House approves patent reform bill

WASHINGTON – The House on Friday passed the most comprehensive patent reform in half a century, delivering a victory for computer technology and financial services companies and leaving drug companies, small inventors, and the U.S. Patent and Trademark Office bracing for a bigger fight before the bill hits the Senate floor.

The bill, which passed 225 to 175 with strong bipartisan support, is meant to reduce the mounting number of patent infringement cases by changing the ways patents are awarded and challenged.

Because much of the bill is perceived to be favorable to targets of patent-infringement suits rather than patent holders, it has attracted passionate support from big technology companies, which are usually the defendants in such suits, and criticism from drug manufacturers and small inventors, who are typically plaintiffs.

“This patent reform will help speed up patent decisions, clear up disputes, and clarify the jurisprudence behind these lawsuits,” said Jonathan Yarowsky, policy counsel for the Coalition for Patent Fairness, which represents technology companies such as Microsoft and Google as well as financial services companies including Capital One. “This will streamline innovation.”

Some of the bill’s opponents said they see room for compromise as the bill moves forward in the Senate. Labor unions and universities had agreed not to oppose Friday’s vote in exchange for further consideration of their concerns before the Senate vote. Senate Majority Leader Harry Reid, D-Nev., expects the bill to reach the Senate floor in the next couple of weeks, according to his spokesman, Jim Manley.

Representatives from drug manufacturers and the Professional Inventors Alliance, an association of small inventors, have also met with Rep. Howard Berman, D-Calif., a co-sponsor of the House bill who has agreed to address their concerns when the bill is reconciled with the Senate version. The Bush administration will also oppose the bill until some changes are made, Jon Dudas, undersecretary of Commerce for intellectual property, said in an interview.

One sticking point is the new set of guidelines for calculating patent infringement damages.

Currently, damages can be awarded based on the entire value of a product that includes a component that infringes on a patent. Under this legislation, judges can instruct juries in certain cases to award damages only for the value of the component. If a computer contains a chip that is patented, for example, the chip patent’s owner would be awarded damages based on the value of the chip rather than the computer.

The standards for determining whether a patent has been willfully infringed upon – which can lead to treble damages – are also stricter.