Patent Reform Prospects Likely Dead

April 30, 2008

Although Senate Majority Leader Harry Reid (D-Nev.) identified patent reform as one of five major bills that he planned for the Senate to tackle when it returned from recess in late March, it now appears that the prospect of enacting patent reform legislation during this Congress is dwindling—if not dead.

Negotiations between Senate Judiciary Chairman Patrick Leahy (D-Vermont) and Ranking Member Arlen Specter (R-Penn.) stalled earlier this month, especially in regard to the damages apportionment provisions contained in the NSBA-opposed Patent Reform Act of 2007 (S. 1145).

Technology companies, whose products may include dozens of patented parts, want awards more closely tied to the specific patent that was infringed, rather than to the entire value of the product. Small high-tech firms and companies and others that frequently rely on licensing patents vigorously have resisted this change. The Bush administration also has repeatedly expressed its distaste for Leahy's damages language, most recently in an April 3 letter from Commerce Secretary Gutierrez that described the language as his "overriding concern."

Although many of those opposed to the damages apportionment provisions in S. 1145 would like to see some reforms to the US patent system, there is nothing that they want badly enough to accept the bill’s apportionment provisions. On the other hand, advocates for patent-reform and this legislation do not want the other patent reforms badly enough to accept reform legislation that does not include apportionment.

The rising chorus in opposition to S. 1145—and H.R. 1908, which passed the full U.S. House of Representatives on Sept. 7, 2007—from various economic sectors, including the small-business community as represented by NSBA, also played a role in the evaporation of the bill’s support.

While it is possible that Senators will resolve their differences and coalesce around some version of S. 1145, this does not seem like the most likely scenario. With a legislative calendar shortened by the election cycle and two recalcitrant sides, it appears this legislation is not going anywhere in the near term. In the meantime, NSBA will continue watching it.