- The Washington Times - Thursday, July 19, 2007

The laws on American inventiveness are being rewritten in a bill headed for a vote in Congress.

The Senate Judiciary Committee is scheduled to begin debate today on legislation that seeks to reduce the number of patent lawsuits. It also could give big companies an advantage over small inventors, patent lawyers say.

A House committee yesterday unanimously approved a similar bill and sent it to the full House for a vote.

“Litigation abuses, especially ones committed by those which thrive on low-quality patents, impede the promotion of the progress of science and the useful arts,” Rep. Howard L. Berman, California Democrat, said when he introduced the Patent Reform Act of 2007 three months ago.

The legislation is Congress‘ response to complaints from big businesses about being deluged with infringement lawsuits by inventors with questionable patent rights.

It is the most sweeping patent legislation in the past half-century, said patent lawyers who discussed the bill recently at a Capitol Hill seminar.

U.S. businesses have invested about $1 trillion in intellectual property and other intangible assets, roughly the same as their investments in equipment, factories and other physical assets, according to the Federal Reserve. The number of patent applications has more than doubled in the past 13 years.

“The kind of suits we’re seeing from patent trolls and others are extremely problematic,” said Diane Smiroldo, spokeswoman for the Business Software Alliance, a trade group for computer companies. “Companies are forced to divert funds to defend themselves in these lawsuits, and that takes away from [research and development] dollars.”

“Patent trolls” refer to people or companies that file frivolous infringement lawsuits against patent owners merely to get settlement money.

While computer giants such as Microsoft Corp., Dell Inc. and Cisco Systems Inc. support the legislation, small companies and independent inventors say the proposed Patent Reform Act could devastate them.

A group of inventors calling themselves the Innovation Alliance wrote a letter to key members of Congress recently, saying the bill would “hinder innovation across the diverse sectors of the American economy we represent.”

The bill would give applicants priority for new patents based on who is first to file an application. Now, priority is determined by who can prove they are the first to invent a technology or device.

A “first-to-file” rule leaves little doubt about who owns a patent, thereby reducing the number of lawsuits, patent lawyers say.

Other provisions would reduce some damage payments for infringing a patent and expand opportunities to challenge the validity of a patent even after it is granted. Damages could be based on the degree that a patent improves on previous inventions, rather than only the market value of the technology.

The Patent Reform Act is worrying small companies and inventors, which together produced nearly one-third of the nation’s patents last year.

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