House Passes Legislation to Reform Patent System

Recently, the House of Representatives passed by a vote of 220 - 175, The Patent Reform Act of 2007 (H.R. 1908), to modernize the patent system. I was a cosponsor of the bill.

It has been 55 years since the law was last significantly updated. Today our patent system is overburdened with applications on trivial inventions and many now view patent litigation as a way to prevent competition or reap windfall profits.

Many improvements were made to the Patent Reform Act since it was introduced on April 18th, led by Chairman Howard Berman and Ranking Member Lamar Smith.

The biggest outstanding concern that I am aware of is the apportionment of damages and I will continue to work on that issue as the bill goes into conference. If there are any other significant concerns still floating out there I would like to hear about them.

The bill has been placed on the Senate calendar for further action. The Administration is promoting its strong support of patent modernization but has issued a Statement of Administration Policy (SAP) regarding their outstanding concerns about a few sections in the legislation, including the apportionment of damages. It is likely this legislation will continue to see changes as the legislative process continues.

The best way to pass along your feedback is through my Tacoma office at 253.896.3775. If you’d like, you may send inquiries about technology issues to: Linda.Danforth@mail.house.gov and for general business concerns or to invite me to visit your business or attend an events it’s best to contact: Roel.vanderLugt@mail.house.gov. I look forward to hearing from you.

Sincerely,

Adam Smith
Member of Congress


Highlights of H.R. 1908:

First-Inventor-to-File: The effective date of the change from a first-to-invent system to the international standard first-to-file system is conditioned upon a Presidential finding that other major patent authorities (principally Europe and Japan) adopt a 1-year grace period similar to that provided in the bill. This benefits academic researchers, small inventors and others who may want to file foreign applications.

Publication of Applications: As introduced, the bill would strike the exemption from publication for applicants who file only domestically. An expected amendment will delay publication for such applicants until the later of 18 months after filing or 3 months after a second office action. This will give an applicant sufficient opportunity to withdraw should she wish.

Assigned Applications: The amendment to §118 is deleted. As a result, an assignment of rights must be in writing and patents will issue in the name of the inventor.

Damages: The original bill seemed to require apportionment in all cases. As amended, it is only 1 of several methods a court can use in awarding damages, including the use of the current approach (15 Georgia-Pacific factors). Moreover, apportionment no longer applies to damages based on lost profits. Another change allows plaintiff to recover the enhanced value of previously known elements where their combination in the invention adds value or functionality to the prior art.

Prior User Rights: The expansion of prior user rights (defense of earlier inventor) beyond business method patents has been entirely removed from the bill.

Post-Grant Review: The “2nd window” for challenging a patent through post-grant review has been eliminated. A cancellation petition must be filed within 1 year of patent issue. Although an inter-partes reexamination can still be instituted at any time, the grounds for doing so remain limited to documentary prior art. In both cases, review will be conducted by specially qualified Administrative Patent Judges rather than examiners. The pendency of post-grant review will not affect the ability to bring an infringement action. An expected amendment will extend the estoppel provision to prevent a losing challenger from relitigating patent invalidity in International Trade Commission cases.

Tax Planning Patents: Among the most controversial business method patents are those claiming novel methods for reducing or deferring a taxpayer’s tax liability. Many have expressed concern that putting an official imprimitur on tax avoidance strategies, and granting a private monopoly to practice such strategies, undermines tax policy. Compliance with U.S. laws ought not be within the control of private individuals. Accordingly, tax planning methods will no longer be patentable after the effective date of the bill.

Venue and Interlocutory Appeals: Venue based on plaintiff’s residence (a unique feature of this bill) is preserved for most categories of patentee (including universities, individual inventors and manufacturers). There are now seven distinct ways for plaintiff to establish proper venue. Interlocutory appeal of claim construction rulings (“Markman” orders) is now discretionary with the district court rather than of-right, as is any stay pending a permitted appeal. The special venue transfer provision in the original bill is eliminated.

Best Mode: The “best mode” requirement of §112 (“The specification shall … set forth the best mode contemplated by the inventor of carrying out his invention”) is frequently used as a defense in patent infringement cases to invalidate a patent. Because it is a subjective factor going to state of mind (what did the inventor “contemplate”) it adds considerable uncertainty to patent validity. The bill now removes “best mode” as a defense in infringement cases.

Regulatory Authority: It is important that the Patent and Trademark Office have sufficient regulatory authority to assure quality and timely patents. But to maintain close Congressional oversight, an amendment will be offered to impose a “report and wait” requirement on PTO. Promulgated rules will not take effect before 60 legislative days, to allow for a Joint Resolution of Disapproval.

