Damages a Hurdle to Patent Reform
March 23, 2009, National Law Journal

The current recession has only made the need for patent reform more urgent. In early March, US lawmakers came together in an attempt to seek consensus over one of the most controversial issues affecting patent reform legislation – damages – a decision that would ultimately overhaul the nation's 50-year-old patent system.

"The Senate and House bills, introduced simultaneously in March, are very similar to last session's reform efforts, but do have some new provisions and are missing some old ones, based on the last round of discussions," noted Heidi L. Keefe, Intellectual Property partner at White & Case's Palo Alto office.

As reported in the article, Keefe sees three separate players with different vested interests in the legislation: pharma, tech, and so-called nonpracticing entities (NPEs), which only own patents and sell licenses for their use. There are also interesting hybrids such as universities and research institutions, for example, Rambus Inc. It is unfair to call the hybrids "trolls," she said, because they do contribute to innovation but have a different interest in the way patents are utilized.

"Pharma needs a strong patent system because it spends substantial money and resources developing truly inventive products," Keefe added. "It needs a damages system that compensates for wholesale infringement of a drug."

"The tech industry recently has been saddled with the fact that its products often encompass numerous inventions," she said, adding, "They need to be certain if a patent is granted, it is truly inventive, and, if a royalty is granted for that patent, it only be granted for that portion of the product truly affected by the patent. So apportionment of damages is incredibly important to the tech industry."

"Neither entity is wrong, but their interests are very different because their products and technologies are very different."

"The NPE has a third viewpoint," Keefe added: "to be able to use the patent system to file its lawsuits in order to, in many cases, protect its investments in research, or, in the case of trolls, to recoup more money than it perhaps deserves."