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Patent Carve-Out Finds Opponents Left and Right

“Criticism that section 18 constitutes a ‘takings’ is unfounded,” he said in a statement. “If a patent is bad and shouldn’t have issued in the first place, there was no property right properly established.”

Banks have already spent millions of dollars on licensing and settlements with DataTreasury in fights over what they say are patent lawsuits without merit, but Peter Freeman, a lobbyist for the Financial Services Roundtable, insisted the group’s efforts are not intended to target any one company.

“Any inventor with a valid patent will not be harmed by this section,” Freeman said. “The real question is what are these guys afraid of?”

A range of outside groups — from the liberal Public Citizen to the conservative seniors group 60 Plus Association — and a number of university law departments have supported the Conyers letter, which raised a number of concerns about the legislation. John Whealan, associate dean for intellectual property law studies at George Washington University, described Section 18 as “troubling to the patent system in general.”

“This statute seems to benefit a particular industry — the financial industry — at the expense of a particular group of patentees,” said Whealan, who in the past has served as a consultant to DataTreasury. “Looking at the objective patent system as a whole, I cannot see a reason why Congress would want to pass such a statute.”

The provision is one of several controversial elements that could delay a vote on the broader patent reform bill, which sailed through the Senate on a 95-5 vote in March. The House Rules Committee put the brakes on Monday night because of a dispute over whether to give the patent office full control over the money that it raises through fees or to continue to require an annual Congressional appropriation for its budget.

Small-business and inventor advocates are also fiercely opposed to a provision that would grant patents to the first to file an application, as opposed to the original inventor. They argue that it gives large corporations an advantage because they have the capital and staff to quickly file for a patent.

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