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The National Academy of Sciences on Monday became the latest government agency to lay out a blueprint for improving the patent system. The NAS’s 140-page document calls for the U.S. Patent and Trademark Office to harmonize its procedures with those in Europe and Japan. Specifically, NAS wants to award patents on a “first-to-file” basis rather than the existing “first-to-invent” method. It also calls on Congress to exempt non-commercial scientific research from patent infringement liability. The NAS report echoes several of the recommendations made by the Federal Trade Commission in its October 2003 report on patent reform. Both agencies addressed the surge in patent applications — and litigation — over the last 20 years and offer recommendations to ease the burden on the system. Both agencies call for a procedure to allow third parties to challenge patents for a limited period after they issue. They also both would make it more difficult to obtain a judgment of “willful infringement.” Finally, both would boost resources allocated to the PTO. The NAS goes a step further with regard to willful infringement. The report proposes that willful infringement be removed entirely since it depends on litigating a party’s state of mind, generating high discovery costs. For the same reasons, the NAS would do away or modify the doctrines of “best mode” — looking at the inventor’s take on the best way to implement the invention — and “inequitable conduct” — penalizing applicants for misleading the patent office. Former PTO Director Q. Todd Dickinson, who was one of the reviewers of the NAS document in its earlier drafts, said removing inequitable conduct could generate a fair amount of controversy. “Certainly there is a belief that the inequitable conduct defense is used too frequently,” Dickinson said. But, he added, “I can’t believe theymeant to do away with that entirely.” The NAS report also hinted that the Federal Circuit U.S. Court of Appeals should try living in the real world. “We recommend some modest steps to ensure that the Federal Circuit, despite its specialization, has broader exposure to legal and economic analysis in all areas of innovation-related law and to the impact of its decisions on the lower courts and on the patent office.” The report says the Federal Circuit, which handles all patent appeals, should encourage people to submit briefs that draw upon other judicial decisions and legal scholarship on the patent system and the economics of patents. It also recommends that appointments to the Federal Circuit bench should be broadened to include people with backgrounds in antitrust or finance law or economics. The report further encourages the Federal Circuit to invite regional judges to sit on its panels and that regional circuits also invite Federal Circuit judges to sit by designation. The NAS’s National Research Council pulled together a 16-member committee to draft the report. Several members were from the Bay Area, including Robert Blackburn, chief patent counsel of Chiron Corp.; James Pooley, a partner at Milbank, Tweed, Hadley & McCloy; UC Berkeley economics professor Bronwyn Hall; and Pamela Samuelson, director of Boalt Hall School of Law’s Berkeley Center for Law & Technology. It’s uncertain whether any of the proposals will actually be implemented. Most of them require congressional backing, and Congress historically has been very slow to adopt new patent legislation. A 1999 law that overhauled the patent system — the American Inventors Protection Act — took about five years to clear the House and Senate. The NAS report had been scheduled for release Thursday to coincide with a conference on patent reform sponsored by the NAS, FTC, Boalt Hall and several other university groups. At a press conference last week, attendees asked what the prospects were for carrying out the FTC’s recommendations. “The challenge will be changing the interests of people in Washington,” said Mark Myers, co-chair of the NAS study and a retired senior vice president of Xerox Corp. Senior FTC policy analyst Susan DeSanti added that Republican Congressman Lamar Smith, chair of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, has said he was interested in holding hearings on patent quality, though none have yet been scheduled. In the meantime, patent lawyers, scholars and corporate in-house counsel continue to debate the way patents are granted and litigated. They batted about their differing views at the Berkeley conference Friday. Dickinson, who is about to become chief IP counsel at General Electric Co., defended the PTO against criticism that it fails to find all relevant prior art — previous inventions that determine whether a patent application is novel and nonobvious. When patents get litigated, he said, a company can spend “$15 million to $20 million to turn up a piece of an invention that 18 hours of searching by the patent office” didn’t uncover. But just because the PTO “doesn’t have $20 million to find one piece of prior art hidden in Russia somewhere” doesn’t mean the system doesn’t work. Mark Lemley, a Boalt Hall professor, agreed the PTO shouldn’t have the last word. “The PTO is not set up to make strong determinations on the validity of a patent,” Lemley said. The PTO provides “a light screen of the patent. It leaves to the litigation process the hard determinations.”

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