Senator to Shield Banks From Patent Lawsuit
Senator Jon Kyl, a member of the Senate Judiciary Committee, is pushing for legislation that would protect banks from a patent infringement lawsuit. As reported by CNNMoney.com, the suit is related to electronic imaging and the processing of checks. While the Judiciary panel is scheduled to look at a patent reform bill today, it’s been hinted that if Kyl has his way, banks would be shielded from having to shell out money for damages in any possible cases.
The plaintiff, DataTreasury Corp., owns a patent for digital check processing, and is currently suing Bank of America and Wells Fargo & Co. Some banks, such as JPMorgan Chase & Co., have already settled with DataTreasury.
Banks moved toward the digital processing and imaging of checks in 2003, after Congress passed a law that encouraged them to do so. Furthermore, a recent report by the Congressional Budget Office found that DataTreasury could be entitled to $1 billion or more in patent royalties if it succeeded in its litigation efforts.
This isn’t the first proposal of this type to be suggested, as Sen. Jeff Sessions offered a similar proposal last year. However, Sessions’ proposal came under fire because it targeted ongoing litigation, and Sessions also owned stock in two banks that could have gained from the provision.
Senator Kyl’s bill differs from Sessions’ because it does not completely protect the banks. Instead, Kyl’s plan contains a clause that would void the provision if a federal court finds that the legislation amounts to a government taking of DataTreasury’s patent rights.
For the much troubled banking-system, this provision could potentially save a lot of trouble and capital. But would passing this legislation set a dangerous precedent?
Patent Reform Reintroduced to Congress
On Tuesday, a group of lawmakers introduced legislation that could reform the nation’s patent system. As reported by CNN Money, the Democratic and Republican leaders of the House and Senate Judiciary Committees introduced legislation that picks up where patent-reform efforts stalled last year.
The patent reform bill passed the House last year, but it couldn’t get by the Senate. The contentious part of the bill was how to calculate damages against a defendant who infringes on an inventor’s patent. But according to Senator Patrick Leahy, one of the sponsors of this bill, “We will get this passed. We will work out the differences.”
Those in favor of the bill state that reforms are needed to improve patent quality and create more certainty in patent litigation. They are supported by high-tech companies, such as Google and Apple, who want to decrease the amount of damages that infringers would have to pay. However, pharmaceutical and biotech companies oppose changing the calculation of damages, and argue that such changes would weaken patent rights and encourage more infringers.
The Senate Judiciary Committee has scheduled a hearing on the new legislation for March 10, but it should be noted that the patent system has not been overhauled in more than 50 years. If anything, those hoping for change should be cautiously optimistic.
