Congress takes up patent redo, damages fight looms

WASHINGTON, March 3 (Reuters) - Senior U.S. lawmakers launched a new patent reform attempt on Tuesday with controversial legislation that would reduce damages paid for infringement.

A battle is expected over the Senate bill’s limit on damages for infringement to lost profits or to a “reasonable royalty,” an issue that sharply divides the high-tech and pharmaceutical industries.

Currently, damages can be calculated as the entire market value of the product. That number can be tripled when the patent infringement is found to be intentional or willful.

Sen. Patrick Leahy, chairman of the Senate Judiciary Committee and a bill sponsor, said 2009 is “the year in which bipartisan patent reform should be enacted.”

Big high-tech companies such as Cisco Systems Inc CSCO.O and Hewlett-Packard Co HPQ.N began pushing for the legislation years ago to cut the number of patent infringement lawsuits and the amount of damages paid.

But the bill has stalled several times on vocal opposition from drug maker Eli Lilly & Co LLY.N, seed and herbicide company Monsanto Co MON.N, and smaller tech companies, which feared lower damages would leave them vulnerable to infringers.

The U.S. House of Representatives approved the measure last September but the bill never made it to the Senate floor as high tech companies and pharmaceutical firms fought each other to a draw.

Major tech companies, which sell devices that can have many patented elements, want to reduce damage awards to deter people from filing what tech companies say are unwarranted lawsuits.

The pharmaceutical industry, whose drugs often have just one or two patents, says it needs the threat of high damages to protect its intellectual property.

Lawmakers stressed that long hours of negotiation were likely to lead to changes to the bill, but that they were determined to see it become law.

“We all agree that more work needs to be done,” said Orrin Hatch, the top Republican on the Senate panel and another co-sponsor.

In the House, a similar bill has also been introduced.

“I do predict that we’ll be successful this year,” added Rep. Lamar Smith.

Other elements of the Senate bill would create a new process for public challenges to patents within 12 months of their issue. (Reporting by Diane Bartz; editing by Richard Chang) (; +1 202 898 8313)