Sept. 5 (Bloomberg) -- Microsoft Corp.'s success in reversing a $1.52 billion trial loss was the latest in a series of court victories that may undermine its chance for broad changes in U.S. patent law this year.

Opponents of change cite the victory by Microsoft, the world's largest software maker, as well as a win by Seagate Technology, the largest maker of hard-disk drives, as proof the law isn't as out of whack as the industry claims.

The original Microsoft verdict ``became the poster child for why damages need to be changed,'' said Steven Miller, general counsel for intellectual property at Procter & Gamble Co. ``It's now proven we don't need that overhaul.''

The computer industry, led by Microsoft, Intel Corp. and Cisco Systems Inc., says it's under siege from lawsuits by people who tinkered at their computers to create tiny technological features and firms that bought patents from bankrupt dot-coms.

The companies are lobbying to make it easier to challenge patents in suits and to fend off the maximum damages when they lose. House debate is set for Sept. 7 on a sweeping proposal that faces new opposition.

Opponents, including drugmakers such as Eli Lilly & Co. and biotechnology firms such as Amgen Inc., want protection for patents covering products they may spend years and hundreds of millions of dollars to develop.

`Breakdown' Foreseen

``This will be devastating,'' Keith Grzelak, a policy committee chairman with the U.S. affiliate of the Institute of Electrical and Electronics Engineers, said of the proposal in Congress. ``You will see a breakdown of a system that helps generate new corporations in this country.''

Microsoft, based in Redmond, Washington, is fighting more than three dozen patent suits. On Aug. 30, it settled an eight- year-old case about to be retried after an appeal, in which a jury awarded $521 million to Eolas Technologies Inc.

The company is appealing another verdict, for $142 million, in favor of a one-man Michigan company that sued over a way to prevent software counterfeiting.

It was hit with the biggest patent verdict ever in February, the $1.52 billion jury award to Alcatel-Lucent over digital-music technology. The verdict's size and questions about Alcatel's right to the technology made the case a focus of the patent-law debate. The trial judge in San Diego on Aug. 6 reversed the jury, threw out the verdict and ruled Microsoft the winner.

Seagate Case

Two weeks later, an appeals court in Washington gave the computer industry another boost. In the Seagate case, judges made it harder for anyone bringing a suit to argue that infringement of a patent was willful and damages should be tripled.

The court's new rule requires proof an infringer ignored the ``high likelihood'' its actions would infringe a valid patent.

The U.S. Supreme Court issued six decisions in its past two sessions scaling back the rights of patent owners.

The justices limited the right to block the use of infringing technology through court orders. They said American patent law doesn't cover software developed in the U.S. and installed on computers made and sold overseas. And they made it easier to defend a suit by arguing one invention is an obvious variation of another.

``The arguments to delay this legislation are more apparent in light of those decisions,'' said Representative Donald Manzullo, an Illinois Republican who co-wrote an Aug. 3 letter to colleagues urging postponement. ``Our goal is to slow it down.'' The letter was signed by 64 other House members.

Republican Leaders

Republican leaders John Boehner of Ohio and Roy Blunt of Missouri wrote Aug. 30 to House Speaker Nancy Pelosi, asking for more work on the proposal.

``We are very concerned that the bill in its present form picks winners and losers among industries with different business models in a way that has never before been attempted in patent law or practice,'' they said.

Drugmakers all along have been demanding major changes in the proposal. So have universities, biotechnology firms, technology companies that rely on patent licensing as revenue sources and several manufacturers whose large numbers of products make them unworried about a single patent suit. These include Johnson & Johnson, Procter & Gamble Co. and 3M Co.

In the past month, these opponents have been joined by the National Association of Manufacturers, the AFL-CIO and the engineers' institute. Unions and manufacturers say weaker patent rules would allow more cheap knockoff goods into the U.S., costing jobs.

People `Waking Up'

``The effort to reform the patent system has been going on for years, and many people just stopped paying attention,'' said Alexander Poltorak, owner of a patent licensing company and author of two books on patents. ``Now they're waking up to the possibility that it might just pass and that it would be a disaster.''

The computer industry, arguing that a few court cases don't destroy the case for change, is mustering supporters for the measure in Congress.

The Electronic Frontier Foundation, a group that has asked the patent office to reconsider patents it says may deter technology, and four other consumer groups sent a letter Aug. 31 to the House leadership urging passage.

Google Inc., the most-used Internet search engine, backs the proposal in a blog posting on the company Web site.

``Low-quality patents and escalating legal costs are currently hurting the ability of U.S. companies to compete globally, and that in turn hurts U.S. workers and consumers,'' Google says.

The law requires too much court interpretation, said Emery Simon, counsel for the Business Software Alliance, the trade group leading the fight for the proposed law.

``The courts are moving in the right direction, and that's a good thing,'' he said. ``We see it as evidence that Congress needs to act, not the opposite. The law needs clarity.''

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

Last Updated: September 5, 2007 12:27 EDT