WASHINGTON WATCH -Patent Law Changes Pending

One of the top items on this fall’s congressional agenda is the first overhaul since 1952 of the U.S. patent system. And it’s possible that the Patent Reform Act of 2005, introduced by Rep. Lamar Smith (R-Texas), will create a new agenda item for CIOs, who could become involved in helping their companies improve their business processes for pursuing patents. In addition, the proposal could accelerate the development of commercial software products.

The bill, which has bipartisan support, would change the basis for awarding patents from the current method—which credits the person or company that can prove they invented something first—to one that credits the person or company who first applies for the patent. Dennis Crouch, patent attorney at McDonnell Boehnen Hulbert & Berghoff, says that such a change would put pressure on companies to improve their internal business processes for preparing inventions to be patented. Otherwise, they may lose their intellectual property to a company that acts faster and files first.

Other parts of the bill would change the way patent disputes are handled, in order to decrease the hurdles that companies face bringing inventions to market. Instead of companies being able to sue each other for patent infringement at any time (as the current system permits), Smith’s bill would establish a definite period when a newly issued patent can be challenged out of court. When patent disputes do end up in court, another provision would prohibit the use of injunctions as a way to stop the sale of the disputed product while the case is pending. James Morris, a lawyer and shareholder with Wolf Greenfield & Sacks, says the proposal could benefit companies that want to begin producing a product without having to fear that a lawsuit will force them to stop. Pharmaceutical companies object to those portions of the bill that would weaken their ability to obtain injunctions, he adds.

Morris says the bill favors big software companies, which have the financial resources to file patent applications quickly. And it might hurt small software vendors and individual inventors who depend on injunctions to force bigger companies to settle in patent disputes. That may be why the Business Software Alliance (BSA), whose members include Microsoft and IBM, is fighting hard for the bill. BSA President and CEO Robert Holleyman says the bill is “of critical importance to the technology industry.”