Patent Reform Bill Would Hurt American Manufacturers, Inventors (Rep. Don Manzullo)

The very soul of our economy rests on protecting, supporting and rewarding innovation and invention through our patent system. Article 1, Section 8 of the Constitution empowers Congress to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” That is a powerful charge, one I take very seriously.

Unfortunately, the Patent Reform Act of 2009 (HR 1260) – subject of a House Judiciary Committee hearing last week — would hurt American workers. At a time when America’s innovators, manufacturers and laborers need strong patent protection to compete internationally, HR 1260 would weaken patent protection by making patents easier to challenge and cheaper to infringe upon. The most disturbing elements of the legislation include the possible establishment of a “first-to-file” system over the current “first-to-invent” system, a dangerously open-ended system for administrative post-grant review, and provisions dealing with apportionment of damages in intellectual property infringement lawsuits.

The bill is already being fast-tracked in the Senate, where the Senate Judiciary Committee has produced an amended version of the bill. That bill (S. 515) is an improvement from previous incarnations of so-called “patent reform,” but many issues remain to be addressed.

The Senate compromise dropped the contentious “apportionment of damages” language, which would significantly diminish a patent by limiting the dollar amount a guilty party could be forced to pay the rightful patent owner. In its place is a gatekeeper function that requires better jury instructions to clarify the relevant factors to be considered in estimating a reasonable damages payment. In addition to making plain good sense, this is a much-needed improvement to the current litigation process.  I urge the House Judiciary Committee to adopt this approach.

The post grant review provisions of the current legislation, however, still threaten to diminish the value and enforceability of U.S. patent rights at a time when our country’s economic recovery is pleading for U.S. innovation. The current bill would create multiple avenues for challenging a patent’s validity without any meaningful protections to prevent the serial attacks that plague the European system. Small innovators will find it particularly challenging to defend their rights against larger and better-financed challengers. If we’re looking for harmonization, the current legislation is certainly aiming for the lowest common denominator.

Congress must ensure the administrative processes in the bill do not become a vehicle for infringers to avoid justice.  I would encourage the Committee to include 1) an appropriate threshold for initiating administrative proceedings, 2) a presumption of validity in those proceedings so the challenger has the burden of establishing invalidity, 3) strong estoppel provisions to avoid serial challenges of the same patent by the same infringer or a group of infringers, and 4) a clear timeline for concluding administrative challenges.

I hope my colleagues with high-tech interests will work with those of us dedicated to small business and manufacturing to find common ground on this issue. Let us work together to strengthen American industries rather than put jobs at risk. Let’s tackle consensus issues like Patent and Trademark Office efficiency, patent pendency and patent quality. Let’s work together to reform the system, rather than take actions – like diminishing the value of damages or undermining the reliability of a patent’s validity.