Bush Administration Speaks Against Patent Overhaul

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U.S. Senate negotiators are getting closer to hammering out disagreements that are holding up a patent system overhaul, but President George Bush's administration still has concerns about the bill, an administration official said Friday.

Congressional negotiators have worked out a compromise on applicant quality submissions, called AQS for short, putting more responsibility on patent filers to search for prior art, said Jon Dudas, under secretary for intellectual property in the U.S. Department of Commerce. But the Bush administration is still opposed to the Patent Reform Act's change in the way patent infringement damages would be assessed by courts, he added.

Currently, courts generally consider the value of the entire product when a small piece of the product infringes a patent. The legislation would allow judges to base damages only on the value of the infringing piece.

Many large tech companies support the change in the way damages would be assessed, saying it's too easy for a patent holder to collect huge damages for a small piece of a product found to be infringing. But opponents of the legislation say it would make it easier for large companies to infringe the patents of small companies or individual inventors.

The Bush administration opposes changes that "limits a court's discretion" in a patent case, but would support changes that help courts more clearly identify factors involved in the infringement, the Department of Commerce said.

"The damages issue is still a very important issue, and one that we want to resolve," Dudas said during a Friday media briefing. "We want to make sure we promote innovation in all business models and in all sectors."

The Coalition for Patent Fairness, whose members include Intel, Amazon.com, Apple, Google and Microsoft, said earlier this week that the patent bill was close to being considered on the Senate floor. The bill is "right on the edge" of Senate consideration, said Mark Isakowitz, a lawyer and lobbyist who runs the coalition.

The coalition has been saying the Senate bill is close to being debated on the Senate floor for weeks now, however. A version of the Patent Reform Act passed in the House of Representatives in September, but has been stalled in the Senate over issues such as the reapportionment of damages.

While the coalition expressed optimism this week, the Biotechnology Industry Association (BIO) said several issues still haven't been ironed out. "A wide range of industries, labor unions and universities continue to have serious concerns about key provisions of the Patent Reform Act," BIO President and CEO Jim Greenwood said in a Tuesday statement.

But Dudas said the applicant quality submissions issue seems to be worked out. The Bush administration supports language now in the bill that would require patent applicants to do a minimum search for old patents covering their inventions, he said. About 55 percent of the U.S. Patent and Trademark Office's (USPTO) resources go into examining patents that are ultimately rejected, he said.

In order for the USPTO to improve the quality of patents granted, "the system must focus on the quality of applications," Secretary of Commerce Carlos Gutierrez said in a letter to senators dated Thursday. "Stated simply, our innovation system can no longer afford the time and the cost of heavily subsidizing poor quality patent applications, which crowd out our most important innovations."

Each applicant applications costs the USPTO US$4,200, while basic filing fees are under $1,000, Dudas added. "It's very easy to apply for something while doing only minimal work," he said.

But a handful of inventors who dialed into the Friday press call with Dudas questioned whether the bill now took the right approach on applicant quality. One man, from Portland, Oregon, said that instead of making more work for small inventors, the USPTO should raise filing fees and increase pay for patent examiners. The European Union has increased its search fees, the inventor said.

"I would expect that's going to reduce the number of filings," the inventor said of raising fees.

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