Medical Device Daily Washington Editor

WASHINGTON — The Senate Judiciary Committee met yesterday to mark up the current iteration of patent reform legislation and voted by a hefty 15-4 margin to pass the bill along to the full Senate along with changes to provisions that deal with how damages are to be determined in patent lawsuits. However, the question of post-grant reviews continues to dog the legislation and a motion to require that congressional appropriators keep their hands off patent application fees died in a party-line vote.

The Patent Reform Act of 2009 (S. 515) originally offered the same provisions dealing with damages as last year's S. 1145, but a hearing held last month made clear that committee chairman Pat Leahy (D-Vermont) was willing to address the concerns of life science industries despite substantial lobbying by information technology companies (Medical Device Daily, March 11). In last month's hearing, Leahy told Medical Device Daily he was willing to take whatever time was necessary to deal with the damages question, but the committee moved more rapidly on this issue than some observers anticipated.

Leahy said in his opening statement that "patent reform is urgently needed" and noted that an agreement had been reached on the damages provision that was satisfactory to several groups, including the Coalition for 21st Century Patent Reform and the Biotechnology Industry Organization (both Washington), a group of stakeholders Leahy described as representing "a pretty broad spectrum."

Sen. Arlen Specter, the ranking GOP member, said of the rewrite to the damages provisions which scuttled the widely reviled apportionment language that "the response has been uniformly positive from stakeholders." On the other hand, Specter was quick to note that committee member John Kyl (R-Arizona) had offered an amendment dealing with post-grant review, but it became clear that Kyl's amendments would gain no traction. Leahy said he had previously informed Kyl that it was his intent "to finish the bill today," and that he was worried that "if you break it apart [to insert amendments dealing with others issues], the whole thing falls apart."

Leahy added that "when you come to an agreement, everyone is not satisfied," but he noted that while post-grant review "is a very important item," the "committee's action is not the end of the line" for such matters, hinting that Senate majority leader Harry Reid (D-Nevada) might allow floor action on the question.

Leahy noted that the amendments get rid of the apportionment approach to dealing with damages and instructs judges to provide juries with specific instructions on how to determine damages, the so-called gatekeeper function. He also remarked that he would have gone further on the language regarding instructions to juries, but said, "as Senator Specter said, nobody gets everything they want."

Sen. Orrin Hatch (R-Utah), a long-standing proponent of patent reform, indicated that he was not happy with the amendments to the bill, in part because of the overwrite of the language providing apportionment as a means of damages determination. "I cannot support the manager's amendment," Hatch said, because the new language "does not improve the status quo." Hatch also bemoaned the provision that watered down the assessment of culpability for willful infringement.

"I'm sick and tired of non-innovators who overuse the inequitable conduct provisions and walk away" with undeserved riches, Hatch asserted. He said the current effort constitutes "a bifurcated approach" in that it attempts to placate IT firms and life science companies. "I'm disappointed that I can't support it, and I won't support it," Hatch said, adding that he felt "that if I were to support this bill in its current form, I would regret it in the future."

Hatch was on his way out the door when Leahy attempted to respond, acknowledging that "the damage provisions are not what Sen. Hatch and I originally produced." He said that he and Hatch had worked extensively on the inequitable conduct issue. "I don't want to make a bad change to the law," Leahy said, but refused to slow down the mark-up. Sen. Diane Feinstein (D-California), stated that she was "sorry to hear about Sen. Hatch because he worked very hard," on patent reform legislation, but she echoed Leahy's hopes of passing the bill out of committee during the meeting.

"I think this bill actually gives the parties 90% of what they want," Feinstein said, noting that while "inequitable conduct remains the same," the question could nonetheless be reviewed later.

Sen. Jon Kyl (R-Arizona) commented that he would "associate myself with Sen. Hatch's remarks" and offered an amendment that would deal with post-grant review. His amendment, he said, "elevates the threshold for post-grant review" and asserted that "current law requires only that the challenger raise interesting or noteworthy questions," allowing 90% of such requests to go forward. He said the practice ties up the system, and a patent owner whose patents are found to be clear "receives nothing but his lawyer's bill."

However, Feinstein rebutted that the Patent and Trademark took in 1.6 million applications last year and granted only 53 examinations. "Why do we need to make this process any more difficult. It's used so rarely," she said, adding, "I would oppose the amendment."

Sen. Tom Coburn (R-Oklahoma) proposed an amendment that would impose a lockbox on fees collected by PTO. "We've taken $762 million from patent office fees and used it for other things," Coburn said, pointing out that monies collected under FDA's user fee programs stay with the agency. "It really is a misdirection of funds . . . and quite frankly, we're putting a lot of new stuff into the Patent Office" that will require more funds, he said. "It makes common sense and is what should be expected by those" who file patent applications.

Specter said "the analogy with FDA is good" and said "I thought it was a good idea." Leahy said "I always liked the concept," but demurred because he saw it as a case of "stepping into the jurisdiction of other committees."