Wednesday, July 13, 2011

House Passes Patent Reform Bill

In the last 60 years, tremendous technological advancements, from computers the size of closets to wireless technology that fits in the palm of your hand have taken place. Meanwhile the patent system that protects today’s technology has gone largely unchanged.

According to the House Judiciary Committee Chairman Lamar Smith (R-TX), the June 23rd passage of the House bill ( H.R. 1249) brings the patent system into the 21st century, reducing frivolous litigation while creating a faster and more efficient process for the approval of patents. No longer will American inventors be forced to protect the technologies of today with the tools of the past.”

The average wait time for patent approval in the U.S, is three years. The Patient and Trademark Office (PTO) with a backlog of 1.2 million patents pending approval have more than 700,000 patents that have not even reached an examiner’s desk. It takes an average of three years to get a patent approved in the U.S.

The bill H.R. 1249 ends fee diversion and preserves congressional oversight by creating a fund for fees collected by the PTO. Under current law, the PTO is forced to give the money it raises through fees for services back to the Treasury and must later request the funds from Congress during appropriations. However, rather than giving the funds back to PTO to help address the backlog of patient applications, the fees are often diverted to other federal programs. Since 1992, nearly $1 billion has been diverted from the PTO.

With the legislation, the money in the fund will be reserved and used by the PTO and only the PTO. This maintains congressional oversight while making sure that fees collected by the PTO can no longer be diverted. This means that good patents will be approved more quickly and therefore this provision will not increase federal spending or contribute to the federal deficit.

It has been reported that anywhere from $400,000 to $500,000 is needed to pursue an interference proceeding claiming the right to a patent based on an earlier invention. As the “New York Times” has pointed out, most small inventors don’t have that kind of money—big corporations do.

The legislation would establish a pilot program to allow the PTO to reexamine a limited group of questionable “business-method” patents. If someone is being sued by a “business-method” patent holder, that individual can partition the PTO to review the patent in question. As a result, bad patents that never should have been issued will be eliminated and good patents that pass this tough scrutiny will have even stronger legal integrity.

The House proposal switches the basic standard of patent approval from a first-to-invent to first-inventor-to-file. The first-inventor-to-file system creates certainty about patent ownership, and therefore reduces costly litigations. Also the “first-inventor-to-file” system makes it easier for U.S. inventors to patent innovation internationally because they will not have to prepare applications for two different systems.

The U.S is no longer winning in the race to publish patents. China is expected to surpass the U.S. for the first time this year as the world’s leading patent publisher surpassing not only the U.S. but also Japan in the total and basic number of patents. H.R. 1249 will harmonize the U.S. patent system with major trading partners and enable U.S inventors at universities and industry to compete more effectively in the global marketplace.

H.R. 1249 has broad support from industry leaders, independent inventors, and academic institutions such as 3M, Apple, Dell, eBay, Facebook, General Electric, Google, IBM, Johnson & Johnson, PhRMA, Proctor & Gamble. Eli Lilly, associations representing over 250 universities, a group representing more than 100 independent inventors, and the Small Business & Entrepreneurship Council representing more than 100,000 members.

In April 2011, the Senate passed its version of patent reform legislation with overwhelming bipartisan support by a vote of 95-5. The House bill passed on to the Senate for final approval has industry broad support and the President has said that he will sign the legislation into law if it passes the House.