Inequitable Conduct: The bill now codifies the judicially-made doctrine of inequitable conduct and incorporates PTO Rule 56 to specify an applicant’s duty of candor. Intent to deceive the Office must be proven separate from the materiality of withheld or misleading information. Where inequitable conduct is found, a judge may impose sanctions ranging from denial of equitable relief and lost profits to holding the patent or related patents unenforceable.

Studies: The amended bill has several study provisions to assure that the reforms included in H.R. 1908 will have their intended effects. These include studies and reports on the new first-inventor-to-file system, on reexamination proceedings, on special masters, on the new damages provisions, and on examiner workplace conditions.

Angels Sing as a Chorus

The Tacoma Angel Network confirms through its participation in the first-ever Angel Capital Association Confidence Survey that investment levels will exceed 2006 levels.

In the ACA (not a funding organization) Confidence Report earlier this year, angel groups belonging to the association forecast that the quantity and quality of entrepreneurial investment proposals in the coming year would surpass 2006 levels. A mid-year check by the ACA shows that those predictions were not just pioedreams. Fifty percent of survey respondents expressed that their group’s deal flow had continued to increase in quality and quantity during the first six months of 2007, and most of the remaining respondents said that deal flow was similar to 2006.

Angel groups were also optimistic about their relationships with venture capitalists. A majority of angel group leaders (73.7%) thought that their relationships with venture capitalists (VCs) had improved in the last three years. Reasons given for the improved relationship with VCs included:

• market segmentation
• increased understanding about their respective roles in early and later-stage financing
• better deal structuring
• good company referrals

Forty-four percent of the angel groups in the survey have established partnerships with VC firms to expedite co-investments or follow-on investments to help close any capital gap.

E-commerce Grows by 25% in 2006

The Washington Retail Association reports on the expansive growth of e-commerce in a recent e-newsletter. The Retail Association cites a new study by Forrester Research, Inc. that as sales increase, online retailers are getting more sophisticated with social media and better images.

The study says that as part of the initiative to improve product detail pages and content, 80% of retailers say they will focus on adding alternative images, 72% will incorporate lifestyle photography and 63% plan on integrating social media tools such as customer reviews and videos.

According to the report, e-commerce sales in 2006 grew 25% over sales during 2005, exceeding expectations of only 20% growth. The report also found that the channel is continuing to grow and expects that it will be a year before the online channel reaches saturation. The report predicts continued growth for leading online retailers and a shift of store sales, which are growing slower than their online counterparts.

Only 27% of retailers say they have live chat on their Web site now, but 33% say that it will be an investment priority in the next 12 months. One-third of all retailers say that product customization is very effective and nearly half of retailers say they are considering an online customization application in the coming year. Forty-nine percent of retailers in the survey offer custom products now.

E-mail marketing continues to be the most effective tool for customer retention, as nearly three-fourths of retailers e-mail customers about new product availability.

Urban Waters Innovations Zone

At the Chamber's Port-Industrial Committee meeting (9-19-07), the City of Tacoma Community and Economic Development Department and the University of Washington Tacoma presented their forthcoming concept and grant application: Innovation Partnership Zone Designation and Capital Grant Application.

LEGISLATIVE BACKGROUND

SHB 1091, passed by the Washington State Legislature in 2007, mandates that the State Department of Community, Trade and Economic Development (CTED) designate Innovation partnership Zones (IPZs) every October. IPZs are research and development parks that possess, or show substantial planning toward:

• commercially valuable research capacity (such as a university, national lab);


• globally competitive firms in a research-based industry; and


• education/training capacity

In addition to awarding IPZ designations, the legislation provides for an IPZ grant program to provide funding to improve commercialization facilities within an IPZ. Grants may also be used to facilitate the collaboration between research teams, industry and workforce training providers that will lead to the formation and financing of new innovative firms, the commercialization of research results,and the movement of firms and industry clusters into globally competitive niches. Five communities will be selected to receive one-time grant awards of $1 million each.

TIMETABLE

On July 25, 2007, CTED mailed out applications to potentially interested parties. CTED conducted teleconferences and live meetings during the last week of July. Final application submittals were due September 17, 2007. On October 1, the CTED director will announce IPZ designated zones and grant awards. By mid-October, CTED expects to send out designation notices and grant contracts.

