[Ip-health] Patent System's Revamp Hits Wall

[Judit Rius Sanjuan]

Patent System's Revamp Hits Wall
http://online.wsj.com/article/SB118817303708409352.html

Globalization Fears Stall
Momentum in Congress;
AFL-CIO Sends a Letter
By GREG HITT
August 27, 2007; Page A3

WASHINGTON -- A bipartisan effort in Congress to overhaul the patent
system -- a priority for some of the nation's biggest technology
companies -- is hitting resistance because of concerns the U.S. might be
exposed to greater foreign competition.

Patent overhaul appeared to be on a fast track earlier this summer. But
plans for a quick vote got derailed last month after the AFL-CIO entered
the debate, warning that innovation -- and union-backed manufacturing
jobs -- might be at risk if the changes were adopted. The union has
considerable clout in the Democratic Congress and expressed concerns
with provisions that would expose patents to expanded challenges and
might limit damages for infringement.

"At a time when the Chinese government is constantly being challenged to
live up to its intellectual-property obligations, we do not want to take
actions that may weaken ours," the AFL-CIO's legislative director,
William Samuel, said in the pointed missive that was circulated on
Capitol Hill.

The sweeping patent initiative -- backed by a business coalition
dominated by technology companies such as *Cisco Systems* Inc. and
*Microsoft* Corp. -- would indeed shift the balance of power of the U.S.
patent system. It would make it a bit harder for holders to protect
patents. Advocates of the legislation contend the current system
encourages patent litigation and costly judgments against infringers --
and stifles innovation. They say the proposals are designed to bring
patent rules in line with the rapidly changing U.S. economy, where
inventions often reflect hundreds of potentially patentable ideas.

Mark Chandler, Cisco's general counsel, dismissed concerns that non-U.S.
companies might gain some advantage by the bill. He said the proposed
changes would strengthen companies at "the heart of innovation in the
American economy," better positioning them to compete at home and abroad.

Opponents of the legislation argue that it would make it easier for
foreign competitors to legally copy patented methods and products.

The maneuvering dramatizes how fears about global integration are
spreading across many issues.

Such concerns have placed in doubt prospects for President Bush's trade
agenda, including market-opening deals with Colombia and South Korea.
Renewal of the president's authority to negotiate deals appears even
more remote. Democrats in Congress are pushing to shore up programs that
help workers who lose their jobs as a result of foreign competition.

The angst about globalization also helped fuel opposition to an
immigration-overhaul bill that would have opened a path to citizenship
for millions of undocumented workers. It has led Congress to enact rules
governing foreign investments in the U.S.

The spillover of those worries into the patent debate "shows the breadth
of the concerns about this model of globalization," says Lori Wallach,
who heads Public Citizen's Global Trade Watch, an advocacy group
critical of the Bush agenda. "It's not just trade agreements any more."

Calls for changes in the patent system have been building for some time
and gained traction after Democrats took control of Congress this year.
In both the House and the Senate, bipartisan coalitions emerged to take
up the issue. And the initiative, with the help of some savvy lobbying
by business supporters, appeared on track for passage, despite the
partisan-charged political environment on Capitol Hill.

The patent initiative, which has been pushed by the financial-services
industry, as well, took an important step forward in July. Both the
House and the Senate judiciary committees approved broadly consistent bills.

The White House made clear it was also on board. While raising concerns
about some details of the legislation, the Bush administration has
offered general support for "the goals" of the initiative.

But the labor-driven pushback gave Democratic leaders pause about
rushing action on the legislation before lawmakers left town for the
August break. Floor votes in the House and Senate are expected this fall.

 From the beginning, the legislation has faced opposition.
Pharmaceutical and biotech companies have voiced concern. So have large
research universities and many manufacturers, such as *Caterpillar* Inc.
and *Dow Chemical* Co. They contend that the legislation is too
far-reaching and would stifle innovation by weakening the value of patents.

Then came the AFL-CIO. Leaders of the United Steelworkers union and the
International Federation of Professional and Technical Engineers, which
represents high-tech workers, offered similar concerns. The legislation
"could seriously threaten our nation's competitive edge in industries
that rely on innovation," Gregory Junemann, president of the engineering
group, warned lawmakers in another letter.

At about the same time, criticism with a strong antiglobalization bent
began to emerge among rank-and-file lawmakers in both parties. In late
July, Reps. Michael Michaud, a Maine Democrat, and Donald Manzullo, an
Illinois Republican, circulated a "Dear Colleague" letter noting
"foreign competitors" welcomed the legislation. The letter was
accompanied by an overseas newspaper story noting that pharmaceutical
companies in India saw the legislation as an opening to break patent
rights on brand-name drugs and gain an edge in the U.S. market.

"We just couldn't believe it" Rep. Manzullo said. "This is a very
serious problem."

Eventually, more than 60 House members joined in an appeal to House
leaders in both parties not to rush action. The request echoed of the
same language used by the AFL-CIO: "It is especially important that
these proposals not undermine our efforts to achieve better intellectual
property protection for U.S. companies overseas, particularly in China
and India."

Amid the concerns, House leaders backed off of tentative plans to run
the measure through the floor before lawmakers left town for the summer.

Rep. Howard Berman, the lead sponsor of the legislation, said it is
"hard for me to understand" why the legislation is being seen as hurting
the nation's competitiveness. "To the contrary," he says, "it is the
weakness and abuses of the current system that are impeding American
innovation." The California Democrat predicted the measure will be
brought up in September and win approval in the House.

--
Judit Rius Sanjuan
Attorney
judit.rius@keionline.org

Knowledge Ecology International (KEI)
www.keionline.org / www.cptech.org
1621 Connecticut Ave, NW, Suite 500 Washington, DC 20009 USA
Tel.: +1.202.332.2670, Ext 18  Fax: +1.202.332.2673