This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

WASHINGTON - Two of the country's leading industries, computer technology and drug manufacturing, are battling over an effort by Congress to overhaul the way inventors profit from ideas, with executives on both sides saying billions of dollars are at stake.

The shift in political control on Capitol Hill coupled with the Supreme Court's newfound interest in taking patent cases has energized a congressional drive to revamp the patent system for the first time since the 1950s.

Sponsors in both the House and Senate, including Sen. Orrin Hatch, R-Utah, unveiled patent reform bills Wednesday. The measures would address the mounting litigation over disputed patents - lawsuits have doubled in the past decade - and the difficulty of ensuring accurate decisions by patent agency examiners.

Citing Utah's stake in the issue with 3,200 technology and 500 life science companies, Hatch said Wednesday the Patent Reform Act of 2007 is "not perfect," but represents a commitment from both sides of the aisle to "streamline and strengthen" the patent system.

"This bill institutes a robust post-grant review process so that third parties can challenge suspect patents in an administrative process, rather than through costly litigation," Hatch said.

The Utah senator said the bill also includes an "anti-harassment provision to discourage companies from colluding and perpetually harassing one company," and a first-to-file provision that would provide greater certainty than the current first-to-invent system "because the filing date of an application can very rarely be challenged."

Congressional initiatives to revise the patent system have drawn intense interest from sectors including traditional manufacturers, universities, banks and financial services and small businesses. The industries vying to sway the outcome have ramped up their campaigns, engaging some of Washington's most prominent lobbying firms since the start of the year.

But the titans in this struggle are the drug industry, which seeks the strongest possible protection for its blockbuster patents, and the software industry, which wants more flexibility for its fast-moving companies.

For large tech companies, which are pushing several of the most substantial changes, a recent court case involving Microsoft exemplifies much of what's wrong with the current law. In February, a federal jury ordered Microsoft to pay $1.52 billion to Alcatel-Lucent for infringing two patents for the MP3 technology used to play digital music on computers, portable players and other mobile devices. Even if Microsoft was in the wrong, critics say the damages, the largest ever in a patent case, were outrageous and reflected profound flaws in how judgments are calculated.

Large tech companies are more prone than many enterprises to trip over existing patents because the development of software is a fast-moving process that involves weaving together many small advances. So the computer industry seeks wider latitude to challenge patents while being protected against paying exorbitant damages, especially for unintended violations.

But drug companies, which often spend years and billions of dollars converting few patents into highly profitable products, want strong rights to turn back challenges and ensure violators pay damages.

In resisting some of the major rewrites being discussed in Congress, the pharmaceutical industry points to the plight of Purdue Pharma, maker of the popular OxyContin painkiller, as an example. Purdue had filed suit against a generic drugmaker, claiming it infringed patents on OxyContin. Federal courts ruled that Purdue could not enforce its patent because it had misled patent examiners, but last year reversed the decision and upheld Purdue's claim. In the interim, however, generic drug makers raced to enter the market and Purdue lost more than half the sales of its marquee drug, estimated at more than $1.2 billion a year, according to industry sources. Purdue was ultimately unable to reclaim its market share. As a result, the company said it had to lay off more than half its employees.

The drug and tech sectors, which rarely square off against each other in court, tend to play different roles in patent cases. Pharmaceutical companies are usually plaintiffs, while tech companies are more often defendants, and that difference explains their clashing views over the patent system.

''We start out from opposite sides of the courtroom,'' said former Rep. Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America. ''We're in a position of having to defend our patents against potential infringement and want a legal regime that gives us the best chance to do that.''

Emery Simon, counsel to the Business Software Alliance, said the traditional justification for patents is that inventors get a limited monopoly over their technology in return for the public receiving new knowledge and products. ''That balance has been tipped,'' he said, arguing that patent law now discourages innovators.

Part of the concern, he said, is the steep penalty for treading on someone else's rights. In the Microsoft case, the jury in San Diego calculated damages based on the value of nearly all computers sold with the Microsoft Windows operating system rather than on the far lower value of the patented MP3 technology that Microsoft was found to have violated. Moreover, more than half the damages reflected Microsoft's sales worldwide instead of just within the U.S., which tech executives said was an improper application of U.S. law beyond the borders.

Since 2000, drug manufacturers have given $61.5 million to political candidates, with more than three-quarters going to Republicans, according to figures compiled by the Center for Responsive Politics. Of the 15 most generous industries, only oil and gas and general contracting gave a higher proportion of their money to Republicans. By contrast, computer and Internet companies played both sides. Of the $112.6 million donated since 2000, each party received almost exactly half.

The Supreme Court, meantime, has raised the profile of patent issues by accepting a half-dozen cases in the past two years, reflecting what legal experts said was the personal interest of the new chief justice, John Roberts. The court last year improved the prospect for congressional action by ruling in a prominent case involving eBay that judges are not required to bar patent infringers from using the patented technology. Before the court essentially settled this issue, the dispute between tech and drug companies over whether injunctions should be automatic was so intense that it threatened to derail any compromise over new legislation.

---

* ELIZABETH NEFF and THOMASĀ BURR contributed to this report.