White House Opposes Patent Reform Act’s Limit on Damage Calculations

Reform of the U.S. Patent Act seems to be progressing toward reality as S. 1145, the Patent Reform Act of 2007, moves out of committee and toward expected review by the U.S. Senate later this month.  However, this week President Bush’s Administration expressed its opposition to the Reform Act’s changes to the method in courts are to calculate damages for infringement. 

According to a letter to Senator Patrick Leahy, the Adminstraion opposes the Reform Act’s specific requirements for damages calculations.  As the letter states, “the judiciary needs the flexibility to determine a reasonable royalty based on the facts of the particular case.”  The letter also expresses that “We believe that the risks to the patent system created by [the bill’s damages calculation provision] are overwhelming.”

While Senate review of the bill may be imminent, the bill’s ultimate success will still depend on further change.  In addition to the controversy surrounding damages, the bill’s proposed post-grant review process may also have the effect of strictly limiting the right of third parties to challenge a patent through reexamination.  This change has been opposed by nonprofit organizations such as the Electronic Frontier Foundation, which argues that the changes “would only permit [third parties] to question the validity of issued patents within twelve months of issuance.”

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