Manufacturers remain at odds on patent reform

A lobbying fight between the high-tech industry and a group that includes manufacturers and pharmaceutical representatives has the potential to stall controversial changes to the nation’s patent laws at a time when the congressional calendar is filling up.

Heading into the congressional recess next week, several loose ends remain for a patent reform bill that has yet to get a floor vote in either chamber.

{mosads}The Senate Judiciary Committee approved a bill in April that the manufacturers and pharmaceutical companies could live with, and the tech industry at one point also appeared open to it. But in recent weeks, Silicon Valley has turned up the lobbying pressure on House members to keep that bill free of the Senate changes — in particular, language limiting damages won from lawsuits that tech groups believe will hinder economic growth.

Also, the Obama administration has yet to nominate its choice to head up the U.S. Patent and Trademark Office — a vacancy that has not helped the bill advance.

“The House legislation has serious negative economic impacts for manufacturers. It is a concern and it is our focus to address that,” said Kathy Roeder, a spokeswoman for the Manufacturing Alliance for Patent Policy, a coalition representing manufacturers.

At stake is a provision included in the Senate version, approved by the Judiciary Committee last month, which should limit damages awarded to plaintiffs in patent lawsuits. Known as the “gatekeeper” provision, it would give clear requirements to courts and judges on how to calculate patent damages by detailing the best practices in handling evidence of patent infringement. That measure could bring down some of the larger settlement payments seen in the past that have hit tech companies particularly hard.

But that provision is not included in the House version, and tech companies are lobbying to keep it out.

The Coalition for Patent Fairness (CPF), an alliance representing the tech industry, is working with House Judiciary Committee Chairman John Conyers Jr. (D-Mich.) and Rep. Lamar Smith (Texas), the ranking Republican on the committee, to preserve the House language in the damages section.

“We feel that in this economy, those provisions will spark innovation, research and development and much-needed job creation — 100,000 jobs over the next five years — that goes with it. We want the House bill as introduced to pass,” said a CPF spokesman.

The House Judiciary Committee has not set a date to mark up the bill.

Pharmaceutical companies and manufacturers, along with their unionized employees, have generally opposed reforming the patent system. They believe any weakening of patent laws, especially limiting damages, would allow foreign competitors to infringe upon U.S. products patented here. That could move jobs and investment overseas.

But the tech industry has lobbied hard for the bill. They argue patent lawsuits have unfairly tied up their scientists and engineers who should be off inventing, not responding to lawyers’ queries. In addition, huge awards from patent lawsuits have severely hindered, if not nearly shut down, some tech companies.

Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and others on the panel ironed out several kinks in the bill earlier this spring, winning support from manufacturers and others who initially opposed the bill. It also seemed at one point like the tech industry was warming to the Senate compromise.

For example, Microsoft, an influential CPF member, released a statement by Horacio Gutierrez, its deputy general counsel, saying the bill passed out of the Senate committee would “help modernize the patent system in important respects and represents a significant step forward in efforts to bring balance and predictability to the outcomes in patent litigation cases.”

Asked to comment on the House bill, a Microsoft spokesman deferred to the Business Software Alliance (BSA), another CPF member and the trade association representing software companies and their hardware partners.

“We like the House bill. The House has been a leader on this issue for the past few years and we strongly supported the House bill in 2007,” said Dale Curtis, vice president for communications at BSA. “The areas of bipartisan agreement outweigh the areas of disagreement. It is not beyond our ability to resolve the remaining issues.”

Some have called for the Senate to move first on its bill by holding a floor vote. In a letter to Senate Majority Leader Harry Reid (D-Nev.) last week, more than a dozen unions urged action on the Senate version.

“We hope that you will recognize the enormous progress on a very difficult issue that this bill represents and schedule time for Senate consideration in the near future,” the letter states.

But the Senate leader has yet to schedule a floor vote.

“We are still taking a look at this complicated issue and how it fits into the broader floor schedule,” said Regan Lachapelle, deputy communications director for Reid.

Both chambers know the clock is ticking. Major debates on healthcare reform and climate change legislation, as well as the Senate Judiciary Committee’s hearing on President Obama’s Supreme Court nominee, are expected to begin this summer and go into the fall. The June work period may be the best chance for patent reform to pass this year on Capitol Hill.