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August 06, 2006

other: US patent system overhaul coming

The US patent system has significant legislation coming. I think a lot of the first draft will get passed with amendments and fine tuning.

The main elements of the new proposed legislation:
- Change to first file from first to invent.

- 12 month "postgrant opposition" system that would allow outsiders to dispute the validity of a patent before a board of administrative judges within the Patent Office, rather than in the traditional court system. The idea behind such a proceeding, also endorsed by the Patent Office, is to stave off excessive litigation. Can get extension of the opposition but only to limited aspects after 12 months.

- the Hatch-Leahy bill would place new restrictions on the courts where patent cases could be filed. (Restricts "forum shopping" for districts known for favorable judges).

- Curb the amount of damages for winners of infringement suits.

- Perhaps most notably, and in a departure from the House version, courts would have to calculate the royalties owed by infringers based solely on the economic value of the "novel and nonobvious features" covered by the disputed patent, not on the value of the product as a whole.

=====More comments:

First draft, probably because of competing priorities among the technology, drug, biotechnology and other patent-heavy industries they will fine tune. I expect that a lot of what is in it will probably get through. But fine tuned. This will favor big companies and those who execute on deliverying innovation more instead of those who invented innovation first.

The strategy is patent as fast as possible and exploit your innovations and make your money. It will tough for someone to take it away and you will need money to keep others from violating. Only really gross and obvious patent violations will get stopped. You probably have to have a series of patents on the innovations. The minor tweaks will no longer be worth much. (although the tweaks could make a lot of money in business, the legal rewards for the innovation will be a lot less if you have to prove how much came from the tweak)

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