Last month, the Senate Judiciary Committee approved an amended version of the Patent Reform Act (S515) that included important compromises on provisions that have kept the bill deadlocked.
Most notably, the provision on damages was amended to allow the judge to determine which of the various methodologies presently allowed for calculating damages is most appropriate in a particular case.
HR1260, the House version of the Act, still allows for a controversial approach to calculating damages for patent infringement that would base damages upon "that economic value properly attributable to the patent's specific contribution over the prior art".
The language is favoured by software companies, who have argued that the present method of calculating damages in US infringement cases is unfair. They say that the “entire market value” rule, which allows a jury to determine reasonable royalties based on the entire market value of a product, rather than just the infringing component(s), can result in disproportionate and exorbitant awards and should be more restrictive.
Witnesses who testified during last week’s hearing before the House of Representatives Committee on the Judiciary included David Simon, chief patent counsel at Intel; Philip Johnson, chief IP counsel at Johnson & Johnson; Professor John Thomas of Georgetown University Law School; Jack Lasersohn of Vertical Group; inventor Dean Kamen; Mark Chandler, senior vice president of Cisco; and Bernard Cassidy, senior vice president and general counsel of Tessera.
Cassidy argued that recent US Supreme Court and Federal Circuit cases have “unquestionably changed major areas of the law and shifted the balance of power between patent holders and users, tightening standards of patentability and narrowing patent rights and remedies".
Cassidy expressed concern that the proposed legislation would create “sweeping changes” for patent owners, particularly with respect to post-grant opposition proceedings and damages calculations. He and other witnesses urged House leaders to adopt a damages amendment similar to the one in the Senate version of the bill.
Philip Johnson of Johnson & Johnson told Managing IP that the witnesses’ remarks stayed close to their written testimony and that he is confident the House will take into consideration the comments on damages. “The House has always recognised that that provision isn’t going to cut it,” he said.
Johnson added that, while several representatives from companies including Intel and Cisco argued that the Senate’s approach on damages could still be improved, none of the witnesses directly opposed it. “In all of these years of negotiating this issue, this approach has received the most widespread support,” said Johnson.
But Johnson said that the big story of the day was that all of those who testified said that the USPTO should be guaranteed the use of all of its fees by statute. Neither the Senate nor House bill includes a provision to stop the practice of so-called fee diversion, which allows USPTO fees to be used for other government programmes. While no fees have been diverted for the last several years, many feel that the option must not be left open.
“Guaranteeing firm financial footing for the Office is crucial,” said Johnson.
