Patent laws ripe for change, or not

The rules governing how U.S. inventors obtain patent rights for their ideas - and how their lawyers enforce them - seem on the verge of upheaval.

A powerful bipartisan bloc of lawmakers is working to win final passage of the first significant changes to U.S. patent laws in almost 60 years, six years after launching the effort.

Sens. Patrick J. Leahy (D., Vt.) and Charles E. Grassley (R., Iowa) introduced legislation Tuesday that would substantially change the law governing filing, while restricting in some cases when aggrieved inventors can challenge someone else's patent.

The bill would also increase funding for the U.S. Patent and Trademark Office, whose director has complained that the agency lacks the resources to effectively oversee the nation's patent system.

The proposed changes are being closely watched by a wide range of interests, from heavy-equipment manufacturers to software-makers, drug companies, and the patent lawyers who represent them.

Although U.S. patent law has come in for substantial criticism in recent years over huge verdicts in some infringement cases, not everyone is convinced the current system is dysfunctional.

"When Congress says it is going to deal with something that has stood the test of time as well as patent law, it needs to do so with extraordinary care," said Lewis Gould Jr., chairman of the intellectual-property practice group of Duane Morris L.L.P., the 700-lawyer firm based in Center City. "There is every opportunity to do as much harm as there is to do good."

What has given some patent lawyers pause is that the bill would institute far-ranging changes.

"I feel very strongly that the U.S. patent system has been a main engine of growth over the past 25 years," said Lynn Morreale, a partner and patent lawyer at Woodcock Washburn L.L.P., a prominent intellectual-property law firm based at the Cira Centre in University City. Morreale said some of the proposed changes in the bill already had been adopted by the courts, so its eventual effect might be muted.

In general, the bill would change the law so that inventors who were the first to file their applications typically would be given exclusive patent rights.

Currently, that designation goes to the inventor who had the idea first.

The proposed change is probably the least controversial aspect of the bill. That's because the United States is unique in using the so-called first-to-invent rule.

The proposed change would align the U.S. system with that of other nations and likely would make it easier for U.S. inventors to enforce their patent rights overseas.

It is also expected to cut down on disputes in the United States over who is entitled to a patent because there would be less ambiguity in a system that grants exclusivity based on a filing date.

"They are trying to simplify the determination of who gets the patent," said Ronald J. Ventola II, a patent lawyer with Schnader, Harrison, Segal & Lewis L.L.P. "The effect of that is, everyone is going to be quicker to file."

Proponents of the bill say that it also would improve patent quality by creating for the first time an adversarial process for patent examinations allowing third parties to challenge at the outset the basis for granting a patent.

Critics of the current system say the issue took on urgency as jury awards in patent-infringement cases began to spiral. One case that sparked particular concern was a jury verdict ordering Microsoft Corp. to pay Alcatel-Lucent $1.52 billion for infringing on Alcatel's MP3-technology patent, the audio-compression technology used to power the Windows Media Player. Critics of the decision said Alcatel's patent rights were not entirely clear, and even if they were, they said, the award was excessive.

The problem for software-makers is that innovation in their industry moves at a much faster pace than in traditional manufacturing; they contend it is simply impossible to legally document every minuscule technical advance, exposing them to questionable challenges.

The divide over how to restructure patent laws between the Microsofts of the world and traditional manufacturers was bridged last year as lawmakers worked out compromise language. That proposal, substantially the same as the bill introduced Tuesday, won the support not only of Microsoft but also the National Manufacturers Association and other diverse interests, suggesting that the chances for the measure this year are good.

On Friday, the Biotechnology Industry Association, the national trade group representing biotech companies and headed by former U.S. Rep. Jim Greenwood of Bucks County, a Republican, announced its support for the bill.

Greenwood said the bill would enhance patent quality and improve transparency in the patent-review process. But he hinted that background maneuvering might not be completely eliminated.

While praising the bill, he said in his statement that his group would work with members of Congress over the coming months "to ensure that the final bill remains true to these principles."