Posts Tagged: "Patent Reform"

It looks like my prediction on Tuesday that the Senate would pass H.R. 1249, the America Invents Act, prior to President Obama’s much anticipated jobs and economy speech that begins at 7:00pm ET today, Thursday, September 8, 2011. The Senate voted to pass H.R. 1249 and send the House version of the America Invents Act to the White House for President Obama’s signature by a vote of 89 to 9. The Coburn Amendment, which would have once and for all put an end to fee diversion, was unsuccessful, being tabled by a vote of 50 to 48.

The United States Senate voted 93 to 5 earlier this evening to end debate on patent reform, which should set up a vote on H.R. 1249 in the coming days. Debate on patent reform is now over in the Senate. In the coming days the Senate will vote on and almost certainly pass H.R. 1249, sending it to the White House for the signature of President Obama. The Obama Administration has lobbied hard for this patent reform and although they are not getting everything they wanted, most notably an end to the practice of fee diversion, President Obama’s signature is guaranteed.

Why would we expect a new post-issuance review to work any better than the current prosecution process? Why are we to expect the Patent Office, which is certainly not equipped to handle litigation-like proceedings, could adequately and appropriately resolve issues of patentability in a post grant review proceeding when they are so horribly under-funded? Why would anyone think this is a good idea? Simply stated, the America Invents Act layers on more and more responsibility for the USPTO but without any additional funding. For years the federal government has been notoriously adept at layering unfunded mandates onto the States, but with this legislation they will layer unfunded mandates onto the USPTO; an agency that accepts absolutely no taxpayer funding.

Now, we’re about to toss it out in favor of a “first to file” bent with post grant challenges and derivation proceedings? Say what…….why? What did the statute do wrong? 8 million patents is a reasonable figure to have achieved. The US is the cross roads of the world’s technology with a statutory “negative pressure” that draws innovators and their ideas here. This country has flourished.

Cloture is the only procedure by which the Senate can vote to place a time limit on consideration of a bill or other matter, and thereby overcome a filibuster. Under the cloture rule (Rule XXII), the Senate may limit consideration of a pending matter to 30 additional hours, but only by vote of three-fifths of the full Senate, normally 60 votes. Without 60 votes cloture fails and debate continues. Unfortunately for those who would like to see patent reform derailed, the fact that there was unanimous consent in the Senate for a cloture vote almost certainly suggests that there will be at least 60 votes to end debate on H.R. 1249, which will bring it to a vote, likely sometime later in the week of September 6.

The real sin is that reexamination could be a much better process. Those in Congress talk about alleviating the burden on the district courts by having a reexamination proceeding available, but they don’t seem to appreciate why it is that reexamination is under utilized. On top of that, patent reform circulating in Congress does absolutely nothing to revamp reexamination in a way that would streamline the process and make it more appealing. What patent reform does do, however, is add yet another procedure to bog down the Patent Office while not allowing the Patent Office to set fees and keep those fees they collect to do the work that is promised when they accept those fees. So if patent reform passes you can anticipate that the reexamination pendency numbers will get even more ugly, making the option even less appealing.

That being the case it seems likely to me that patent reform won’t be picked up in the Senate until after Labor Day in September. What does this mean for patent reform? Who knows! I personally cannot see the Senate capitulating to the demands of the House of Representatives, and Senator Tom Coburn (R-OK) has already fired a shot across the bow prior to the House voting on H.R. 1249 suggesting he plans to make a big deal about USPTO funding, which was stripped from H.R. 1249. If the Senate does not accept H.R. 1249 and instead modifies the bill that would mean it would have to go back to the House. We might get into a game of ping-pong because I am told there will be no Conference on this legislation.

Small businesses are the backbone of the nation’s economy and those that are most likely to engage in job creation. Unfortunately, the small businesses surveyed tell a tale of little or no job creation over the next 1 to 3 years, and in fact suggest there will be more layoffs coming. The respondents see too much uncertainty in Washington, DC, too many regulations and a number of other matters (i.e., the deficit, debt, health care and taxes) as significant impediments to job creation. This on the heels of a disappointing jobs report for June 2010, downward revisions of the number of jobs created in April and May, and unemployment rising to 9.2%, this Chamber survey only piles on the continuing terrible news for the economy. With Congress bickering over the obvious — namely that we simply cannot spend money we don’t have and need to start spending less than we bring in to cut the deficit — it doesn’t seem there is likely to be any good news on the horizon.

The vast number of America’s companies that need patents to prosper and grow should fear the post-grant provisions for challenging patents in H.R. 1249, the patent reform bill passed last month by the House of Representatives. In a system already plagued by delays in granting patents, they threaten to delay courts from enforcing patents once finally granted. This threat has received little attention, perhaps because advocates of the bill promise promptness that they cannot deliver.

Under the “first to file” AIA regime, the effective prior art date is what prior art exists before the U.S. patent filing date. In other words, the U.S. patent applicant no longer has the luxury of that potential up to one year “window” after the invention date. Instead, the danger of intervening prior art by others steadily (and potentially exponentially) increases as time passes between the invention date and the U.S. patent filing date. Put differently, U.S. patent applicants are now really in a “race to the U.S. Patent & Trademark Office (USPTO)” to minimize the ever increasing danger of intervening (and accumulating) prior art coming into play. For the Goliaths, they’ve been existing in this situation for many years because the rest of the world (ROW) is “first to file.” But for the American Davids, “first to file” under the AIA is going to be culture shock of the worst, and most expensive kind, with time pressure that these Davids aren’t prepared or trained to handle.

United States House of Representatives passed H.R. 1249, which is known as the America Invents Act by a vote of 304-117. This bill differs from the Senate version of patent reform, S. 23, so there will be no bill going to the desk of President Obama just yet. There are important differences between the two bills, chief among them is funding for the United States Patent and Trademark Office.

Shortly after 2pm Eastern Time the United States House of Representatives voted on the Managers Amendment to the America Invents Act, H.R. 1249. The Managers Amendment passed by a vote of 283 – 140. The House then proceeded to address several amendments to H.R. 1249. The handwriting seems to be on the wall. The House is poised to pass H.R. 1249, together with prior user rights and without giving the United States Patent and Trademark Office access to the fees it collects without the blessing and approval of appropriators.

Obviously, Congressman Rogers is not being completely straight forward. The funds that exceed the appropriation to the USPTO would be available for use by the USPTO if and only if that is consistent with grants by appropriators. That is a far cry from saying the USPTO would get to keep 100% of the user fees it receives. Of course, this would not be the first time that Congressman Rogers was less than completely accurate regarding PTO funding.

General Electric was not the only large U.S. corporation not to pay taxes. According to Citizens for Tax Justice, General Electric had some company. In fact, American Electric Power, Dupont, Verizon, Boeing, Wells Fargo, FedEx and Honeywell all had tax rates between -0.7 percent and -9.2 percent for the stretch between 2008 to 2010. On the other hand, the United States Patent and Trademark Office continues to have user funds siphoned off, making the USPTO a much larger taxpayer than the largest U.S. corporations.

The reality is that from 1790 to 1836 patents were given to the first to file. Between 1836 and 1870 a panel of arbitrators would decide disputes between conflicting patents and patent applications, but were not required to grant the patent to the first and true inventor. Moreover, even with the passage of the Patent Act of 1870, the first act that specifically and unambiguously gives the Patent Office the authority to grant a patent to one who is not the first to file, the power to grant to the first to invent is conditional, not mandatory. This permissive language persists through the Patent Act of 1939, and ultimately into the regime we have today, which was ushered in by the 1952 Patent Act.