Senate Judiciary Committee Passes Patent Reform Bill

As I sit here listening to the Executive Meeting of the Judiciary Committee on patent reform, things are getting extremely contentious.  Senator Specter (R-PA) has said that he would rather wait and not vote this bill out of Committee until Senator Kyl (R-AZ) has an opportunity to submit his amendments relative to the post-grant review process.  Apparently Senator Kyl has a busy schedule this morning, and may not be able to make it to this Executive Meeting in order to put forth his suggested amendments.  Senator Specter says that the Committee should hear out Senator Kyl, but it does not sound like that is what is going to happen.  Senator Leahy wants to vote the bill out today, presumably at this Executive Meeting.  Senator Specter pointed out that with this delicate compromise everything should be done to hear the input of all Senators on the Committee and that rushing things could cause the compromise to collapse.  Specter also said that he didn’t think the Senate Majority Leader would bring up a bill that left Committee if there were still substantial work to be done.

Senator Hatch announced that he could not support the compromise amendment because it lacks language that he had been promised regarding reform to inequitable conduct.  He does not believe that the bill in its current form accomplishes the goal of making the patent process better.  Hatch said that Congress cannot let non-innovators keep us from making the patent process better.  Hatch went on to explain that industries need certainty and predictability, and that the bill has the very real potential to undermine innovation within the US and abroad.  Hatch said that Congress needed to spur innovation and that he  “cannot support a bill that I know does not improve the status quo.”  Hatch did say that he was willing to compromise on damages, despite what he thought was best, but he had been promised real reform of inequitable conduct and that is not in this bill that will be reported out.

Senator Hatch was obviously very upset.  He went on to say that under this present patent reform “you can still sue for fraud if you want to, and you can still fix your patent and narrow it before litigation.”  I am not sure what he means when he says you can still sue for fraud.  Inequitable conduct is not something that can be raised in and of itself and brought as a cause of action in the first instance.  Inequitable conduct can be raised as a defense, so perhaps that is what Senator Hatch is talking about and equating the raising of a defense with suing for fraud, but it was not clear.  Hatch went on to saythat he is “sick and tired of non-innovators who use inequitable conduct provisions and then walk away as infringers.”  Hatch said when we originally started we wanted to solve the problems faced by innovators, particularly innovators in the high-tech industries.  When Senator Hatch finished his comments he got up and walked out.  Senator Leahy even asked him to stick around to hear is comments because Leahy was going to praise Hatch for his work on the bill, but Hatch continued to leave and walked out.

Senators Feinstein and Specter both suggested that there is still more work necessary on the bill as it moved to the floor of the Senate and that they would be willing to consider language for inequiteable conduct requested by Senator Hatch and perhaps ultimately included into the bill on the floor of the Senate.

Kyl offered an amendment regarding post-grant review, primarily for the purpose of adjusting the standard.  Kyl’s belief is that the standard currently in the bill does not require a high enough standard, and he wants to include a prima facie invalidity standard where the petitioner must raise serious doubt about the patent’s validity.  Kyl’s amendment would require the petitioner to raise questions that if unrebutted would require the patent claims to be invalidated.  Kyl said he realizes that his amendment will not likely be adopted, but urged Senator Leahy to at least call up the Patent Office management to get their view to understand why the PTO does not support this and why the PTO thinks the post-grant review as it presently stands would cripple the Patent Office and make their work load even more overwhelming.  Senator Kyl also pleaded with the Committee to give his amendment real thought, even saying” “I’d like the Committee to consider whether somebody who has been working on this might have a really good idea.”

Senator Leahy then became quite upset himself because he wants a vote on the patent bill today, and right now.  He does not want to have a recess for several weeks because that would lead to a lot of lost work.  Leahy wants to move forward and report the bill out to the full Senate rather than slow down and consider the Kyl amendment and Senator Hatch’s request for more on inequitable conduct.  Senator Specter then said he was inclined to slow down and try and consider Senator Kyl’s amendment, but Leahy is now stalling to find more Senators on the Judiciary Committee to come into the room so that there will be enough Senators to have a vote.  It would seem that they are looking for a quota because Senator Kyl is willing to push this and not allow the bill to leave without following all formalities and having a roll call vote.  Once enough Senators were present a roll call vote was had, and with the Senators there and also voting by proxy the result was the Kyl amendment was defeated by a vote of 14 to 3.

Senator Kyl then made additional remarks saying that he has a lot more amendments that he wants to introduce, but it seems clear that based on this vote any attempts by him to further amend the bill would not be fruitful.  He then went through his concerns, and quite frankly I could not keep up with him.  What is apparent, however, is that Senator Kyl is extremely well versed on the bill and on patent law itself.  I am not sure that I agree with him on all his points, but I would say that it certainly seems that Senator Kyl probably understand the patent laws better than any of the other Senators on the Committee. 

Two things that Senator Kyl said that are interesting relate to damages and venue.  It had been said on Tuesday that the compromise language would simply codify the current judicially created law relative to damages.  Apparently that is not exactly the case.  Additionally, the bill would codify the venue change rules of the Fifth Circuit Court of Appeals, which were recently relied upon by the Federal Circuit when they took the Eastern District of Texas to task for not ordering the transfer of venue in TS Tech.  Senator Kyl explained that this is a new provision and that neither he, nor anyone on his staff, had read the necessary Fifth Circuit cases on venue change law.  He said he didn’t think any other Senators or staff had read those cases either, and he thought it was important to read those cases so they knew what they were codifying, which seems like a good idea to me, but in the Congress today most seem more interested in voting now and reading later, which is sad.

Senator Colburn is now trying to add an amendment regarding Patent Office fees.  I am not sure that I am following exactly what his amendment is, and I have not read it yet.  Most of these amendments were finalized overnight, and it is clear to me that the Judiciary Committee is rushing this bill through the Committee.  Leahy even just said that he would rather this amendment be considered by the full Senate rather than in Committee because he is afraid this amendment might step on the jurisdiction of another committee.  I don’t know about that.  It does seem as if Leahy, Specter and Colburn all agree that Congress will need to give the Patent Office more money in the future rather than raid Patent Office coffers in order to make up for the decrease in revenue, which as you know is caused by decreased applications, substantially decreased allowances and what will soon be a substantial decrease in maintenance fees.

Senators Colburn and Specter did say that an increase in user fees, even a substantial increase in user fees, would likely be supported by stakeholders if they knew those fees would go to the Office to provide more resources.  Perhaps we will soon see a pay-for-services Patent Office, rather than a fees structure that does not take into account the work being done on a case by the PTO.  But that will not happen today as a part of this Senate patent reform bill.  The bill just passed the Senate Judiciary Committee and is on to the full Senate.