CITY OF TACOMA APPLICATION

IPZ Boundaries

CTED encouraged applicants to develop small zones that provide opportunities for collaboration and exchange. City of Tacoma staff, in partnership with their counterparts at the University of Washington Tacoma and the Port of Tacoma, identified a potential boundary designed to meet the application criteria of CTED. The proposed IPZ is a compact, contiguous area of about 121 gross acres with logical natural and human-made boundaries: To the west is the Thea Foss Waterway, north is Commencement Bay, east is the Middle Waterway and a right of way, and south is East 15th Street. The Zone will be attractive to businesses seeking to relocate or establish new offices -- set on the waterfront with views of the city, Mt. Rainier and Commencement Bay. It also benefits from proximity to downtown Tacoma's commercial zone, port operations and the UW Tacoma campus. The Zone benefits by having a large supply of available property that is owned by either the City of the Port or is listed for sale or lease. Businesses currently located in the zone will coexist with Zone partner businesses. There will be no change in zoning, land-use regulations, etc.

The boundaries were selected to include the City's Environmental Services building, the Center for Urban Waters, a state-of-the-art building to be located in the Innovation Partnership Zone.

IPZ Program Concept

The IPZ will focus on research and local strengths in the areas of applied environmental research and computer science-based research to improve port navigation and security. The City's Center for Urban Waters will house its environmental labs and serve as the hub of the IPZ. It will also house the Urban Waters marine research center, whose mission is to develop solutions to the problems facing urban bay communities. The research of the IPZ, contributed by UW Tacoma primarily through its Environmental Science and Institute of Technology faculty, will focus on the following priority areas:

• Ballast water and invasive species


• Urban water runoff technology


• Information systems-based port navigation systems


• Cyber-security and computer-based port security initiatives


• Marine biotechnology


• Aquaculture

Solutions to these problems are key to the continued economic development of the Puget Sound region. They also have applications to port cities across the nation and around the globe. The IPZ was designed to leverage the Port's strong national and international connections.

The UW Tacoma Institute of Technology will be an active partner in the Zone with an initial emphasis on research to develop port navigation and port security systems. The Institute is part of a national "Center of Excellence in Information Assurance Education," as designated by the National Security Agency (NSA).

The UW Tacoma Innovation Zone office in the Center for Urban Waters will coordinate activities and direct partners to resources, such as access to the UW Tech Transfer office, educational programs for technology entrepreneurs, and the pursuit of further grant support. It will also coordinate regular meetings of IPZ partners, designed to generate synergies and efficiencies in the process of transforming research-based ideas and inventions into marketable products and services. IPZ grant funds would establish the UW Tacoma Innovation Zone office that will feature a video conferencing wall and other technology that will allow partners to meet with colleagues around the globe.

The Port is a major property owner in the Zone. The Port will seek to align its marketing efforts for the development of approximately 22 acres of recently acquired real estate to support the goals of the Innovation Partnership Zone. The Port already participates with the Institute of Technology in the port navigation and port security system development.

A New Acronym to Learn: STEM

This is for all you "back to schoolers" in all grades, or those considering a return to academia.

I want to mention a new acronym I ran across on the Bureau of Labor Statistics site today. STEM.

It stands for Science Technology Engineering and Mathematics, and if you are considering pursuit of an occupation or an occupational change, this is an area to explore.

Schools are paying attention to this information. In Minnesota, The Mankato School District took note of the fact that according to the Bureau of Labor Statistics, 10 of the 15 fastest growing occupations requiring at least a bachelor’s degree are computer, science or technology related. In response the district has created a handful of progressive programs that integrate classroom education with real-world business applications. St. Peter built an entirely new science lab at North Elementary to engage kids earlier in math, science and technology. Le Sueur-Henderson spent a goodly portion of its $18.5 million bond referendum on upgrading middle and high school labs and technological equipment.

Bold moves that will pay off in the future for the students who accept the challenges of the field.

The government BLS site has more about STEM for download as a report here. Here is a snippet from it to spark your interest.

Faster aircraft, bolder video games, better medicines—technology moves forward every day. And tech-savvy workers make those advances happen. Without the work of scientists, technicians, engineers, mathematicians, and other skilled workers, most new products and discoveries would never be developed.
Technical occupations are often defined as those related to science, technology, engineering, and mathematics (STEM). Workers in STEM occupations use science and math to solve problems.

This article describes the occupations that most clearly concentrate on STEM. You’ll find information about STEM occupations, earnings, educational requirements, and job prospects. There are also suggestions on how to prepare for a STEM career and where to find more information.

In the early part of this decade, there was a difficult spate of job losses in certain sectors, yet Computer Science and Engineering remains one of the 25 fastest growing industries with strong career opportunities in the Nation.

Wage-and-salary employment is expected to grow 40 percent by the year 2014, compared with only 14 percent growth projected for the entire economy.

Welcome back, students.

cross posted at www.livingandworkingvirtually.com

Research Grants from WA Technology Center

Are you working on innovative technology research with near-term commercial potential?

Consider applying for a Washington Technology Center grant to offset the costs of your R&D.

