The Leahy-Smith America Invents Act, which is considered the most sweeping change to the U.S. patent system in decades, would change the nation’s U.S. patent system from a first-to-invent system into a first-to-file system. Support for the first-to-file provision is mixed in the patent bar.
The final bill is also controversial because it does not bar fee diversion–the practice of allowing the U.S. government to use U.S. Patent and Trademark Office revenue that exceeds the agency’s budget for other government programs. This is the version passed by the House of Representatives on June 23. Because the Senate passed the House version without any amendments, it can now go to President Obama for his signature.
The legislation’s provisions to allow challenges to patents — so-called post-grant review — are also a flashpoint. New post-grant review processes enable parties to challenge issued patents for a set period of time.
The bill also changes the inter partes re-examination process, which can be initiated by anyone except the patent owner, including an alleged infringer. The bill allows inter partes review either after the PTO grants a patent or after the post-grant review.
The Senate’s 93-5 cloture vote on Sept. 6 limited the Senate to 30 hours of consideration of the bill, including time spent on debate and roll call votes. Once cloture is involved, only previously proposed amendments can be considered.
Just before the vote, bill sponsor Sen. Patrick Leahy (D-Vt.) called it “the first meaningful patent reform in nearly 60 years.”
“We cast aside partisan rhetoric…so Congress [could] send [President] Obama the most significant jobs bill in this congress,” Leahy said.
Sen. Maria Cantwell (D-Wash.) spoke vociferously against the bill just before the vote, calling it “a big corporate patent giveaway that tramples on the rights of small inventors.” She said, “It changes first-to-invent to first-to-file, which means if you’re a big corporation with lots of resources you will get there and get the patent.”
Referring to the fee diversion issue, Cantwell also said the bill “doesn’t keep the money where it belongs. It is giving the money away.”
In the roughly 90 minutes prior to the vote on the bill, the Senate defeated two amendments widely viewed as minor and tabled a closely watched amendment that would have ended fee diversion.
One of the amendments, by Sen. Jeff Sessions (R-Ala.), would have struck a section of the bill concerning calculation of the 60-day period for certain patent term extensions — when a patent owner can get additional patent protection time due to delays in regulatory agency reviews. The amendment, which would have retroactively lengthened the deadline, was defeated, 47-51.
An amendment by Cantwell would have substituted the Senate bill’s more limited language in the section about the procedure for challenging business method patents, which are related to a business processes and frequently involve software. It was defeated, 13-85.
Sen. Tom Coburn (R-Okla.)’s amendment to add language barring diversion of PTO fees to other government agencies was tabled by a vote of 50-48.
The American Intellectual Property Law Association and the Intellectual Property Owners Association and many intellectual property lawyers strongly favored ending fee diversion.
The bill is “the most sweeping change in patent law and practice since the 1836 creation of the modern [patent] examination system and the building of the U.S. patent office,” said Harold Wegner, a partner in the Washington office of Foley & Lardner.
The bill is not, however, a jobs creator, despite statements by the president, PTO director David Kappos and Leahy, who is also the chairman of the Senate Judiciary Committee, Wegner said.
Wegner disputes the argument that the legislation would create American jobs because it would enable the PTO to cut the backlog and thus unleash many inventions earlier. “There’s no empirical study to support this conclusion in any way,” Wegner said.
The bill offers some reform and improvements, but there’s “no support” for claims that the bill will be a major job creator, said Yar Chaikovsky, a Menlo Park, Calif., partner at McDermott Will & Emery. “We are getting some benefits to the patent office, but some of the benefits are being overstated,” Chaikovsky said.
Chaikovsky also said certain provisions dropped during the period when multiple bills were floated would have been important reforms, such as those addressing damage calculations in patent infringement litigation and jurisdictional issues.
“We lost provisions that were, I believe, helpful to corporations large and small and people involved in patent litigation generally,” Chaikovsky said.
The bill is “anti-innovation legislation,” said Alexander Poltorak, founder and chairman of American Innovators for Patent Reform, a coalition of inventors, companies and licensing executives. “It is going to hurt job creation, and it is certainly going to hurt our industry and the economy in the long run,” Poltorak said.
Poltorak also said the bill would hurt inventors, universities and small companies, which do most of the innovating and inventing. “The only ones that are going to benefit are large multinationals that sponsored the bill and that drafted the bill,” Poltorak said.
Poltorak, who is an inventor himself, predicts that if the bill becomes law the already-backlogged patent office will be flooded with applications because of the first-to-file provision. “People are going to run to the patent office with every single idea they get which is going to completely clog up the patent office,” he said. “Patent applications are going to be of worse quality and less mature.”
The new post-grant review procedure, which is an adversarial procedure before an administrative judge, “is going to give a sniper rifle to the hands of big companies,” Poltorak said.”People will just abandon their patents,” Poltorak said. “It’s an excellent patent assassination provision and nothing else.”
The bill also neglects to address a key needed reform, which would be a multi-tiered patent system, Poltorak said. Most of the industrial countries offer different types of patents and different protection levels, such as a senior patent for a major invention and a junior patent for a minor improvement.
“In the U.S., if you file a cure for AIDS and an invention for a kitchen gadget you get exactly the same protection,” Poltorak said. “We’re not debating an issue that would bring our patent system into the 21st century.”
The bill’s impact depends largely on what sort of regulations the patent office promulgates, said Stuart Meyer, a partner at Fenwick & West in Mountain View, Calif. “A lot in the bill is broad brush,” Meyer said. “Depending on how proposed rule-making or comments come out, the details can make it a real efficiency gainer or it can make it very, very difficult [for practitioners].”
The difficulty in getting any patent reform legislation passed shows that any future reforms are likely to be a long time coming, Meyer said.
“The big lesson for everybody is: If there’s a need for reforming the patent system, it’s going to be a long, long time before it’s seen in legislation,” Meyer said.
Sheri Qualters can be contacted at firstname.lastname@example.org.