- The Washington Times - Friday, September 14, 2007

Corporations are taking aim at a patent reform bill passed by the House last week, warning that it threatens to weaken American industry’s ability to protect rights to its inventions.

Competitors in the United States and abroad would have more incentive to steal inventions under the Patent Reform Act of 2007 because it significantly lowers the damages they would need to pay, said Bruce Artim, director of federal affairs for pharmaceutical company Eli Lilly & Co.

“We’re concerned this sends exactly the wrong signal,” he said.

Mr. Artim joined William B. Heming, deputy general counsel of heavy equipment manufacturer Caterpillar Inc., in discussing patent reform legislation this week with reporters and editors of The Washington Times.

They represent an advocacy group, the Coalition for 21st Century Patent Reform, that is trying to rally opposition against many parts of the patent reform bill now pending in Congress.

The bill passed the House last Friday by a vote of 220-175, narrow enough to give the coalition hope of defeating the Senate version of the legislation when it comes up for a vote, which is likely this fall.

Supporters of the bill say it would reduce the number of patent lawsuits that can cost companies millions of dollars in legal fees, even when the claims are frivolous.

About 3,000 patent lawsuits are filed each year in the United States, roughly triple the number that were filed in 1990. Some companies, including computer company Cisco Systems, have reported settling frivolous lawsuits for large sums merely to avoid the higher costs of litigation.

The relatively slim margin of approval in the House gives opponents of the patent reform bill “some momentum going into the Senate,” Mr. Heming said.

The current patent system could require anyone who infringes on someone else’s patent to pay damages equal to the market value of the invention.

The House bill would limit damages to the value of the innovation that an invention adds to previous patents.

“That is completely disconnected from the market economy,” Mr. Heming said.

One likely result is that some companies will intentionally infringe on a patent owner’s rights if they determine they would pay less in a lawsuit than they would profit by cheating, he said.

“We are certainly better off with no change to damages,” Mr. Heming said.

He also said the bill’s wording for determining damages was vague and that the pending legislation would make it easier to challenge valid patents that corporations spend millions of dollars to develop.

“It may cost more for [research and development] to take place,” Mr. Heming said.

Caterpillar applies for about 600 patents a year and spends roughly $1.3 billion annually on research and development, he said.

Better options, according to the coalition, would be to give judges clear instructions they must follow in assessing damages, limit the time period for filing patent claims and increase U.S. Patent and Trademark Office funding to hire more patent examiners, thereby giving them more time to ensure the quality of the patents they issue. None of these ideas is included in the patent reform bill, the coalition said.

The Coalition for 21st Century Patent Reform faces opposition from the Coalition for Patent Fairness, an advocacy group of mostly high-tech companies that say frivolous patent lawsuits hurt their business. The pending legislation would reduce the amount they pay in settlements, the group says.

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