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Lawmakers in Washington are considering changes to the patent code that would bring U.S. law closer to intellectual property standards in the rest of the industrialized world. The change would convert the U.S. patent system from the uniquely American “first to invent” to “the first to file” standard the rest of the world uses. The idea of the Patent Reform Act of 2005, HR 2795, which could emerge from a House of Representatives subcommittee after Labor Day, is to make the system work more efficiently and make the process of obtaining a patent less expensive and less prone to litigation. Some patent attorneys and trade associations welcome the proposed reforms as the long overdue, objective revamping of an outdated, subjective system � the most sweeping systemic changes in half a century. Others, however, say that the problem of inadequate funding for the U.S. Patent and Trademark Office (PTO) should be addressed before specific reforms are hashed out, and that the scope of injunctions under the proposed reform and other provisions need more consideration. Herbert C. Wamsley, executive director of the Intellectual Property Owners Association, a Washington-based trade group representing intellectual property owners in all industries and technology fields, called the proposed legislation “probably the biggest attempted rewrite of the patent code since 1952. “The reforms will help bring legal certainty to patent law, and some of them will address the quality of patents and reduce litigation costs,” Mr. Wamsley said, adding that bringing U.S. patent law more in line with the rest of the world could also begin to lay the groundwork for “an international agreement to harmonize patent systems.” Not everyone shares Mr. Wamsley’s sanguine outlook. Catriona M. Collins, a patent litigator at Cowan, Liebowitz & Latman in New York, is among a number of lawyers who say it makes no sense to discuss reforming the system without first adequately funding the PTO. “The basic problem is the quality of patents,” Ms. Collins said, and to consider reforming the system without first giving patent examiners the resources to do their jobs properly is really just “rearranging the deck chairs.” William A. Rodger, public policy director for the Computer & Communications Industry Association in Washington, agreed that “the issue of basic patent quality remains the elephant in the room.” Mr. Wamsley acknowledged that from 1992 to 2004, about three-quarters of a billion dollars in PTO fees “were diverted to other government agencies for unrelated purposes,” resulting in staffing losses that translated into a considerable work backlog. “The patent office is hiring 1,000 patent examiners in 2005 and another 1,000 patent examiners in 2006-a huge staff buildup-to catch up with the workload,” he said. Scope of Injunctions Mr. Rodger and others also have expressed concern that the bill pits pharmaceuticals and biotechnology against the “completely different world” of information and software technology. For instance, pharma/biotech industries “need the power of the injunction to stop the infringement of their patents, but the proposed infringement standard does not work for software,” Mr. Rodger said. That is because in contrast to an anti-cancer drug that might be “one big drug based on one big idea,” a computer software program, comprising millions of lines of code, could be “hundreds of bright ideas [that] equal maybe no patents at all, [that] equal maybe one patent, or hundreds of bright ideas [that] equal hundreds of patents,” he said. Warren D. Woessner, a pharma-biotech patent attorney at Schwegman Lundberg Woessner & Kluth in Minneapolis, expressed his own reservations about a narrowed injunction regime that could amount to compulsory licensing. Limiting the scope of injunctions and damages means “an infringer can infringe when he knows all he’ll have to pay are ‘reasonable royalties.’” That in effect creates a state-enforced licensing monopoly that takes away an inventor’s prerogative “to pick and choose who[m] you license your patent to,” he said. Daniel Ravicher, senior counsel to the Free Software Foundation and executive director and founder of the Public Patent Foundation in New York, a nonprofit public interest legal services organization, said he expects “very little if anything” from the legislation. “After promising beginnings, the strongest provisions, subjected to gamesmanship by big companies � particularly the pharmaceutical industry � have been gutted to render the reform ‘much ado about nothing,’” said Mr. Ravicher. “As the negotiations have been reported to me,” he added, the committee already has eliminated three key provisions that would have made for substantial reform: limiting a patentee’s right to get injunctions, authorizing the director of the patent office to regulate continuing applications and establishing a second period to challenge a patent after it has been issued. But Michael K. Kirk, executive director of the American Intellectual Property Law Association in Washington, said the lawmakers’ goal is to produce legislation that will lead to fewer and less costly lawsuits. “The idea is to replace existing subjective areas that have caused litigation problems in the past such as ‘first-to-invent’ and ‘best mode’ with objective standards,” Mr. Kirk said, and to constrain catchall theories such as “willful infringement” and “inequitable conduct” � the “big ticket” items in patent litigation. One wholly new measure already in use abroad is post-grant opposition proceedings to keep contested cases before administrative law judges and out of federal district court. If such proceedings are properly funded, Mr. Woessner said, “most patent attorneys favor this as a way to knock out weak patents . . . before they can cost their clients millions of dollars.” Ms. Collins said that though these proceedings work well in Europe, their success will rely on the extent to which companies perceive the administrative law judges to be fair arbiters of the matters before them, and not simply “bless what the patent examiners have already decided.” Barry J. Swanson of Swanson & Bratschun in Highlands Ranch, Colo., said he does not expect that his “pure prosecution” practice � one based on filing patent applications-will change if the proposed post-grant opposition proceedings become law because he expects that most litigants will continue to save their best shot for litigation. But he said some of the changes proposed could confer benefits on his practice, which is focused on the biotechnology and pharmaceutical industries. Chief among the benefits would be a duty of candor and good faith that has been proposed to replace a defense of patent unenforceability due to inequitable conduct, which, Mr. Swanson said, creates traps for patent filers and is the source of “a great deal of uncertainty and fear.” William P. Berridge of Oliff & Berridge, an intellectual property law practice in Alexandria, Va., said he welcomes reform but thinks Congress is much more focused on its overall goals than on the details. “In general, it’s being rushed through too fast for such a major reform. It needs a lot more time for study,” Berridge said. Lamar S. Smith, R-Texas, the bill’s lead sponsor, said the subcommittee “has worked with a number of interest groups to put a bill together that addresses concerns with patent quality and the patent system.” Smith said further: “I look forward to a hearing in September on some recent suggested changes in the bill.” � Peter Geier is a staff writer for The National Law Journal, an ALM affiliate publication of the New York Law Journal. This article originally appeared on Aug. 15, 2005 in The National Law Journal.

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