House Passes Bank, Hi-Tech Backed Reform to Curb Patent Lawsuits

September 10, 2007

Technology and financial services firms won a key patent reform victory Friday when the House approved legislation the industries have pushed for years by a vote of 220-175.

The Coalition for Patent Fairness and the Business Software Alliance, whose members include high-tech titans such as Apple Inc. and Microsoft Corp., lauded the decision as a boon for inventors and consumers.

Co-sponsored by Reps. Howard Berman, D-Calif., and Lamar Smith, R-Texas, the bill seeks to improve patent quality and reduce patent litigation, which can be a costly and time-consuming exercise for firms of all sizes.

The legislation would limit damage awards for patent infringement and grant patents to the first inventor to file an application, a switch from current law in which the patent goes to the first person to develop the innovation.

The bill also increase information available to patent examiners and creates a post-approval patent re-evaluation process.

Opponents of the bill included pharmaceutical and biotechnology companies, such as Johnson & Johnson and Amgen Inc., who say it weakens patent protection by reducing infringement penalties and permitting post-approval challenges to patents.

Manufacturing companies, including General Electric Co. and Caterpillar Inc., and technology companies that rely heavily on patent licensing, such as semiconductor-maker Qualcomm Inc., also opposed the bill.

The Innovation Alliance, a group representing Qualcomm and many smaller technology companies, said Friday before the vote that it would “radically alter” the patent system “to mitigate the potential litigation costs of the few wealthiest companies in the world.”

The Senate Judiciary Committee approved a similar version of the bill in July and it awaits a vote in the full Senate.

That bill includes a provision that would protect banks from damage awards in patent infringement cases involving electronic check-clearing technologies, such as check-imaging systems.

Banks have paid millions of dollars to settle allegations of infringement of such technologies, the American Bankers Association said in July.

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