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Senate’s version of Patent Reform Bill of 2011: Comments on the day after

by Orlando Lopez

On March 8, 2011, the Senate passed, by 95 to 5, a version of the Patent Reform Bill, which has been renamed the America Invents Act (this really should be the America Profits From Invention Act).

The House Judiciary Subcommittee on Intellectual Property moved quickly to hold its first hearing on March 10, 2011, hearing testimony from Prof. Dan Burk,  UC Irvine Law School, Andrew Pincus, of Mayer Brown LLP, representing the Business Software Alliance (BSA), and Prof. Dennis Crouch, University of Missouri Law School (also known for his blog, patently-o).

Since we have recently presented an annotated version of the original bill, the adopted version of the bill is reviewed below along with some Monday morning quarterback comments.

First inventor to file – The adopted bill moves the US from being the only inventor-centric, first to invent, patent system to being a first to file system (referred to as a first inventor to file system), like the rest of the international community.  An attempt by a bipartisan group, led by Sen. Feinstein, was not able to get enough votes to stop the first to file movement.  A more balanced solution to the problems created by first to invent, so that the large entities are not disadvantaged and the small entities are still allowed leeway, is still needed, and with little hope, we look at the House to do that.  At the House Committee hearing, Prof. Burk expressed some caution regarding changing the system to first to file, since by disrupting 200 years of settled patent law, the change will result in significant cost and Congress should make  the cost determination before making the change.  In contrast, Pincus, representing the BSA, voiced support for the change to first to file.

In the Senate bill, the damage provision is gone and venue only gets a technical amendment treatment.  Burk, Pincus and Crouch detailed at the House Committee hearing, how the recent Court decisions have made the damage and venue provisions of the previous version of the bill unnecessary.

Post-grant review – Both avenues for post-grant review remain in the bill: An Opposition-like post-grant review, filed within nine months of when the patent issued;  and, an inter-parties review similar to re-examination, available after the nine month period.  Discovery is allowed in the post-grant review, which leaves the concern about the expense to small entities.  A provision that streamlines the post-grant review, to make it more like a summary judgment with both parties presenting briefs and  affidavits, would be welcome.  Such a provision would reduce the cost impact to small entities.  Prof. Burk express some caution in the change to a post-grant review while the BSA  supports such creation of the post-grant review.

Fee setting authority– The Senate bill provides fee setting authority to the USPTO and sets up a mechanism by which the USPTO gets to keep the fees generated.  This is probably the most significant portion of the bill in terms of providing a strong USPTO.  There was consensus among Burk, Pincus and Crouch, joining the voices of many others, that granting fee setting authority to the USPTO and allowing the USPTO to keep and use the fees it collects (rather than being a cash cow), would be beneficial to the patent system.

Pre-Issuance Third Party Submission – The ability to provide information related to patentability by third parties is still in the adopted bill.  Pincus, in his testimony, voiced support for this provision.

False Marking – The restrictions on false marking litigation remain in the adopted bill.  This is a welcome change in the law (I had a difficult time seeing patent attorneys as ambulance chasers). Pincus, representing the BSA, testified in favor of the changes in the false marking litigation.

The Senate bill includes other provisions that were part of the proposed bill, but were not discussed in the testimony at the House Judiciary Subcommittee on Intellectual Property hearing.  Two of those provisions are identified below.

Tax Strategies excluded – Patents on tax strategies are ruled out by the Senate Bill.

Best mode – In the adopted bill, the best mode requirement is ruled out as an invalidity weapon. Since the best mode requirement is not gone, it remains a necessary element in order to obtain a patent.  The best mode requirement can be used against the potential patent holder by the Patent Office, but not by the courts.

In the Senate bill, there is  a one-year delay in the implementation of a number of the new procedures for the USPTO.  The delay softens the impact of adding more work to an overworked agency.

The House is moving quickly to consider patent reform.  This is an area where, in the past, there has been much bipartisan agreement.  Even those of us who express some caution about the move to the first to file system, would be willing to trade those cautions for the strengthening of the USPTO brought about by the fee granting authority and the retaining of the fees.  Let’s look forward to a serious consideration of patent reform by the House and to a stronger US patent system.

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