On March 4, 2010, the Senate Judiciary Committee released its new “compromise bill” on patent reform. Senator Leahy described the objectives of the bill as follows:*
“we wanted to improve patent quality and the operations at the [Patent and Trademark Office], and address runaway damage awards that were harming innovation. We are close to a compromise that will address these issues.”
Damages in patent disputes are among the most difficult issues to address in the negotiations over patent reform. Leahy and others settled on the so called “gatekeeper compromise,” which allows the court to strictly limit the methodologies and factors relevant to the determination of damages.
5 SEC. 4. DAMAGES.
‘‘(b) PROCEDURE FOR DETERMINING DAMAGES.—
‘‘(1) IN GENERAL.—The court shall identify the methodologies and factors that are relevant to the determination of damages, and the court or jury, shall consider only those methodologies and factors relevant to making such determination.
But across town, the United States Trade Representative (USTR) is pushing for a new global norm that says exactly the opposite, in secret negotiations on the so called “Anti-Counterfeiting Trade Agreement,” known as ACTA.
On the issue of what methodologies can be or must be considered when determining damages for patent infringement, the US and Japan have proposed that judicial authorities be required to consider:
“any legitimate measure of value that may be submitted by the right owner.”
Considering the proposals by all countries, the current ACTA negotiating text on damages currently reads as follows:
(b) in determining the amount of damages for infringement of intellectual property rights, its judicial authorities shall consider, inter alia [EU: the lost profits] the value of the infringed good or service, measured by the market price, the suggested retail price, or other legitimate measure of value submitted by the right holder, [EU: the profits of the infringer that are attributed to the infringement].
Why is Senator Leahy, the head of the Senate Judiciary Committee, so out of step with USTR, on this issue?
* February 25, 2010, Juliana Gruenwald, “Leahy: Patent Deal Is Close,” Tech Daily Dose, National Journal.