More than 100 companies, business associations say they're against possible expansion of CBM program

WASHINGTON (Legal Newsline) -- Last week, a group of more than 100 companies and business associations urged federal lawmakers to reject efforts to expand the Transitional Program for Covered Business Patents, also known as the CBM program.

Under the America Invents Act, which was signed into law in 2011, a new transitional post-grant review proceeding was created for Covered Business Method patents.

According to AIArulemaking.com, a website devoted to news and information on the implementation of the AIA, the program allows a petitioner who has been sued for or charged with infringement of a patent meeting the statutory definition of a Covered Business Method to challenge the validity of the patent before the U.S. Patent and Trademark Office.

The idea behind the program is to provide parties with an alternative to costly litigation.

In a letter to Sens. Patrick Leahy, D-Vt., and Chuck Grassley, R-Iowa, a total of 114 companies and associations -- including Procter & Gamble, 3M, DuPont, General Electric, IBM, Xerox, the National Small Business Association and BSA | The Business Software Alliance, among others -- urged the lawmakers not to include measures to expand the CBM program as they move forward with patent reform legislation.

Leahy has introduced his own reform bill, the Patent Transparency and Improvements Act of 2013. The legislation remains in committee.

"Expanding the CBM program will hurt America's innovators -- both small and large -- and weaken America's competitive advantage around the world, at a time when we can least afford it," the coalition wrote in its five-page letter Thursday.

BSA Director of Government Relations Tim Molino added that expanding the program would be a "serious impediment" to reaching consensus on any patent reform legislation.

"Patent reform should make life harder for bad actors and easier for innovators," he said. "Expanding the CBM program would harm American inventors and U.S. economic growth."

Last month, Rep. Bob Goodlatte's Innovation Act was approved in an overwhelming bipartisan vote of 325-91. It has since been sent to the Senate, where lawmakers are carefully considering it.

As the coalition noted in its letter to Leahy and Grassley, when originally introduced, the bill contained a provision expanding the CBM program.

However, before markup in the House Judiciary Committee, the provision was removed because it was creating a roadblock to passing any legislation.

"We believe the same is true in the Senate," the companies and associations wrote. "Expanding the CBM program is not just ill-advised from a political standpoint, but from a policy perspective as well.

"It's worth recalling the auspices under which the CBM program was enacted."

The companies and associations explain that when Congress was considering the AIA, proponents of the CBM program argued it was a necessary, but temporary, measure to review a narrow class of financial services-related patents.

However, new legislation -- a handful of patent reform bills have been introduced in recent months -- would make the transitional proceedings permanent and expand the definition of Covered Business Method patent to include data processing patents used in any "enterprise, product or service."

"This means that any party sued for or charged with infringement can always challenge an extremely broad range of patents at the USPTO," the coalition wrote the lawmakers. "The request for a proceeding need not be related to financial products or services and can be submitted time over the life of the patent.

"This proposal would eviscerate the delicate balance that was struck with the other new post-grant review programs in the AIA to ensure that patents would not be devalued by limiting serial challenges during the patent's life."

Data processing, the companies and associations note, is integral to just about everything -- from cancer therapies to safety systems that allow cars to respond to road conditions in real time to prevent crashes.

"Subjecting data processing patents to the CBM program would thus create uncertainty and risk that discourage investment in any number of fields where we should be trying to spur continued innovation," they wrote.

Expanding the program also could end up undermining many valid patents by giving infringers a new loophole to delay enforcement, they argue.

"Infringers would be able to delay legitimate lawsuits they face in district court by initiating CBM proceedings at the PTO," the coalition wrote. "This would buy time to gain market share on innovative, patent-holding competitors."

On top of that, expanding the program could end up hurting the United States' relationship with its trading partners, the companies and associations contend.

Click here to view the complete letter.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.