Third Time the Charm for Patent Reform?

WASHINGTON — Patent reform, one of chief policy priorities of the IT industry writ large, is getting another turn around the block in Congress this session.

A bipartisan group of lawmakers from the House and Senate today announced plans to introduce the Patent Reform Act of 2009, an ambitious bill that aims to modernize and streamline the patent process, but already has some organizations worried about a chilling effect on fundamental research and development.

“Patent reform is about economic development,” Sen. Patrick Leahy (D-VT), said at a press conference today announcing the bill, which would usher in the most sweeping reform of the U.S. Patent and Trademark Office in more than five decades. “It is about jobs, it is about innovation, it is about consumers.”

The effort revisits a contentious debate from the last session in Congress, when the House passed the Patent Reform Act, but the measure ran aground in the Senate. A similar bill failed to get off the ground in the previous session.

Last year’s deadlock centered on the issue of damages. Groups representing small inventors, as well as a host of R&D-intensive companies from industries ranging from manufacturing to pharmaceuticals, opposed the bill for making it tougher for patent holders to enforce their claims in court.

The Innovation Alliance, whose members include companies from a variety of industries that are generally heavily invested in R&D, held a conference call with reporters shortly after the announcement of the bill to register its opposition.

“The one thing that’s disappointing to us is that the most controversial portion of the legislation is unchanged, and that is the apportionment of damages,” said Stan Fendley, Corning’s director of legislative and regulatory policy. “Reducing damages that are available to us when we are infringed makes it harder to invest.”

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Many large tech firms, on the other hand, supported the patent reform bill for enhancing safeguards against frivolous litigation, a practice commonly known as “trolling.”

The Business Software Alliance, whose members include IT heavyweights such as Microsoft and Cisco Systems, was quick to praise the lawmakers’ effort.

“Patent reform is a perfect example of how common sense, bipartisan solutions can bring about a stronger economy,” BSA President and CEO Robert Holleyman said in a statement. “Of course, we recognize that more work lies ahead, but we are encouraged by the high degree of consensus on most reform items and by the bipartisan, high-level commitment to get the job done.”

Joining Leahy on the Senate side was Orrin Hatch (R-UT). In the House, Reps. John Conyers (D-MI) and Lamar Smith (R-TX) introduced an identical companion bill.

The four lawmakers acknowledged that the section regarding damages will again be a stumbling block, but expressed hope that there will be room to compromise as the bill works its way through Congress.

“The most controversial provision remains in the bill,” Leahy said. “We kept the language the same, not because we assume it’s going to be the final language in the bill, but because we want to start off where we left off to give us something to work from.”

Leahy said he expects the Judiciary Committee to hold a hearing on the bill next week.

In addition to putting the lid on patent trolls, the bill also hopes to clear the considerable backlog at the Patent Office, where an application commonly sits for nearly three years before review.

The Innovation Alliance took issue with some other provisions in the bill, such as the venue where patent litigation cases would be heard, but those issues are trivial compared to the damages provisions.

“It’s my view that everything else in this bill can be worked out,” Fendley said.

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