A new US law which would reduce the damages to be paid out for patent infringement has been passed by one half of the US legislature. The proposed law was backed by large technology firms and banks but opposed by smaller tech companies and drug companies.
The Patent Reform Act was passed by the House of Representatives on Friday. It must be passed by a vote of the Senate and signed by the President before becoming law.
The bill's supporters said that it was aimed at improving the quality of patents awarded and cutting down on the amount of expensive litigation over patents that takes place. The law proposes a cut in the damages that can be awarded for patent infringement.
It also changes the basis on which patents are awarded. The US is unusual in awarding patents to the first person to invent a technology. The bill proposes that a patent be awarded to the first person to file a patent application. This is easier to determine and, proponents hope, will result in less litigation.
Software publishers' lobby group the Business Software Alliance, which represents companies such as Microsoft and Apple, had backed the new law, which it says goes some way towards fixing a 'broken' patent system. The large hi-tech companies lobby says that the current system plays into the hands of abusive patent litigation and opportunism.
The bill was passed by just 220 votes to 175 with Democrats largely backing it. The 60 Republicans who voted for the bill were almost cancelled out by the 58 Democrats who crossed the floor and voted against it.
Innovation Alliance is a lobby group which represents smaller technology companies such as InterDigital and Qualcomm. It says that the new law could end up costing small businesses and universities money. Spokeswoman Susan Mora said that it was not acceptable to change the law "so patent infringers can reduce their supposedly soaring litigation costs".
The pharmaceutical industry, which earns its money through licences from drugs it invents, has opposed the change and said that it has been motivated by sector-specific concerns from large software publishers.
There are said to be concerns in the White House about the fact that the new law limits a judge's discretion in awarding patent violation damages. Even if passed by the Senate the law could be blocked by a veto from US President George W Bush.
Copyright © 2007, OUT-LAW.com
OUT-LAW.COM is part of international law firm Pinsent Masons.