Comprehensive patent reform legislation will be appearing for the third time before the full senate since 2008. A unanimous vote by the Senate Judiciary Committee on January 29, 2011 sent the legislation to the full Senate. Senator Leahy introduced the Patent Reform Act of 2011 and was supported by eight cosponsors.

It has long been the position of this Blogger that patent reform should fundamentally focus on improving the quality of patents and on improving the registration process administered by USPTO. And that patent reform should not be used as an excuse to roll back the enforcement mechanisms available to holders of intellectual property and the consequences of infringing their rights.

This blog discusses three features of the new bill. Under this Bill, the patent regulatory framework in the United States would shift from “first to file” to “first to invent”, new rules would be applicable to the assessment of damages and third parties would have new powers to challenge intellectual property rights.

Approval of the Bill would result in the US transitioning to a first-to-file system. A conversion of the patent system from first to invent to first to file arguably would have the positive effect of speeding up the application process. The move would make the USPTO’s challenging task of working through its application backlog a more manageable one. An “effective filing date” would be given to every patent application and the obviousness of an invention would be judged from that date. Whether or not any prior art was available on a date before filing would determine patentability. Inventors would have a grace period of a year to make disclosures.

The proposed Bill would bring changes to the treatment of damages by courts. The Bill creates specific procedures for how a judge should manage the issue of damages in any given case. The Bill is clearly crafted from the viewpoint that in recent times damage awards have grown out of control. Such a frame of reference ignores the reduction in the level of deterrence faced by patent infringers that would occur under the proposed reform.

The Bill as proposed would limit the ability of court’s to make decisions on a case by case basis. Instead there would be certain factors and methodologies for the assessment of damages and only those factors and methodologies could be used when assessing the award of damage. Before evidence on damages is produced, a court would be mandated to look at the arguments made by either party. The reform Bill also requires a court to divide the portion of the trial that deals with damages if there is such a request. The request can however be rejected where there is good cause to do so.

This reform Bill would codify the Federal Circuit past ruling that infringement is not willfully done unless “cogent and persuasive evidence” is used by the claimant to show that, with regard to the patent, the conduct of the accused was objectively reckless. Objectively recklessness happens when the actions of the infringer occur despite the strong likeliness that his or her actions infringed upon a patent that is valid. The defined risk must be objective and the risk must either be known by the infringer or be so apparent that the accused infringer ought to have known.

The reform Bill would permit a third party to challange a patent through the USPTO via an Inter Partes Post Grant Review, Third-Party Requested Post Grant Review, and through Pre-Issuance Third-Party Submissions. These changes in the law would likely increase the quality of registered patents.

A party may file for an “inter partes review” after the nine month window for post grant review elapses. The inter partes review proceeding would be limited to novelty & obviousness issues based on prior art.

The proposed statute allows for pre-issuance of third-party submissions. This amendment makes it possible for third parties to disclose any printed publication, and a description of why it is relevant to the USPTO, for consideration in the examination process for a pending patent.

The Bill also permits third-party requested post grant review which is a review proceeding that can be brought by any party. The post grant review allows a third party to challenge the validity of a claim. One cannot file a request for post grant review after nine months of issuance have expired.

High quality patents are essential to the continued economic growth of the US economy. Some steps are taken in the proposed reform to increase the quality of patents. Unfortunately the Bill also contains veiled attempts to reduce strong deterrence factors that provide a disincentive for infringement of patent rights.