Patent Baristas

After months of meetings and redrafting work, the U.S. Senate is said to be ready to make a move on the patent reform bill, S. 1145. Various senators are said to be working behind the scenes drafting amendments with some compromises being made on section 11 of the bill, a/k/a “Applicant Quality Submissions (AQS).”

The Intellectual Property Owners Association (IPO) is urging everyone to contact their senators to get the section on AQS banished.

Meanwhile, the Bush Administration still has concerns. Carlos Gutierrez, the Secretary of the U.S. Department of Commerce, sent a letter to Senator Patrick Leahy urging the preferences of the Administration. Specifically, he emphasizes the importance of section 11 (Applicant Quality Submissions). Interesting, given that this is one of the stupiderest provisions of the bill.

Specifically, Gutierrez states:

The Administration strongly supports the AQS provision in the bill in its current form and believes that enactment will prove to be the strongest step toward improved patent quality. By reducing the number of poor quality and imprecise applications, applicant quality standards will result in dramatic reductions in patent pendency and backlog, as well as reduce the likelihood of excessive litigation. The current misalignment of information incentives slows and degrades the patenting process.

If this sounds like it was written by the Patent Office itself, you’re right. The Patent Office is an arm of the Commerce Department and Gutierrez is merely falling in line. The letter states that “[t]here is no one who has greater opportunity, information, or incentive to explain why an application deserves a patent grant than the applicant.”

The Administration also supports changes to the doctrine of inequitable conduct arguing that the inequitable conduct standard should require actual fraud. The Administration also supports post-grant patent review avenues to challenge a patent’s validity.

For the record, the Administration’s big concern is changes to the assessment of damages in patent infringement cases — exactly the issue for which the Coalition for Patent Fairness said that they would fight to the death. Currently, courts generally consider the value of the entire product when any part of it infringes a patent. The proposed changes would allow judges to base damages only on the “economic value properly attributable to patent’s specific contributions over the prior art.”

The Administration is willing to support methods that identify the factors and evidence relevant to the determination of damages and to consider only those factors when making their determinations. Such a “gatekeeper” function would promote transparency without limiting necessary discretion.

What’s not been determined is whether or not shifting more burden to the applicant really is the most efficient way to achieve better quality examination.

George Margolin, Vice President, Professional Inventors Alliance, poses the question in his response to the Coalition for Patent Fairness. Margolin asks if the Coalition argument is: “Someone who invents the “X” key shouldn’t be able to sue the keyboard maker for the value of all the letters,” then, “Who would be dumb enough to BUY a keyboard WITHOUT the X or A or E KEY or any other crucial key?”

Noteworthy in all this discussion is that Jon Dudas, Commissioner of Patents, stated that each patent application costs the USPTO $4,200, while basic filing fees are under $1,000. [Note to readers: Does anyone know where this number comes from or can verify the accuracy?] This sounds funny given that the patent office brings in more money that it spends on operations. I guess they forgot to mention that they get the other $3200 (and much more) by forcing you to file multiple divisionals and endless continuations in order to get something allowed.

If you want to be heard, call the capitol switchboard, 202/224-3121, and ask to be connected to your senators’ offices.

See the letter here: commerce-ltr.pdf