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Spurred by an increase in patent litigation and jury awards reaching into the millions, a new coalition is urging federal lawmakers to support legislation that would change the way the courts handle patent suits. The Coalition for Patent Fairness, a patchwork of 45 companies from the technology, financial services, and manufacturing industries — led by lobbyist Mark Isakowitz of D.C.’s Fierce Isakowitz & Blalock — has spent the better half of 2006 building momentum and educating Congress about the coalition’s concerns regarding the current patent system. Isakowitz says he expects the Senate to act on patent reform legislation introduced by Senate Judiciary Committee members Orrin Hatch (R-Utah) and Patrick Leahy (D-Vt.) in the coming year. The proposed Patent Reform Act would, among many things, award patents on a first-to-file basis, rather than the current first-to-invent basis. The legislation would also establish new standards for awarding reasonable royalties. Judges would consider the value of only the infringed component, not the product as a whole, and any history of nonexclusive marketplace licensing. Indicating the coalition’s muscle in lobbying Congress, Isakowitz points to a letter he and the coalition sent to Hatch and Leahy on July 26 asking Congress for “fair and balanced reforms.” Their legislation was introduced Aug. 4, the day Congress adjourned for its summer recess. “The most telling thing . . . that letter we sent a week or so before the Hatch bill was introduced . . . that was the result of a lot of our effort,” says Isakowitz. Tracy Schmaler, press secretary for the Judiciary Committee’s minority staff, says the bill was a culmination of two years of hearings and debate on patent reform. Courtney Boone, press secretary for the Judiciary Committee’s majority staff, notes that the measure was on the Senate agenda for late September, but Congress did not act on it before leaving town Sept. 29. The coalition, which started lobbying in late July, includes Apple Computer Inc., the Business Software Alliance, Comcast Corp., Dell Inc., the Financial Services Roundtable, Hewlett-Packard Co., Intel Corp., Microsoft Corp., Oracle Corp., TechNet, and Time Warner Inc. In addition to Isakowitz, Andrew Pincus, a partner in the D.C. office of Mayer, Brown, Rowe & Maw, says he’s focusing on the substantive legal arguments for patent reform. According to a 2006 study by PricewaterhouseCoopers International, the number of patent infringement cases filed annually increased from 1,171 in 1991 to 3,075 in 2004. Since 1994, the report states, the median amount of damages awarded by juries has been $8 million. Isakowitz, former director of federal governmental relations for the National Federation of Independent Business, says a handful of cases, including the Supreme Court’s May decision in eBay v. MercExchange, have raised patent reform’s profile in Congress. But it was the recently settled lawsuit against Research in Motion Ltd., the Canada-based maker of the BlackBerry device, that has resonated the most with Hill lawmakers. Before the case was settled in March, many of the 3 million BlackBerry users feared the suit would shut down their beloved e-mail-on-the-go toy. At issue was whether the BlackBerry infringed on the patent rights of Virginia-based NTP Inc., whose founder created a system to send e-mails between computers and wireless devices. RIM agreed to pay NTP $612.5 million to settle the dispute. For members of Congress and their staff, BlackBerrys have become the single most identifiable work tool, says Isakowitz. The shutdown threat was a winning argument with these pols, who couldn’t imagine life in Washington without the electronic device. “It’s essential to the culture in that building, and this is the very issue that almost took their BlackBerry away,” Isakowitz says. Coalition members say they also want to change the way venues are chosen for patent challenges in order to reduce forum shopping, a point addressed in the bill. It is not unusual for patent holders alleging infringement to seek out, for example, a federal district court with a history of favoring plaintiffs. When the alleged infringer does business nationwide, that patent holder has a wide range of choices. A current hot spot for such litigation is the Eastern District of Texas. “If you do business in Marshall, Texas, you can be sued there,” says Paul Devinsky, a partner in the D.C. office of McDermott, Will & Emery whose practice focuses on patents. “But if you are a company based in the Northern District of Illinois or Southern District of New York or other major patent venues, that’s where you should be sued.” Coalition members are also seeking to change the law that allows companies to be held liable in U.S. courts for overseas sales. Those who oppose the legislation, including members of the pharmaceutical industry, assert that proponents are simply trying to make it harder to get, and easier to invalidate, a patent. Patrick Doody, a partner in the McLean, Va., office of Hunton & Williams who focuses on patent matters, says the coalition basically represents one industry sector, computers. He says the proposed changes would harm others, notably pharmaceutical companies, which often have only a handful of patents for their prized drugs versus the several hundred that computer companies often possess. Computer companies, he suggests, would do fine under the proposed law. Says Doody, “Microsoft will come out with Office 2009 and will sell millions of copies of it whether or not patents are protected.”
Joe Crea can be contacted at [email protected].

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