House Subcommittee hearing on patent reform - compromise and controversy

Today’s hearing of the House Subcommittee on Courts, the Internet, and Intellectual Property revealed a significant shift in the progress of the Patent Act of 2005 and, indeed, in the patent reform movement in general.

Compromises are indeed being made.  The draft amendment circulated by Representative Smith over the summer eliminates the controversial injunctive relief provision.  This appears to reflect a compromise by the software and high technology industries in consideration for the newly added venue provision.  But, even in light of the elimination of the injunctive relief provision, opposition to the venue provision is developing, particularly by the biotechnology industry.

Representative Smith gave a not-so-subtle hint in his opening statement – “We’re attempting to thread the needle on two key issues – transfer of venue and apportionment of damages.”

The pharmaceutical industry appears relatively pleased with the draft amendment save the apportionment of damages provision.  In particular, the industry is happy to see the elimination of the injunctive relief provision, the so-called “second window” of the post-grant review procedure, and the section granting authority to the Director of the Patent and Trademark Office to place limitations on continuation practice.  These three provisions of the bill as introduced have been the primary target of the industry since getting involved in the effort.  Now, with these provisions gone, the industry seems to be focusing its efforts on the apportionment of damages section.

Some members of the Subcommittee expressed reservation against moving toward the text of the draft amendment.  Notably, Representative Berman is clearly opposed to the elimination of the “second window” from the post-grant review procedure.

The Coalition Print, also known as the “September Redline,” has become a focus of attention.  That version of the bill is supported by a coalition of companies (reportedly to be 33 at this time) and the Intellectual Property Owners (IPO) Association.

What happens next?  A substitute bill has to be introduced at some point.  H.R. 2795, as introduced, is clearly dead as a means for meaningful patent reform worthy of broad-based support.  A bill that reflects current compromises will be better suited for advancement of the issue.  Broad support, generally speaking, appears to be shoring up despite the fact that controversy continues to surround a few provisions.

When a substitute is introduced, look first at the venue and apportionment sections.

Timing of a substitute is an open question.  The draft amendment or coalition print could probably be dropped quickly with minimal tinkering.  If more compromise and/or additional support is desired, a more thorough edit of either of these drafts may be warranted, which will take time.  And we’ve still got one eye on the Senate to see if Hatch plans to show his hand anytime soon.

Please visit the PTP Patent Reform Library for copies of all versions of the bill and testimony from the hearing (will be available soon).