US lawmakers take another shot at patent reform

U.S. lawmakers have proposed patent reforms that would reduce the amount of money paid out following patent disputes.

U.S. lawmakers have reintroduced legislation that would mark the first major overhaul of U.S. patent law in more than 50 years.

The legislation, introduced in the U.S. Senate Tuesday, is very similar to the Patent Reform Act of 2007, which died on the Senate floor last year. If passed, the 2009 version would change the way the U.S. Patent and Trademark Office works, bring U.S. patent law in line with global laws, and introduce so-called "reasonable royalty" provisions, which change the way damages are calculated and would reduce the likelihood of massive payouts for some patent holders.

The changes will "improve the quality of patents and remove the ambiguity from the process of litigating patent claims," said Senator Patrick Leahy, a Vermont Democrat who is one of the bill's sponsors, in a statement. The legislation is also sponsored by Utah Republican Senator Orrin Hatch. A House version of the legislation was also introduced Tuesday by John Conyers, a Michigan Democrat, and Lamar Smith, a Texas Republican.

The reasonable royalty provisions were "perhaps the most hotly debated topic in the patent reform debate last Congress," Leahy said.

Representatives from technology giants such as Google, Hewlett-Packard and Intel were quick to say that the changes would cut down on frivolous patent lawsuits.

The problem with the current patent system is that it gives "every incentive to people who have claims that are weak at best to go ahead and try them, because you might hit the jackpot," said Andrew Pincus, a lawyer retained by the Coalition for Patent Fairness, which represents the technology companies.

In 2007, a jury ordered Microsoft to pay Alcatel-Lucent US$1.5 billion in damages following a digital music patent lawsuit. The award was overturned on appeal, but proponents of the 2009 Patent Reform Act say it is indicative of the kind of excessive payouts that can arise from patent lawsuits.

"We clearly need better patent litigation in place to allow us and many others in the industry to continue to innovate," said Symantec Chairman and CEO John Thompson, speaking on a conference call with reporters.

His company spends about $4 million each time it is hit with a patent lawsuit.

"The resources spent on these frivolous lawsuits would be much better spent innovating," said Mike Holston, Hewlett-Packard's general counsel, on the same call.

A group representing patent-holders that oppose the legislation said that it would harm U.S. entrepreneurs, large and small. "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," the Innovation Alliance said in a statement.

The changes would "devalue all patents, invite infringement -- including from companies in China, India and other countries -- and generate more litigation that will further strain the courts," the Alliance said.

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