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Patent Reform

Description:    The U.S. House of Representatives passed comprehensive patent reform legislation, The Patent Reform Act of 2007 (H.R. 1908), on September 7, 2007 despite bi-partisan opposition by a vote of 220-175.  Companion legislation, S. 1145, was reported out of the Senate Judiciary Committee in July and is expected to be considered in February.  The OESA Intellectual Property Council has expressed serious concerns over the legislation.  An industry coalition of more than 400 pharmaceutical companies and other manufacturers, labor unions, research institutions and the Intellectual Property Law Section of the American Bar Association oppose patent reform as currently proposed.  Industry support for the legislation comes mainly from multinational information technology companies and the banking industry.  Proponents argue the reforms would stimulate innovation and better serve the current economy where inventions often reflect the use of hundreds of potentially patentable ideas.         

Status:   Many industries oppose the current patent reform legislation because the changes currently proposed would make it more costly and time consuming for patent-holders to defend their rights and reduce legal and procedural protections now in place against infringement.  Opposition to the Patent Reform Act of 2007 focus on four major areas of concern:  

• Changes in the formula to calculate damages:  Establishes a formula for damages which discounts the value of a patented component in an end product.  Subtracts the value of preceding, often uncommercialized technology from the damages a convicted infringer would otherwise owe an inventor. 
• Post Grant Review:  Creates new, costly, and duplicative quasi-judicial avenues to challenge the validity of patents granted by the U.S. Patent and Trademark Office (USPTO).  Paves the way for serial, open-ended challenges to patent validity.  Removes the patent-holder’s "presumption of validity" during an initial challenge, making it significantly easier to invalidate a patent that has been issued. 
• Venue:  Severely curtails a patent holder's access to the courts to petition by prohibiting venue, in most cases, in all but the accused infringer's home jurisdiction. This change in the law will increase judicial backlog and work overwhelming in favor the patent infringers.
• Interlocutory Appeals:  Grants district courts discretion to appeal intermediary hearings in the course of a patent infringement case to the Federal Circuit Court of Appeals. This change will greatly delay the course of a patent infringement case, adding significant time and expense to the rights-holders’ defending their patents. 

Impact on Industry:  The changes proposed would significantly increase the cost of defending existing patents, reduce damages that could be received if a patent were infringed, and possibly increase the overall incidence of infringement. 

2008 Anticipated Action:  MEMA will continue to work with market segment association members including the OESA Intellectual Property Council to lobby against patent reform provisions which would weaken protections currently provided to patent holders.  We will support other aspects of patent reform where there is a member consensus to do so.  MEMA will work independently and in coalition with other industries on this issue. 

MEMA Staff Contact:          
Catherine Boland
Director, Government Relations
Phone: 202-312-9241
Email: cboland@mema.org