Business Connections
A Business Law Update
7.15.2005
Proposed Legislation Would Radically Change Current Patent Law
Kenneth R. Davis II and Garrett Crawshaw
The winds of change are blowing hard in patent law. On June 8, 2005, Congressman Lamar
Smith (R-TX) introduced the Patent Reform Act of 2005. The Act proposes to fundamentally
change patent law in several significant respects. The major provisions of the Act are many, but
a few of them are addressed below.
Change the United States from a “first to invent” to a “first to file” system. Currently, under
U.S. law, the first person who can prove that she was the first to conceive and reduce an
invention to practice has rights senior to other subsequent inventors. Other countries generally
use the first to file rule granting a patent and all rights to the first person who files a patent
application for an invention. Proponents claim that the Act would reduce costly litigation that
may be necessary under the current system to establish which invention actually came first.
Patent Quality. In the last several years criticism has grown that patents are too readily issued
on inventions that are obvious or insufficiently novel or useful. The Act would allow greater
latitude to third parties to challenge pending patent applications. The Act would also allow those
accused of infringing greater rights to challenge the validity of the patent after it was issued.
Damages. Under current law, a party found liable for infringing a patent may be ordered to pay
treble damages where the infringement was found to be “willful.” The Act limits judicial
determination of “willful” infringement to the most egregious cases.
Injunctive relief. Judges now have broad latitude to craft an injunction that will restrict the
future conduct of an infringer. The Act will limit a judge’s discretion in this regard and makes it
much more likely that any injunction entered will be stayed by the court pending appeal. Under
current law, a relatively quick hearing on an injunction will dispose of the entire case. The result
of the Act is that a patent holder will lose one of the most damaging enforcement weapons in its
arsenal.
While patent reform has been a frequent and failed target of Congress, the current proposed Act
is enjoying increasing bipartisan support. While the lines of demarcation are not always clear,
generally, the Act is favored by owners of large patent portfolios who claim that “patent trolls”
who never commercialize their own patents but instead wait to sue companies with similar
inventions for infringement. To date, the strongest opposition to the Act comes from groups of
independent inventors and small businesses that claim that a first to file system imposes undue
cost and burden an inventor with fewer resources.
The entire text of the Act can be found at
http://www.lanepowell.com/pdf/2005_draft_patent_statute.pdf
This article was co-authored by Kenneth R. Davis II and Garrett Crawshaw. Ken is a
shareholder at Lane Powell who practices in the area of complex commercial litigation, with a
special focus on intellectual property litigation, including Internet, copyright, patent, trademark
and trade secret, antitrust and telecommunications. Ken can be reached at
davisk@lanepowell.com or (503) 778-2121. Garrett is a summer associate in Lane Powell's
Portland office. He is a third-year law student at University of Oregon.
For more information on these or other business issues, please contact our Business Lawyers at:
Lane Powell PC
(503) 778-2100 Portland
(206) 223-7000 Seattle
businesslaw@lanepowell.com
or visit our website at http:www.lanepowell.com
We provide Connections as a service to our clients, colleagues and friends. It is intended to be a
source of general information, not an opinion or legal advice on any specific situation, and does
not create and attorney-client relationship with our readers. If you would like more information
regarding whether we may assist you in any particular matter, please contact one of our
lawyers, using care not to provide us any confidential information until we have notified you in
writing that there are no conflicts of interest and that we have agreed to represent you on the
specific matter that is the subject of your inquiry.