Software industry seeking changes in US patent law

WASHINGTON -- The software industry will seek changes in US law to limit the amount of money companies must pay when their products are found to infringe on patents, the head of the industry's trade group said yesterday.

Robert Holleyman, president of the Business Software Alliance, said the group will ask Congress to overturn an appeals court ruling that allows damage awards to be based on a product's global sales rather than those in the United States. The ruling upheld the calculation of a $521 million jury verdict against Microsoft Corp., the world's largest software maker.

Representatives Lamar Smith, a Texas Republican, and Howard Berman, a California Democrat, on June 8 introduced a bill that seeks to curb patent lawsuits and change the way US patents are issued and reviewed. A proposal to limit damages to US sales, discussed earlier in hearings before both the House and Senate, wasn't included in the bill.

''We think the more members know about this, the more they will be willing to address the problem," Holleyman said. His group represents the world's biggest software makers, including Microsoft and International Business Machines Corp.

The US Court of Appeals for the Federal Circuit on March 2 upheld a jury finding that a component of Microsoft's Internet Explorer infringed on a patent owned by closely held Eolas Technologies Inc. Since that component was on master disks used for software code developed in the United States and sent overseas, damages could be calculated on global sales, the court ruled.

Microsoft, based in Redmond, Wash., said in court papers that more than 64 percent of the $521 million award was based on computers ''made, sold, and used entirely in foreign countries."

The ruling by the Federal Circuit, which specializes in US patent law, has the effect of extending the reach of US patents to other countries, Holleyman said.

''The decision could have the unintended consequence of sending more tech jobs outside the US" so that the components aren't made in the country, he said. ''We will ask that it be included in subsequent bills."

The bill, which has eight other cosponsors, came after hearings on the increase in patent litigation and proposals to bring US patent law in line with Japan and Europe. The number of lawsuits over patents, copyrights, and trademarks rose 11 percent to 9,294 since 2000, according to US court figures.

The bill would authorize the US Patent and Trademark Office, rather than the courts, to resolve most disputes over the validity of patents and would grant a patent to the first applicant rather than to the person who is determined to have created the invention.

The technology industries are pushing for changes to counter so-called ''trolls," in which someone buys a patent and uses it to demand money from companies by threatening them with litigation and court orders to halt sales of products.

''We need to rebalance the equation so that we're favoring high-quality patents and at the same time we try to discourage what we think are abusive litigation practices," Holleyman said.

Under US law, a patent owner has the right to stop someone from selling a product that's been found to infringe on the patent, even if the holder doesn't make a competing product.