If a recent analysis by the Congressional Budget Office (CBO) is to believed, two Senate-drafted provisional additions to the Patent Reform Act could result in widespread litigation against the federal government.  According to the report, issued Feb. 15, Sections 13 and 14 of S-1145 would likely subject the government to claims of an illegal taking of private property, resulting in damage awards totaling at least $1 billion.

CBO’s analysis focused on Section 14, which would eliminate remedies patent holders have with respect to certain patents relating to systems that financial systems use to settle checks by transmitting electronic records instead of transporting paper documents, and Section 13, which would provide the director of the PTO with new authority to accept certain patent applications filed after statutory deadlines if the applicant petitions PTO within a specified time frame and the director determines that such delay was unintentional.  Neither provision was in the House version of the legislation (HR-1908).

With regard to Section 14, the CBO writes that because a patent is essentially a right to restrict the use of an invention, enactment of the provision would almost certainly result in litigation against the federal government with plaintiffs seeking compensation for a taking of private property.  Certain patent holders who believe their patents would be infringed have already indicated that they would immediately file suit against the federal government should enactment occur.  Section 13 presents a different, though still serious, problem, CBO warns.  The report estimated that enactment of that section would result in the PTO granting almost five years of additional patent protection to Angiomax, an anticoagulant used in conjunction with certain coronary procedures in hospital settings.

“That added patent protection would increase the net cost for hospitals to perform certain procedures using that drug and would lead to higher net spending on health services by private health plans and certain federal and state health programs” including Medicare, Medicaid and the health insurance programs for veterans, military personnel and federal employees and retirees, CBO said.