Patent Reform, American Style

The United States is considering reforms to its patent system. Without participation from developers, though, the scales may be tipped against Open Source. It’s time to participate in government the way you write code: just dive in and do it.
While the software world has been paying rapt attention to Europe’s consideration of the Computer-Implemented Inventions directive, new initiatives to reform the United States patent system have been underway.
With bipartisan support, Representative Lamar Smith (R-TX) introduced H.R.2795, or The Patent Reform Act of 2005. Smartly, Smith’s draft legislation incorporated many of the suggestions from the National Academies of Science report titled “A Patent System for the 21st Century” (2004) and the Federal Trade Commission’s report, “To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy” (2003). For the software industry — and that includes the Open Source Software movement — H.R. 2795, as originally proposed, contained a number of attractive alterations to the patent system.
Some included:
*Reduced exposure to assertions of willful infringement by (among other things) raising the standard of proof from the plaintiff from a “preponderance of the evidence” (think of that as 50.1 percent) to “clear and convincing evidence” (think of that as 67 percent).
*The inception of two post-grant opposition periods when third-parties could challenge the validity of a patent. The first period would commence immediately upon issuance of the patent, and the second would commence upon the assertion of the patent in an infringement action. (The latter opposition period would be particularly valuable to the software industry.) These oppositions also would adopt the lower “preponderance of the evidence” standard for proving invalidity.
*The disclosure of all patent applications 18 months after filing instead of disclosing just those patent applications for which a corresponding foreign application had been filed.
*A provision to reinforce the premise that injunctive relief is at the discretion of the court and considers all pertinent evidence.
The latter provision was particularly important in light of the recent May 2005 ruling of the Federal Circuit Court of Appeals in Mercexchange, L.L.C.v. eBay, Inc. and Half.com, Inc., in which the court held that U.S. District Courts must issue permanent injunctions upon the finding of patent infringement. That ruling clearly runs contrary to Section 283 of the United States Patent Act (35 U.S.C. § 283), which provides that injunctive relief is permissive, not mandatory.
Other provisions, some of which have questionable value to our industry, included assigning priority on a “first to file” basis rather than “first to invent.”[ For a compelling argument against “first to file,” see http://www.groklaw.net/article.php?story= 20050814182026814, which discusses Microsoft’s claim that it invented the “song menu software” found in the Apple iPod. —Editor]

Compromise Elusive…

However, other industries didn’t view H.R. 2795 as particularly beneficial. Smith brought together industry representatives from the pharmaceutical industry, the biotechnology industry, university technology transfer offices, and the software industry (represented by the Business Software Alliance) to try and work out the kinks. But due to substantial differences of opinion among the constituencies and the considerable lobbying weight of the pharmaceutical industry, there was little compromise.
Instead, a revised draft of the bill has now been advanced that is a mere shell of its prior self, and further consideration of the bill has been postponed until the fall (about the time you read this).
Gone is the second opposition period — a huge loss to Open Source — and a change that leaves small- and medium-sized businesses that file patent applications at the mercy of large industry players who can afford to monitor new patents and oppose during the single opposition period. The limitation on injunctive relief was also removed.

… But Influence is Still Key

While neither of the two provisions is likely to be reinstated in the bill because of pharmaceutical industry opposition, it’s not too late to add some worthwhile measures that are far less likely to attract opposition.
Some examples:
*Request funding to establish a central repository for software prior art in U.S. Patent and Trademark Office.
*Eliminate Section 271 (f) of the United States Patent Act (35 U.S.C. § 271 (f)), which extends liability for infringement to goods assembled outside of the U.S.
*Further amending the right to injunctive relief to eliminate the availability of such relief to so-called “Non-Producing Entities” (or companies that some refer to as patent trolls).
*Asking that the National Academies further study the application of injunctive relief in patent infringement cases in varying industries and further analyze whether various industries would be better served by a patent act that is custom-tailored to each industry.
While eliminating software patents altogether may be the best solution, a patent reform bill that incorporated these changes would at least be better balanced toward software in general and Open Source in particular.
However, these changes will only come about if the Open Source community participates in the change process. If you’d like to get involved, see Red Hat’s Open Source Now platform (http://www.redhat.com/opensourcenow/pp_intro.html), and the web site for the Open Source and Industry Alliance (http://www.osaia.org/).
It’s time to participate in government the way you write code: just dive in and do it.

Mark H. Webbink is Deputy General Counsel of Red Hat, Inc.

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