Large tech firms praise patent reform bill

Several large technology vendors praised a U.S. patent reform bill introduced this week, but other groups slammed the legislation, saying it would water down intellectual property rights.

Earlier this week, four U.S. lawmakers introduced the Patent Reform Act, an attempt to make it harder for patent holders to collect huge damage awards and to improve the way patents are granted. The bill is similar to one introduced in 2007, which failed to pass because of opposition from several groups.

This week, several large tech vendors issued statements in support of the bill, which would limit huge patent damage awards by defining that a reasonable royalty, based on economic analysis, should determine awards in patent lawsuits. The bill would also require patent lawsuit plaintiffs to demonstrate "with clear and convincing evidence" that defendants acted in a reckless manner in order to collect triple damages for willful infringement.

The legislation would also create a new post-grant procedure to challenge patents, and it would award patents to the first person to file a patent claim on an invention, instead of current U.S. Patent and Trademark Office (USPTO) determination of who was the first inventor.

"This bill will establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs, while making sure no party's access to court is denied," said Senator Patrick Leahy, a Vermont Democrat and cosponsor of the bill.

Large tech companies have long complained that it's too easy for patent holders to win multimillion-dollar awards in patent lawsuits. Many tech products contain dozens of patented inventions, and it's often difficult to determine whether small pieces of a tech product are patented, many large tech vendors argue. In addition, due to limited resources, the USPTO has sometimes awarded questionable patents, they say.

Microsoft praised the lawmakers, including two Democrats and two Republicans, for again introducing the legislation. The bill sponsors have a "continuing commitment to promoting innovation and improving the U.S. and global patent systems," Horacio Gutierrez, the company's deputy general counsel, said in a statement.

Hewlett-Packard also praised the legislation, also sponsored by Senator Orrin Hatch, a Utah Republican, and Representatives John Conyers, a Michigan Democrat, and Lamar Smith, a Texas Republican.

“As one of the nation’s largest patent holders -- HP is on average granted four U.S. patents every day -- HP is a constant target of frivolous patent lawsuits," Michael Holston, HP's general counsel, said in a statement. "These lawsuits force HP to divert resources away from innovation and product development, leading to reduced economic benefits from invention. Reforming the patent system will reduce costly litigation and free up valuable resources for research and development."

Other groups criticized the legislation, saying it would discourage innovation and cost U.S. jobs. Several recent court cases in the U.S. have already weakened patent protections and made it more difficult to collect huge damage awards, said the Innovation Alliance, a trade group representing small businesses, including some tech vendors.

"Unfortunately, the bill introduced today is basically the same divisive bill that was opposed by a broad range of American industries, innovators, universities and labor unions when it stalled in the last Congress," Brian Pomper, Innovation Alliance executive director, said in a statement. "At this time of grave economic uncertainty, Congress should not make changes recklessly, without compelling evidence that the proposed changes will positively strengthen the U.S. economy."

U.S. Representatives Don Manzullo, an Illinois Republican, and Mike Michaud, a Maine Democrat, suggested in a joint statement that the bill would put "hundreds of thousands [of] more Americans on the unemployment lines."

"This year's version of the so-called patent reform bill again weakens America's strong patent system, making it easier for foreign companies to take our ideas and our jobs," the two lawmakers said. "It makes no sense to us why we would threaten the jobs of hundreds of thousands of Americans at a time when our people are in desperate need of jobs."

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