NJBiz criticizes patent reform (HR 1908)

In NJBiz, Thomas Gaudio wrote:

Topping the list of concerns among biotechnology companies is a provision that “would require the courts to calculate [patent infringement] damages by only taking into account the value of the particular improvement to the prior art [what was known about the invention before the patent] instead of the entire value of the product,” says Robert Paradiso, head of the life sciences patent practice at the law firm Lowenstein Sandler in Roseland. Patent infringement damages are typically based on lost sales or what the infringer would have paid the patent holder in royalties for licensing the patent, he says.

Paradiso gives the following scenario: A company has a new version of a drug whose improvement to its predecessor is that the medicine is released over time, instead of immediately, to have a longer-lasting effect. The controlled-release drug has annual sales of $100 million while the immediate-release version has annual sales of $75 million.

Under the current law, if the controlled-release drug is infringed and the company loses $100 million, the violator would typically be ordered to pay $100 million to the patent holder. The proposed legislation says the infringer would only be charged $25 million, or the difference between the products’ revenues.

Some blogs have written that the favorable House vote was BECAUSE the controversial provision on damages in HR 1908 was amended. IPBiz notes that this is not clearly the case. There may have been promises to change it LATER and there may have been strong-arming by Congr. Berman.