House CIIP Subcommittee Holds Hearing on Patent Bill

June 9, 2005. The House Judiciary Committee's Subcommittee on Courts the Internet and Intellectual Property (CIIP) held a hearing titled "H.R. 2795, The Patent Act of 2005". This was the CIIP's third hearing this year on proposed revisions to the Patent Act.

The first two hearings pertained to patent law reform generally, and the earlier Committee Print [52 pages in PDF] of the "Patent Act of 2005". See, story titled "Summary of the Committee Print of the Patent Act of 2005" in TLJ Daily E-Mail Alert No. 1,122, April 25, 2005.

On June 8, Rep. Lamar Smith (R-TX) (at right), the Chairman of the CIIP Subcommittee, and others, introduced HR 2795 [63 pages in PDF], which makes numerous changes to the Committee Print.

This bill switches to a first inventor to file system (Section 2), limits the availability of injunctions of patent infringement (Section 7, at page 40), makes changes in the availability of damages for infringement, imposes duties of candor on persons associated with the filing and prosecution of patents, and creates new post grant opposition procedures.

35 U.S.C. § 283 currently provides that "The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable."

HR 2795 would add the following language: "In determining equity, the court shall consider the fairness of the remedy in light of all the facts and the relevant interests of the parties associated with the invention. Unless the injunction is entered pursuant to a nonappealable judgment of infringement, a court shall stay the injunction pending an appeal upon an affirmative showing that the stay would not result in irreparable harm to the owner of the patent and that the balance of hardships from the stay does not favor the owner of the patent."

For opponents of changing current law, this is an improvement. The Committee Print had provided that "A court shall not grant an injunction under this section unless it finds that the patentee is likely to suffer irreparable harm that cannot be remedied by the payment of money damages. In making such a finding, the court shall not presume the existence of irreparable harm, but shall consider and weigh evidence that establishes or negates any equitable factor relevant to a determination of the existence of irreparable harm, including the extent to which the patentee makes use of the invention."

TLJ intends to write a more detailed summary of HR 2795 in a forthcoming issue.

This hearing, like prior hearings in the House and the Senate, demonstrated that there remain significant interests with strong opposition to some of the fundamental changes to patent law contained in the bill, particularly the limitation on the availability of injunctions, and switching to the first inventor to file rule.

The CIIP heard from witnesses who criticized the injunctive relief provisions. Other witnesses at other hearings have criticized this also. In contrast, many others adamantly support limiting the availability of injunctions.

For the opponents the argument is basic. Patents are a form of intellectual property. The most important of the attributes of any property right is the right to exclude others from using the property. A property owner enforces exclusivity with an injunction. Hence, limiting the availability of injunctive relief goes to the heart of patent rights.

Gary Griswold testified at this hearing on behalf of the American Intellectual Property Law Association (AIPLA). He wrote in his prepared testimony that "AIPLA strongly opposes this provision. It would devalue the property right of patentees by undercutting their traditional right to injunctive relief against adjudged infringers. The impact would appear to be especially harsh on independent inventors who already face great difficulty in commercializing their patented inventions. It would likewise be equally harsh on universities which are precluded in many, if not most, cases from directly commercializing their inventions and which must therefore rely on licensing or selling their inventions. It would also set an extremely unfortunate precedent internationally for the United States by suggesting to other nations that there need be no patent exclusivity for all inventions - that other nations can also pick and choose the patented inventions for which they wish to grant exclusivity."

Carl Gulbrandson testified that the proposed legislation would inhibit university technology transfer systems. He opposed the section on injunctive relief, and other sections.

He also wrote in his prepared testimony [PDF] that "Elements of the Patent Act of 2005 represent the interests of a narrow group of companies from one or two industry sectors ..." (See, page 12.)

At the hearing, Rep. Howard Berman (D-CA), the ranking Democrat on the CIIP Subcommittee, began his five minutes for questions by scolding Gulbrandson. He said this statement is "preposterous" and "gets under my skin".

Gulbrandson is from the state of Wisconsin, and represents the Wisconsin Alumni Research Foundation. Two of the eighteen members of the Senate Judiciary Committee, Sen. Herb Kohl (D-WI) and Sen. Russ Feingold (D-WI), and the Chairman of the House Judiciary Committee, Rep. James Sensenbrenner (R-WI), represent the state of Wisconsin.

The House Judiciary Committee, and its CIIP Subcommittee, have a history of approving bills that are not approved by the full House and/or the Senate.

See also, prepared testimony of Josh Lerner of Harvard Business School. He and Adam Jaffe co-authored the book titled Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It. [Amazon].

The fourth witness was David Ravicher of the Public Patent Foundation. See, prepared testimony [10 pages in PDF]. He asserted that he speaks for the public interest on patents.

The photocopy of HR 2795 distributed to reporters at the hearing lists only one sponsor, Rep. Smith. Rep. Berman and Rep. Bob Goodlatte (R-VA) praised and defended the bill at the hearing. Rep. Zoe Lofgren (D-CA) praised the bill, but said that it is "not the final product". Rep. Darrell Issa (R-CA) said that he is a cosponsor, but went on to describe the bill as "a first cut". He also advocated changes not in the bill. For example, he said that patent specialization in the federal courts should be in the trial courts, not the appellate court. Rep. Adam Schiff (D-CA) stated that he supports "a lot" of the bill. Rep. William Jenkins (R-TN) and Rep. Chris Cannon (R-UT) attended, but did not express their views about the bill. Rep. Rick Boucher (D-VA), who is usually active on technology and intellectual property issues, did not attend this hearing.

Rep. Smith announced at the conclusion of the hearing that the CIIP Subcommittee will mark up the bill on June 30.