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months of issuance (a timeframe supported by the Administration) under section 323. The counterpart U.K. opposition law provides for an opposition proceeding within two years after the date of grant, but the European Patent Convention opposition period is only 9 months. We respectfully suggest the creation of a reasonably moderate time frame of 12 months by changing the language of section 323 in H.R. 2795 from "9
months" to "12 months."
Further, we recommend allowing anyone who is threatened with a patent infringement action to file a request for an opposition proceeding within six months after receiving notice of the patent infringement action. Without the six-month window for initiation of an opposition proceeding upon a threat of patent infringement, the opposition proceeding would be seldom used. Organizations would not likely expend the resources necessary to monitor the patents of their competitors or the resources necessary to invalidate a patent in an opposition proceeding without any tangible economic return. However, an infringement action provides a sufficient economic incentive to use an opposition proceeding to avoid paying infringement damages for a questionable patent or a patent of suspect validity. Moreover, the 6-month window for launching an opposition would foster a more detailed scrutiny of patents than ordinarily occurs during the typical 25 hours or less of examination at the PTO." We are pleased the H.R. 2795 contains this second 6-month window.
H.R. 2795 currently requires the new opposition proceeding to be stayed if the owner of the patent files an infringement action during the 9
Section 72(2)(b) of the U.K. Patents Act of 2004.
FEDERAL TRADE COMMISSION, TO PROMOTE INNOVATION: THE PROPER BALANCE OF COMPETITION AND PATENT LAW AND POLICY, A REPORT BY THE FEDERAL TRADE COMMISSION, October 2003, at 5.
month or 6-month windows for filing an opposition. This stay provision should be removed because it encourages costly litigation and allows the patent owner to control the opposition.
Both Visa U.S.A. and The Financial Services Roundtable are strong believers in the U.S. patent process as fundamental to a healthy U.S. economy and robust free enterprise system, and strong believers in the process you have started. With increases in pending patent applications and claims of infringement, there is a need for Congressional debate and frank discussion with members of the financial services industry and the patent community at large. Given the importance of the patent process, the USPTO should be fully funded without fee diversion and given adequate resources to perform its duties. At the same time, it is not enough for the USPTO to turn out patents in greater quantity if those patents are not of the highest quality. I know that Director Dudas shares this view and we appreciate his dedication to patent quality issues. Moreover, because of increases in frivolous claims of patent infringement, we encourage you to continue your focus on appropriate defenses and other tools for litigation risk management, especially efforts to curb the use of injunctive relief.
We look forward to participating further as you develop and move legislation to improve the patent laws.
Biography Jonathan Band received a B.A., magna cum laude, Phi Beta Kappa, in 1982 from Harvard College, and a J.D. from Yale Law School in 1985. From 1985 to 2005, Mr. Band worked at the Washington, D.C., office of Morrison & Foerster LLP, including thirteen years as a partner. Mr. Band established
his own law firm in May 2005. Mr. Band helps shape the laws governing
TESTIMONY OF CHUCK FISH
TIME WARNER INC.
UNITED STATES SENATE
COMMITTEE ON THE JUDICIARY
RECOMMENDED PATENT IMPROVEMENTS
June 14, 2005
Chairman Hatch, Senator Leahy, and Members of the Committee, it is an honor to have
the opportunity to appear before you today to discuss recommended improvements to our
nation's patent laws. My name is Chuck Fish, and I am Vice President and Chief Patent Counsel
of Time Warner Inc.
The patent system as it exists today touches Time Warner's diverse businesses in many
ways and works well in a variety of contexts.
There are several areas, however, where
improvements are sorely needed. The patent remedies environment, which is the subject of
today's hearing, is one of the most important. As a large and diverse media company, Time
Warner has an enormous and unique interest in the maintenance of strong intellectual property
protections in all contexts. We believe that creators and innovators must have the fruits of their
intellectual endeavors protected lest this country lose its edge in exporting valuable products like
our entertainment and technology products and services.
That strong commitment to intellectual property protection and, in particular today, a
strong and enforceable patent system in this country is wholly compatible with repairing a
remedy system that has begun to reward not innovation, but hiring tenacious lawyers. Indeed, it
Judiciary Testimony Hearing
is critical that the remedial aspects of the patent law and their judicial application strike the right
balance in today's complicated marketplace.
To illustrate problems in the current remedy system, imagine a company (either a large or
small company) that brings an exciting new information service to market. The company has
invested tens of millions of dollars in research, equipment, marketing, etc. and may have
negotiated license arrangements on a variety of patents needed for the service. Then, without
warning, the company is hit with a patent infringement suit by another patent owner the company
was previously unaware of who owns a patent that relates to a small part of the overall service.
The patent owner demands as damages a portion of the monthly fee charged to subscribers for
the overall service, including the new information service. In addition, the patent owner asks for
an injunction, which would prevent the company from providing the service at all merely as a
way to gain leverage and increase the likelihood of a favorable license fee. Thus, the new
service can be essentially paralyzed until the patent dispute is resolved.
Certainly, if the patent is valid, and the company truly infringes the patent, a broad range
of remedies including the issuance of an injunction may well be justified. However, as is
increasingly the case, if the patent is invalid, or the company does not infringe the patent, the
array of remedies brought into play through such a lawsuit cannot be justified. The company
faces the threat of multi-million dollar damages far higher than the value of the patented
component, as well as the threat of having to withdraw the service. The results and the relief in
such cases are often unpredictable. Even winning these nuisance lawsuits can cause major
damage to a large company, and can bankrupt a small company. In the end, most companies
settle with the patent owner rather than run the risk of litigating. Consumers are the real losers,