Notice of Intent Deadline: September 13, 2007

Proposals Due: October 18, 2007 by 5:00pm

Washington Technology Center awards hundreds of thousands of dollars in grants to Washington-based research teams in an effort to help transition great ideas out of the laboratory and into the marketplace.

If you are a Washington technology business looking to partner with an academic or non-profit researcher on a collaborative research endeavor, you may be eligible for a funding award through our Research & Technology Development grants program.

These awards help Washington companies grow faster, create jobs and attract investors by providing the critical funding needed to advance scientific research and product development.

Research & Technology Development funding pays up to 80% of the cost of research projects -allowing you to channel your capital to other business growth needs or continue working on breakthrough scientific discoveries.

Washington Technology Center allocates $1 million annually for these grants, which are awarded on a competitive basis to collaborative research teams working on innovative technology projects with strong commercial potential.

They are now accepting proposals for our next round of grants which will be awarded in December, 2007. Projects begin January 1. But hurry, application deadlines are drawing near. Notice of Intent deadline is September 13 and applications are due October 18.

296 companies have benefited from Research & Technology Development funding. You could be next.

Keeping Competitive

The Tacoma-Pierce County Chamber has joined the effort of Compete America, a coalition of corporations, trade associations, and educators, and others urging Congress to remain focused on taking steps this year to address the highly-skilled immigration crisis facing U.S. employers by reforming the H-1B visa and employment-based green card systems.

Highly-educated foreign professionals play a significant role in allowing the United States to maintain an innovative edge over its global competitors. However, our outdated immigration system has made it harder and harder for qualified foreign talent to come to and remain in this country and contribute to our nation’s intellectual capital and economic well-being, which, ultimately, poses a serious threat to our global leadership position.

Consider that in April of this year, the U.S. Citizenship and Immigration Services (USCIS) received over 133,000 H-1B visa applications for only 65,000 available slots for fiscal year 2008 – on the very first day applications could be accepted. This arbitrary, unrealistic cap sends the message that America’s doors are closed and that these individuals, many of whom have been educated in U.S. universities, should look for opportunity elsewhere. In most cases, those opportunities will be with our foreign competitors.

The H-1B visa program is often used as a temporary step toward permanent resident status for top talent, with the ultimate goal being the attainment of an employment-based (EB) green card. Yet, the shortage of available EB green cards and the massive backlog of pending applications are equally as dire as the H-1B shortage. Those seeking an EB green card can face delays of up to five years or more, leaving them in professional limbo. Furthermore, the existing backlog serves as a major impediment for companies’ recruitment and retention efforts of qualified professionals who wish to remain and work in the United States.

Policymakers have recognized the important contributions of these individuals and the imperative of reforming our highly-skilled immigration system. The Chamber was pleased to see these issues addressed as part of the earlier comprehensive immigration reform legislation in the Senate, lead by Sen. Maria Cantwell, and was disappointed when, in the end, it failed to pass a final bill.

Despite this outcome, there are further opportunities for action on these issues this year. The House of Representatives is urged to work to identify other appropriate legislative vehicles for alleviating this growing crisis.

Keep America competitive in the world economy. Allowing the best and brightest minds to come to the U.S. is an important component in achieving this goal. An Innovation Agenda to address the need for highly-skilled immigration reform should remain at the top of the list.

DoD CIO GIG

The Department of Defense's Global Information Grid (GIG) architectural vision is now available on-line at the Office of the Assistant Secretary of Defense for Networks and Information Integration and DoD Chief Information Officer Web site.


The document provides details on the department's vision for its future information technology enterprise and was signed by John G. Grimes, the Assistant Secretary of Defense for Networks and Information Integration and DoD Chief Information Officer.


According to Grimes, the department's goal in establishing the GIG architectural vision is to promote unity of effort among those responsible for evolving today's GIG to its target state, including component CIOs, portfolio managers, and architects.


The GIG is formally defined in existing DoD policy and described in the architectural vision. It is the combination of people, processes, and technology used for collecting, processing, storing, disseminating, and managing information throughout the DoD. It includes all departmental communications and computing systems and the interfaces to non-DoD mission partners. The GIG supports all DoD personnel and organizations, the missions, operations, and functions they perform, and the ability to exchange information within the department and with external mission partners.


The GIG architectural vision is one part of the DoD enterprise architecture - the part that describes the desired future state of the GIG. Other parts of the enterprise architecture include a description of the current information environment and capabilities and plans and strategies to achieve the transformation described in the GIG architectural vision.


"The GIG architectural vision is designed to be a short, high level, description of the department's objective enterprise architecture," said Grimes. "It will evolve to reflect operational, systems, and technical changes to the target GIG."