Patent Reform 3-10 Hearing Commentary

Senator Leahy convened a hearing earlier this week, and as predicted the bulk of commentary and controversy was over the issue of damages.  

CNNMoney and eweek noted this in their summaries early in the week.  

The press has generally reported the now familiar rift between “High Tech” companies favoring reforms that may serve to limit patent damages, and the representatives of “Bio/Pharma” arguing that the case for reform has not been made.  Phillip Johnson of Johnson & Johnson was quoted the most in articulating that position, while various persons in favor of the reform were cited, including Stanford professor Mark Lemley.  

Lemley was quoted as decrying the “significant judicially created problem with litigation abuse of the patent system that Congress should address: the problem of damages calculation in reasonable royalty cases”.  In fact, Lemley’s position is more nuanced than that.  His prepared testimony noted that since Congress began debating patent reform, several decisions by the Supreme Court and the Federal Circuit have fixed some of the problems he saw in patent law.  These include eBay v. Mercexchange (regarding the availability of injunctive relief), KSR v. Teleflex (relating to obviousness), In Re Seagate (willful infringement), and others.  In fact, Lemley recommended holding off on patent damages reform until after the Federal Circuit has ruled on several cases that will affect the reasonable royalty analysis, including the entire market value doctrine potentially at issue in the Lucent v. Gateway case currently pending before the Federal Circuit.

Richard Cauley has an excellent guest post in PatentlyO about the proposed reforms to patent damages. He notes that while the intent of the proposed reforms are noble – limiting patent damages to the economic value of the patent – the effect will be to create a judicial nightmare of hearings on how to apply the Georgia Pacific factors – or “damages Markmans”.

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