Senate panel considers key changes to patent overhaul

Bipartisan senators pushing for broad patent reform are adding a whole new section to their bill to placate industries that have been wary of congressional action. 

Senate Judiciary Chairman Chuck Grassley (R-Iowa) and other sponsors of the Patent Act unveiled a managers’ amendment to the bill on Tuesday night that will be taken up at Thursday’s markup. 

{mosads}The overall legislation is aimed at combating what industry groups say is growing abuse of the legal system, with so-called patent trolls buying up patents solely to extract settlements. The bill makes a number of changes to the legal procedures of patent trials.  

But industries like biotechnology and pharmaceuticals have raised concerns about a different kind of alleged abuse taking place at the trial-like proceedings in the U.S. Patent and Trademark Office (PTO), which were set up after Congress last passed a patent bill in 2011. 

Those proceedings at the PTO — known as post grant and inter partes reviews — were meant to offer a faster and cheaper way to challenge the validity of a patent. Supporters say the proceedings are important to weed out weak or vague patents.  

But critics and some lawmakers have said those proceedings are skewed too far against patent owners. They have also claimed that hedge funds use the proceedings to short stocks.   

The amendment would also make a number of changes to the underlying text, including to a contentious provision on fee shifting. The amendment is meant to relieve some of the burden on universities, inventors and commercial lenders — who could be left on the hook for trolls’ legal bills.

“Let me make clear that if we succeed, no one will get everything they want,” Grassley said last month.    

Many large technology companies have teamed with retailers to push to crack down on patent trolls this Congress.

But pharmaceutical firms, biotechnology companies and universities have been wary of skewing too far against individual patent holders. Large patent holders like Qualcomm have also opposed broad reform. 

Lawmakers in both chambers have been doing a delicate dance to satisfy concerns from multiple industries, all of which use patents in vastly different ways. Reform passed out of the House last Congress but stalled in the Senate under then-Majority Leader Harry Reid (D-Nev.). 

Among other things, the amendment unveiled Tuesday night would change the claims construction standard used in PTO proceedings to better reflect district courts, and would give the PTO director the ability to veto a proceeding. 

The amendment would allow patent owners to submit evidence at the outset and would ensure multiple panels hear the case at different stages.

It would also make clear that at the outset of proceedings, patents are presumed to be valid. Senators said they are still working on a provision regarding the ability for patent holders to amend patent claims during the proceedings.