[Ip-health] Bush sides with Pharma/Bio over Tech companies on patent reform

[robert weissman]

Thanks to Pharmalot for the tip.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/05/BUOGURRUS.DTL
Bush staff, tech titans split over patent bill

Tom Abate, Chronicle Staff Writer

Tuesday, February 5, 2008

The Bush administration said Monday that it opposes a key provision of a
patent reform bill that has passed the House of Representatives and is
awaiting a floor vote in the Senate, taking sides in an intellectual war
over how best to promote innovation.

The position puts the administration at odds with big technology firms
like Intel, IBM, Apple, Google, Cisco and Hewlett-Packard that have
banded together to push the bill, and squarely on the side of the
biotech and venture capital industries, which say the proposed change
would significantly weaken patents.

A patent is a government-issued monopoly that gives inventors the legal
right to control the use of their discoveries for up to 20 years.

In a six-page letter written on behalf of the U.S. Patent and Trademark
Office, the administration told senators that it disagrees with a
provision that would change the way damages are calculated in cases when
patent infringement is proven. That change "could promote infringement,"
the administration warned, saying it would oppose the legislation unless
the bill is changed to "protect the inventor."

"What the administration is saying on damages is our position as well,"
said Kelly Slone with the National Venture Capital Association, which
has sent senators a letter signed by Kleiner Perkins Caufield and Byers,
New Enterprise Associates and others.

Mark Isakowitz, a lobbyist with the tech-sponsored Coalition for Patent
Fairness, downplayed the significance of Monday's letter, saying the
administration made much the same argument before the House passed its
patent bill by a 220-175 vote in autumn.

"We strongly and respectfully disagree with their view," said Isakowitz,
adding that he still expects the bill to come up for a floor vote in the
Senate around the end of February. "Between now and then we have to try
and reach a broader consensus on damages," he said.

Patents are authorized in Article I of the Constitution, which gives
Congress the power "To promote the Progress of Science." But the
Constitution does not say exactly how, which has meant a never-ending
series of arguments, said Kenneth Dobyns, a retired patent attorney who
wrote a history of the system called "The Patent Office Pony."

"There's never been a time when it wasn't like this," Dobyns said.

At the heart of the current dispute is the fact that patents, which have
been on a sort of pendulum swing throughout U.S. history, from worth
very little to worth very much, are somewhere at the high end of their
historical value.

The reasons have little to do with Congress, which has not really
changed patent law since 1952, but rather with a reorganization of the
federal court system in the 1980s. That change created what amounts to a
special court of appeals for patent cases that has, generally speaking,
ended up strengthening patent law, according to Bronwyn Hall, a UC
Berkeley economist who has studied the situation.

Perhaps the high point of patent strength, at least to members of
Congress, came in recent years when the Canadian company Research In
Motion paid $612.5 million in March to settle a patent dispute that had
very nearly lead to a court-ordered injunction stopping sales of the
BlackBerry device, which is popular on Capitol Hill.

The size of the settlement and the drama leading up to it lent credence
to tech industry complaints about patents.

"We have a system which is out of whack, out of balance," said Tim
Sheehy, a Capitol Hill lobbyist for IBM Corp., which backs the current
language on damages that the White House opposes.

Biotech industry leaders feel particularly threatened by proposed
changes because their whole industry has grown up in the past 25 years
when, largely thanks to court actions, patents have become more and more
valuable.

"If it comes down to a choice between a tilt toward the iPod or a tilt
toward cancer cures, I think that's a no-brainer," said James Greenwood,
president of Biotechnology Industry Organization.

What remains to be seen is whether the disagreement over damages can be
ironed out, or whether the bill will stall.

"A forced choice is a false choice. The current proposal forces a choice
of promoting one innovation over another," said Patent Office Director
Jon Dudas, who held out hope of an agreement being reached.

E-mail Tom Abate at tabate@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/05/BUOGURRUS.DTL