IDEA Act Moves Forward While Fate of PERA and PREVAIL Seems Uncertain

During a scheduled markup hearing of three key patent bills today, Senators Thom Tillis (R-NC) and Chris Coons (D-DE) announced they would delay consideration of both the Patent Eligibility Restoration Act (PERA) and the Promoting and Respecting Economically Vital American Innovation Leadership Act (PREVAIL Act), respectively. However, the Inventor Diversity for Economic Advancement (IDEA) Act of 2024 moved forward to the Senate floor.

Commenting on the decision to delay PERA, which would eliminate all judicially-created exceptions to U.S. patent eligibility law, Tillis said “we’ve had some discussions with members, we feel like we’re making good progress, but for the purposes of the markup I will be withdrawing it from consideration.” He alluded to forces at work that “may be trying to undermine progress of either PERA or PREVAIL,” and said that despite those efforts, “it’s going to get marked up, so those [trying to thwart the bills] need to get at the table before they get on the table.”

The reasons for delay with respect to the PREVAIL Act, which would introduce a number of reforms to the Patent Trial and Appeal Board (PTAB) process, were more concrete, with Coons explaining that Senator Ted Cruz (R-TX) has amendments about making the PTAB process fairer for small and independent inventors and Senator Marsha Blackburn (R-TN) had also asked for more time for consideration. Coons also noted that there is now a manager’s amendment to address concerns from Senators Peter Welch (D-VT), Richard Blumenthal (D-CT) and Amy Klobuchar (D-MN) that the standing requirement contemplated by PREVAIL “might prevent generic competitors and patient advocates from using the PTAB to challenge patents.”

PREVAIL would require standing for PTAB challengers—specifically, that they must have been sued or threatened with a patent infringement lawsuit before filing a PTAB challenge—and limit multiple petitions against the same patent by “prohibiting any entity financially contributing to a PTAB challenge from bringing its own challenge.”

Coons said he didn’t want to move forward with the vote due to attendance issues as well as to give those members more time but added that “there is some significant misrepresentation going on about what happens at the PTAB,” noting that 18 of the 20 largest litigants are from Big Tech “who use it to invalidate properly granted patents.”

The last bill considered in today’s hearing was the IDEA Act, which will “direct the PTO to collect certain demographic data from patent applicants in a confidential and voluntary way,” according to the bill’s co-sponsor, Senator Mazie Hirono (D-HI), today. The impetus for the bill was Senator Chuck Grassley’s (R-IA) Study of Underrepresented Classes Chasing Engineering and Science (SUCCESS) Act, which required the USPTO Director to provide Congress with a report on publicly available patent data on women, minorities, and veterans, and to provide recommendations on how to promote their participation in the patent system. The resulting USPTO study found chiefly that there simply isn’t enough publicly available data to guide and support legislation that will foster inclusive innovation. This inspired the IDEA Act.

As Hirono explained, the USPTO was forced to guess the gender of inventors based on their first names, which “works for Dick or Clark or Ted but Corey and Lindsay are tougher,” noted Hirono. And the Office had virtually no way of guessing who was a veteran. The IDEA Act will therefore authorize voluntary confidential collection of such information “in a way that would have no impact on which applicants ultimately receive a patent,” said Hirono. The collected demographic info would be kept separate from applications and not considered by examiners.

“I believe in this theory that inventors and leaders are evenly distributed among races, religions, creeds, ethnicities and we have to find a way to get to all of them,” commented Tillis.

According to a Council for Innovation Promotion (C4IP) letter supporting the bill, “[i]nvolving a greater number of women and Black Americans in the innovation process could increase U.S. gross domestic product by as much as 4.6%, or roughly $1.3 trillion, according to one study.”

The bill was favorably reported by a vote of 15 to 6.

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C4IP also today applauded the passage of the IDEA Act and in a statement sent to IPWatchdog commended Tillis and Coons for “their continued commitment to moving PREVAIL and PERA through the committee.” The statement added: “These bills are the result of a thoughtful and collaborative process, and we are confident that the full Senate Judiciary Committee will favorably report these critically important bills soon.”

Judge Paul Michel, retired Chief Judge of the U.S. Court of Appeals for the Federal Circuit and also a Board Member with C4IP, said he is encouraged by today’s hearing despite the delay of PERA and PREVAIL:

“Today’s Judiciary Committee discussion of PREVAIL and PERA revealed dramatic progress toward approval. From the start, Senators Coons and Tillis emphasized their need for broad stakeholder support, a near consensus. Such legislative proposals also need time and discussion for members to get used to the complex issues and satisfy their own concerns. The promised Manager’s amendment will address such concerns, including what “standing” should be required to petition the PTAB and a possible narrow exemption for individual inventors owning their patents. Accordingly, the prospects for passage sharply increased today even though a vote was delayed. The Senate Committee leaders again showed they know best how to advance legislation.”

The Innovation Alliance also commended the Committee on movement of the IDEA Act but said it was “disappointed that the Committee postponed consideration of the PREVAIL and Patent Eligibility Restoration Acts, which are needed to strengthen the U.S. innovation ecosystem. Failure to pass these bills would represent a win for Big Tech and a loss for American inventors and the U.S. economy.”

Patrick Kilbride of Kilbride Public Affairs and former senior vice president of the Global Innovation Policy Center (GIPC), said the decision to postpone the markup was not unexpected but that the debate around the need for amendment of PREVAIL “is a side show, since PTAB proceedings are hardly used by the biopharma sector and the top challengers are all in tech. So, it’s a good example of how patent haters are effectively riding on the coattails of more sympathetic interests to advance their agenda.”

This article was updated post-publication.