The bill will "weaken the patent system ," Dean Kamen, inventor of the Segway scooter, told a Senate panel. "It will devalue patents. It will be a disincentive for people to invest in the future."

The most important change proposed by the legislation is to alter the basis of calculating infringement damages. Under current law, damages are valued according to the price of the entire product containing the infringing invention. Patent reform would change that, so damages are calculated just on the specific piece that infringes.

Bill Could End Huge Verdicts

For example, in the record-setting $1.3 billion judgment against Microsoft , later overturned by a judge, a jury found that Microsoft had infringed MP3 patents that were used in Windows Media Player. The verdict was so large because it was calculated on the value of Windows as a whole, rather than the incremental value of Media Player as a part of Windows.

Testifying against patent reform was Steve Perlman, inventor of WebTV and a lead developer for Apple's QuickTime. He said Congressional staff members were "stunned" to hear that technology startups oppose the bill. He opposed the idea of changing U.S. patent law to make it more like other countries' regulations. "I don't want to have the startup economy they have," he said. "I want the one we have."

Although one of the main drivers for the legislation is to address the rash of lawsuits by "patent trolls," Kamen said the effort is counterproductive. "You don't shut down the national pastime of baseball because some players are using steroids," he said. "You can go after 'trolls' and other bad actors without unintended consequences that are harmful."

The Innovation Alliance, an antireform lobbying coalition, issued a statement criticizing the bill. "This would lead to less certainty, further delay in securing a valid patent, and expose emerging companies to meritless or commercially motivated challenges by deep-pocketed rivals," the group said.

Harm to Innovation Culture?

The bill, supported by all the big technology companies, would actually hurt those companies, who depend on startups to funnel innovation to them, Perlman said. "A lot of the companies that are for the bill depend on the startup companies that feed them," Perlman said. "We are part of an ecosystem. They have market power , we don't. If we don't have patents, we cease to exist."

He also said that many of the problems the bill purports to solve might be resolved by the impact of a 2006 Supreme Court decision. In eBay v. MercExchange, the Court held that courts should not automatically issue preliminary injunctions upon a claim of infringement. Courts should instead consider whether the infringement has caused "irreparable harm" and whether money damages would suffice.

If patent trolls can't use infringement claims to hold technology companies essentially hostage -- as was almost the case with NTP's claims against BlackBerry-maker Research In Motion -- the need for reform is greatly reduced, Perlman said. "There has already been a huge change," because of the ruling, he concluded.