Tech-Backed Patent Lawsuit Bill in Trouble in U.S. Senate

A long-negotiated patent overhaul bill sought by technology companies and opposed by big pharmaceutical makers is in deep trouble in the U.S. Senate, Democratic and Republican aides said Monday.

Big high-tech companies such as Cisco and Hewlett-Packard began pushing for reform legislation years ago to cut the number of patent infringement lawsuits and the amount of damages paid.

A version of the bill passed the House last September but a similar measure is stalled in the Senate amid vocal opposition from drug maker Eli Lilly & Co, seed and herbicide company Monsanto Co, and smaller tech companies that fear lower damages would leave them vulnerable to infringers.

“I wouldn’t say the bill is dead, but let’s say right now it’s on ice,” said one Democratic aide.

The measure has drawn opposition mostly from Republicans and lacks the 60 votes needed in the 100-member Senate to clear a likely procedural roadblock, aides said.

“We’ll try it again next year when we will have more (Senate) Democrats,” said a second Democratic aide. Democrats now control the Senate with a slim majority but are expected to add seats in the November elections.

“It’s almost dead,” said a Republican aide. “But people are still talking to each other. When they completely stop talking, then it is dead.”

The bill is bogged down in the Senate over how high damages for patent infringement should be and other sticking points.

The Bush administration also opposes the damages portion of the House version of the bill.

Under current law, damages can be calculated as the entire market value of the product. That number can be tripled when the patent infringement is found to be intentional or willful.

The tech industry — which sells devices that can have many patented elements — wants to reduce damage awards to deter people, who they privately call “patent trolls”, from filing what tech companies say are unwarranted lawsuits.

The pharmaceutical industry, whose drugs often have just one or two patents, says it needs the threat of high damages to protect their intellectual property.

Under a failed compromise, judges hearing patent cases would have ruled on whether the patent involved was central to the product or not. The potential awards paid by an infringer would have been adjusted accordingly.

Some experts have also questioned whether the patent legislation goes too far.

“The central problem with all of these proposed changes is that they would inject far too much uncertainty and arbitrariness into the patent system,” says Scott Kieff, who teaches patent law at Washington University School of Law in St. Louis.

“Most proposed changes would have been terrible, resulting in less innovation and economic growth and fewer jobs for American workers. They also would seriously undermine U.S. efforts over the years to ensure predictable enforcement of intellectual property rights overseas,” Kieff wrote in a e-mail interview.

Other proposals in the legislation were aimed at stopping forum-shopping, or choosing court venues that are fast or plaintiff-friendly.

The legislation would have allowed post-grant reviews, or public comment on patents after they are granted; and changed the punishment for “inequitable conduct,” or failing to inform the patent office of information relevant to patentability. The punishment now is loss of the patent.

(Editing by Tim Dobbyn)