House Judiciary Committee Balks at Senate Patent Bill

Talk about turn of events.  Earlier today I posted an article regarding how patent reform legislation is not certain because it is conceivable that there will not be enough votes for the bill on the floor of the Senate.  As I was writing that post the House Judiciary Committee was holding hearings on patent reform, and the hearing did not bode well for those hoping for reform.  But wait, the House held a patent reform hearing today?  Yes, and they did not give much notice, announcing the hearing only yesterday.  So on a day Chrysler will declare bankruptcy, and the day after reports of a 6.1% contraction of the US economy, the House held a patent reform hearing with less than 24 hours notice?  Something is not right here!  What is going on?  In any event, Congressman John Conyers (D-MI), Chairman of the House Judiciary Committee, reportedly started the hearing this morning by saying: “we are not a rubber stamp for the Senate.”  This was then echoed by Ranking Member Lamar Smith (R-TX) and others on the Committee.

So what does this all mean?  It is early to tell with any certainty.  This may just be chest pounding and not wanting to be viewed as simply being willing to do whatever the Senate wants.  What is clear, however, is that if the House does not adopt the Senate version of the bill there will be no legislative patent reform in 2009.  There will be more detailed news and analysis in the days ahead no doubt, but in the meantime here are some statements released by interested parties today.

Joint Press Release of U.S. Reps. Mike Michaud (D-ME) and Don Manzullo (R-IL)

U.S. Reps. Mike Michaud (D-ME) and Don Manzullo (R-IL), members of the House Manufacturing Caucus, expressed serious concerns with the House patent legislation, H.R. 1260, in written testimonies presented to Chairman Conyers during a House Judiciary Committee hearing on the bill today.

Michaud and Manzullo said significant improvements were needed to both the damages and post grant review provisions of the House bill. They further suggest that the Senate Judiciary Committee language on damages is a constructive compromise, and offered ideas to fix the post grant provisions so that American innovators are not trapped in an endless loop of challenges to their intellectual property.

As members of the Congressional Manufacturing Caucus, Reps. Michaud and Manzullo are particularly sensitive to how changes in patent law could negatively impact U.S. manufacturers, leaving those companies with fewer resources for hiring workers and investing in research and development. U.S. manufacturers face intense and myriad competitive pressures in the global market, but America has maintained a competitive advantage in intellectual property by having the strongest patent protections and the highest penalties for infringement.

“The legislation the committee is considering today has stark consequences for companies that rely on innovation for a competitive edge,” Manzullo said. “At a time when America’s innovators, manufacturers and laborers need strong patent protection to compete internationally, the net effect of the bill will be to weaken patent protection by making patents less reliable, easier to challenge and cheaper to infringe.”

“During this economic downturn, it is critical we pass a patent bill that protects our manufacturing base,” Michaud said. “The House legislation being considered today could result in the migration of hundreds of thousands of high skill, high paying manufacturing jobs overseas. I sincerely hope we can work with the committee to strengthen the bill.”

After careful analysis of H.R. 1260, Michaud and Manzullo recommend that the House adopt the Senate Judiciary Committee compromises that resolved controversial differences on damages and prior art. Regarding post grant review, they also encouraged the Committee to include:

• an appropriate threshold for initiating administrative proceedings,
• a presumption of validity in those proceedings so the challenger has the burden of establishing invalidity rather than requiring a patent holder to re-establish the validity already verified in the application process,
• strong estoppel provisions to avoid serial challenges of the same patent by the same infringer or a group of infringers, and
• a clear time-line for concluding administrative challenges.

Without these changes, Michaud and Manzullo said, “The patent reform bill will increase the length of patent pendency, reduce patent certainty and undermine U.S. innovation and job creation.”

Statement by Stan Fendley, Director Legislative and Regulatory Policy, Corning Incorporated:

The House patent proposal H.R. 2160 includes controversial provisions that will have severe, negative impacts on manufacturers’ ability to hire workers and invest in R&D. The Senate Judiciary Committee has shown that it is possible to update patent laws without dramatically favoring one industry over another and bringing economic havoc to manufacturers.

It is disappointing that having last time passed a bill that admittedly required the input of the Senate, a number of members of the House Judiciary Committee explicitly rejected a carefully crafted agreement that can pass the Senate. We hope the House Judiciary Committee will craft a consensus bill similar to the compromise that was reached in the Senate.