Patent Law News

Hatch Introduces Patent Reform Legislation 

Washington – Last week, Intellectual Property Subcommittee Chairman Sen. Orrin G. Hatch (R-Utah) and the subcommittee’s top Democrat, Senator Patrick Leahy (D-Vt.), introduced legislation to reform and streamline the nation’s patent laws.

“Patents cover everything from computer chips to pharmaceuticals to – I am told – at least one variety of crustless peanut butter and jelly sandwich,” Hatch said. “Everyone is affected by patents, but this is a tremendously complex area of law. We’ve listened to all the interested parties, and this bill is a compromise that will help address the most pressing problems facing patent holders.”

Patent law is vital in the nation’s ability to compete in the global economy. Hatch’s bill is designed to ensure that the United States remains at the forefront of developing and translating new ideas into tangible goods and services through an effective patent review and protection system.

The proposed patent changes are important for many companies heavily reliant on patent protection, including Micron Technology Inc., which announced a joint venture that will invest $3 billion to $5 billion in Lehi. The new venture is expected to bring 1,850 jobs with an average pay of $50,000 to Utah County. Yet companies like Micron face many frivolous patent challenges that cost millions to fight through drawn-out court battles. “Today’s patent litigation system is a lottery, and everyone wants to hit the jackpot,” said Steve Appleton, Chairman, CEO and President of Micron. “This bill brings balance back into the system. We’ll be able to shift millions of dollars from litigation to innovation — which translates into providing more jobs at facilities such as the one in Lehi.”

The main provisions in Hatch’s bill focus on increasing patent quality, increasing international harmonization, and decreasing unwarranted or abusive patent litigation:

• Patent Quality: Many complaints about the current patent system deal with the number of suspect and over-broad patents that are issued. Because bad patents are generally of little value to productive companies, in many cases their value is maximized by using them as a basis for infringement suits against deep-pocket defendants. Hatch’s bill institutes a robust post-grant review process so that third parties can challenge suspect patents in an administrative process, rather than through costly litigation.

• International Harmonization: The United States is the only significant country following the first-to-invent system, in which the right of the patent lies with the first inventor, rather than the first inventor to file for a patent. Hatch’s bill would move patent protection toward a first-to-file rule, which provides greater certainty since the filing date of an application can very rarely be challenged.

• Patent Litigation: Certain patent holders – called patent trolls – do not manufacture any products or supply services, but instead earn their living off patent disputes. Hatch’s bill limits two elements of the litigation system that appear to have little or no justification: willful infringement and inequitable conduct. Because of the high reward – three-times the actual damages under willfulness and an unenforceable patent under inequitable conduct – both of these tactics have become the standard rather than the exception in major patent cases. Limiting these elements would simplify litigation, curb unproductive discovery, limit opportunities for abuse, and decrease litigation uncertainty.

Hatch noted that this bill is not the final product that will be considered by the Senate, and he is still reaching out to interested parties to refine it. The bill is expected to be considered by the Senate Judiciary Committee as early as September.

Patent reform legislation has also been introduced in the House of Representatives, and Hatch intends to work with his colleagues in the House as his bill moves through the Senate to ensure that a reform bill passes Congress. 

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