utah Republican, Representative Howard Berman, a California Democrat, and Representative Lamar Smith, a Texas Republican.

Similar legislation failed to pass during the last session of Congress. But several tech trade groups and companies -- including Microsoft Corp., Cisco Systems Inc., the Software & Information Industry Association and the Business Software Alliance (BSA) -- praised the sponsors for reintroducing the updated bill.

IBM Corp., in a statement, called the legislation the "most sweeping effort to reform the U.S. patent system in 50 years."

"We think the bills will help maintain our country's innovation leadership, reduce excessive litigation and damages awards, and improve patent quality," John Kelly III, IBM's senior vice president for technology and intellectual property, said in a statement.

Tech companies have decried large patent infringement awards in recent years, saying a court system that has allowed patent holders to get injunctions on projects with a small piece of infringing technology has hurt innovation. In May 2006, in a infringement case against eBay Inc., the U.S. Supreme Court overturned the long-held practice of issuing injunctions against infringing products in nearly all patent cases.

But many tech groups have for years called for more changes to the U.S. patent system.

The bill would also increase the resources for the U.S. Patent and Trademark Office, a provision praised by many tech groups. "This legislation is critical to modernizing the existing patent system, which will, in turn, promote greater innovation and productivity," BSA President and CEO Robert Holleyman said in a statement. "Unfortunately, opportunistic enforcement of patent rights and patent quality issues have become impediments to innovation and continued economic prosperity. "

Other groups, including the pharmaceutical industry and small inventors, have opposed major changes to the patent system.

Ronald Riley, president of the Professional Inventors Alliance, called large tech companies "patent pirates that pillage others' property."

"America's economy has always been driven by our inventiveness," Riley said recently. "In the past, we have profited by making our inventions. Today both our foreign competitors and our own disloyal multinationals conspire to take our inventiveness for their own profit."

Berman, chairman of the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property, said the bill was developed in a "highly deliberative manner." Still, it is not perfect, and the sponsors will be open to improvements, he said in a statement.

Copyright © 2007 IDG Communications, Inc.

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