Uncertain Future for Patent Reform Legislation

As of today, legislative patent reform efforts are working their way through Congress. We are further along the road to legislative reform than at any point in time over the last 4 years, but the ultimate outcome is still not certain. The Senate Judiciary Committee has reported out a version of patent reform, so there is a real expectation that legislative reform will happen at some point during 2009, perhaps soon. It is expected that if Senator Harry Reid (D-NV) brings the legislation to a vote it will be because he has the votes to pass the legislation. If the Senate passes patent reform there will be patent reform. The House of Representatives has consistently passed patent reform, and there is every expectation that President Barack Obama will sign the bill, thus the Senate is, as is typically the case, in charge.

There are at least several contentious issues remaining that could derail the patent legislation, including damages, first-to-file, the lack of inequitable conduct reform and presence of post-grant review. Senator Orrin Hatch (R-UT) has been a major driving force in patent reform, along with Senator Patrick Leahy (D-VT).  After years of supporting efforts, Senator Hatch, a member of the Senate Judiciary Committee, did not vote in favor of the version of the bill reported out to the full Senate. This is, in my opinion, a major red flag. Senator Hatch explained to the Committee that he compromised on damages in exchange for a promise of inequitable conduct reform being included in the Senate bill and modeled after the House version of the bill. With no inequitable conduct provisions attached to the bill reported out to the full Senate, Senator Hatch voted against the Senate version of patent reform in Committee. Thus, it seems plausible to assume that if inequitable conduct reform is not included in the bill there may be some difficulty mustering the votes required for Senate passage.

The patent reform vote in the Senate will not go along party lines, so the fact that the Democrats enjoy an overwhelming majority in the Senate does not by any stretch of the imagination mean that patent reform will automatically pass the full Senate.  This is not a Republican vs. a Democrat issue. Many Senators come from States where significant and important campaign contributors are both in favor and against certain provisions of patent reform, putting these Senators in an uncomfortable position where compromise is not possible. Still other Senators come from States where the predominant industry is either in favor of, or against, reform. Therefore, there remains great uncertainty regarding whether the Senate will pass patent reform.

Some commentators, including myself, feel that if reform is not passed by June 1, 2009, it becomes less likely with each passing day.  With how divisive Washington, D.C. is becoming it seems likely that the 2010 campaign season will start quite early, perhaps even as early as Fall 2009.  With the announcement today that Chrysler will file bankruptcy, the announcement yesterday that the US economy contracted 6.1% during the first quarter of calendar year 2009 and partisan bickering about national security, terrorism and a range of other issues, Congress will have their plate full, as will the President.  If patent reform does not happen very soon it will become politically impossible for those in Congress to potentially alienate large corporate campaign contributors so close to what will certainly become a defining election in 2010.

Regardless of your politically philosophy, you must acknowledge that the 2010 election cycle will be the most important election cycle since the 1994 election when Republicans swept into power behind Newt Gingrich and the Contract for America.  I am not ready to predict that such a change will occur, but it seems obvious that if Republicans have a repeat performance of 1994 things will significantly change in Washington, D.C.  If the Democrats hold, or gain, things will also significantly change in the other direction.  Therefore, I do not expect many, if any, gratuitously divisive issues being taken up after Labor Day 2009.  There is simply to much at stake in the next election, and as President Obama aptly demonstrated during the 2008 election cycle, there is an enormous advantage that comes with the ability to out spend your opponent.  In the world we live in campaign contributions are increasingly essential and no politician can intentionally alienate large corporate donors and expect to be successful.

Time will tell whether legislative patent reform actually happens, but if the past is any indication of the future, we can expect patent reform to somehow find a way to derail itself.  Perhaps what needs to happen is reform that would actually create a better patent system, which is something that everyone could agree on and should pass quickly.  Unfortunately, the one change that is most needed, reform and certainty with respect to inequitable conduct, is not present and the Supreme Court has decided not to clarify the law.  So even if patent reform does become law no one should expect a better patent system.