By Pamela W. Bertani

As Congress continues to mull over the Patent Act of 2005, and the Act is subjected to ever increasing scrutiny, what some believe are serious flaws in the legislation have surfaced, creating considerable cause for concern. A previously published companion article highlighted various provisions of the proposed legislation, which bill sponsor Congressman Lamar Smith (R., Texas) extolled as being necessary “to bolster the United States economy and improve the quality of living for all Americans” as well as to “create new jobs.” While these objectives are clearly inviting – particularly in light of growing criticisms regarding Patent Office inefficiency, the lack of qualified patent examiners, the poor quality of issued patents, and the corresponding escalation of profoundly expensive patent litigation – some believe that the legislation may result in fixing current patent procedures that are not broken, which will create more chaos than stability in an already stressed system. Two hotly contested provisions in this regard concern the Act’s redefinition of “prior art”, and the provision governing the issuance of injunctions.

In what some commentators have deemed a sleeper provision with potentially devastating impact, Section 3 of the Act redefines what constitutes prior art in determining the conditions for patentability. As it currently stands, prior art comprises earlier issued patents as well as inventions that have become part of the public domain through public use, knowledge, publication or sale, regardless of whether the underlying inventive information was fully understood or accessible to all. Section 3 changes this standard, and appears to narrow the scope of what constitutes prior art. Pursuant to the new definition as expressed in subsection (a)(1), prior art would comprise information that was “publicly known” more than one year before the application filing date, or “publicly known” before the filing date other than through the inventor’s disclosure of the claimed invention. The critical language here is “publicly known”, a phrase which many believe will become a major focus of future patent infringement cases challenging the validity of issued patents. Pursuant to the Act:

Subject matter is publicly known for the purposes of subsection (a)(1) only when –

(i) it becomes reasonably and effectively accessible through its use, sale, or disclosure by other means; or

(ii)it is embodied in or otherwise inherent in subject matter that has become reasonable and effectively accessible.

Arguably, the proposed prior art definition could permit someone to patent what would otherwise be considered public domain information, unless someone skilled in the art could both gain access to the subject matter and comprehend its content without undue effort. Many commentators contend that the new reasonably and effectively accessible standard will create uncertainty with respect to what constitutes prior art, and substantively narrow the scope of cognizable prior art citable to prevent protection of public domain information.

The current prior art categories and standards have evolved from a rich and well understood body of law. Precedent does not exist for the newly proposed standard, which would leave courts with the daunting task of fettering out, on a case-by-case basis, what is or is not “publicly known” with respect to any given invention. And to what end? It is highly questionable whether such a change would do anything whatsoever to promote innovation, improve Patent Office efficiency or otherwise benefit the public. An opposite result may be much more likely – the prospect of patenting public domain information could stifle innovation and create a disincentive for originality and creativeness in thinking up new inventions; the Patent Office could be flooded with applications for inventions that would otherwise be considered devoted to the public domain, further burdening an already overloaded patent application processing system; and most importantly, the public would be disadvantaged as a result, since access to public domain information would be restricted, and needed new innovations would either not be invented, or would be bogged down in a Patent Office bombarded with the public domain applications. The prior art standard is simply an issue that does not need fixing by the Patent Act of 2005.

The Act also decreases the likelihood of courts issuing injunctions in patent infringement matters, which is another hotly contested aspect of the proposed legislation. The current rule in this regard is that courts will generally issue permanent injunctions against patent infringement absent exceptional circumstances. Section 7 of the Act arguably waters this rule down, and makes the prospect of an injunction much more discretionary – again without good reason, and without the aid of precedent as guidance. According to Section 7:

In determining equity, the court shall consider the fairness of the remedy in light of all the facts and the relevant interests of the parties associated with the invention. Unless the injunction is entered pursuant to a nonappealable judgment of infringement, a court shall stay the injunction pending an appeal upon an affirmative showing that the stay would not result in irreparable harm to the owner of the patent and that the balance of hardships from the stay does not favor the owner of the patent.

Thus, courts are required to stay an injunction pending appeal upon a showing that a stay would not irreparably harm the patent owner, and that the patent owner would not bear the brunt of hardships as a result of a stay. Patent owners and representative organizations have obviously objected to the proposed new standard as devaluing patent owners’ property rights by circumventing their traditional right to injunctive relief against adjudged infringers. This is a point well taken. Of what value are property rights that cannot be effectively enforced against infringers, pirates, and other intellectual property misappropriators? The answer to this question is even more poignant when one considers the escalating expenses associated with prosecuting a patent application through to completion and issuance, and then being forced to contemplate litigation in order to protect the patent rights granted.

The final language of the bill is anyone’s guess at this point. As we continue to monitor the bill’s progress, the prospect of new and important issues of contention is likely, which will undoubtedly impact the bill both substantively and procedurally. It is beyond credible dispute that patent reforms are needed to streamline the patent application process, increase Patent Office efficiency, and ensure that high quality patent are ultimately issued. Equally important is adherence to the old adage – if it isn’t broken, don’t fix it. Hopefully Congress will find the right balance between these two opposing objectives.