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Apparently Pigs Can Fly: Senate Passes Historic Patent Reform Bill

March 9, 2011

Just when most believed it couldn't be done, the United States Senate voted yesterday, in an overwhelming show of bipartisan support, to approve Senate Bill S. 23 (titled the "America Invents Act"). If passed by the House of Representatives, this would be the most comprehensive change to U.S. patent law since Congress passed the 1952 Patent Act over half-a-century ago. Although the idea of patent reform is certainly not uncommon and has been raised with some vigor in 2005, 2007, and 2009, the Senate's passage of Senate Bill S. 23 marks a significant milestone in the seemingly endless quest for patent reform.

Although the America Invents Act languished for more than a week through a series of debates and suffered multiple amendments, the final version of the bill boasted bipartisan backing from all but five senators. In the words of Senate Judiciary Committee Chairman Patrick J. Leahy, D-Vt., the bill strikes the "proper balance for America—for our economy, for our inventors, for our consumers." Only Senators Barbara Boxer, D-Calif.; Maria Cantwell, D-Wash.; Mike Crapo, R-Idaho; James Risch, R-Idaho; and John Ensign, R-Nev. voted against the legislation.

The White House strongly supports the legislation and has called it a "fair, balanced and necessary effort to improve patent quality, enable greater work sharing between the [United States Patent and Trademark Office (USPTO)] and other countries, improve service to patent applicants and the public at the USPTO and offer productive alternatives to costly and complex litigation." And Tuesday evening, President Barack Obama applauded the passage of S.23 saying that he is "pleased that, on a bipartisan basis, the Senate has passed the most significant patent reform in over half a century." Indeed, the sweeping legislation addresses rising public and industry concerns regarding how the USPTO reviews, grants, and hears challenges on patents.  Specifically, S. 23 includes the following measures:

  • Transition from a first-to-invent system to a first-to-file system for determining priority of multiple inventors to the same or similar inventions (Section 2);
  • Prioritization of reviews for certain patents deemed critical to U.S. economic development (Section 23);
  • Establishment of a transitional program to review granted business-method patents in light of the Supreme Court's recent decision in Bilski v. Kappos (Section 18);
  • Formation of a new "first-window" post-grant, patent-opposition system with a shorter timeframe but broader jurisdiction than the current reexamination procedure (Section 5);
  • Establishment of procedures for third parties to submit for consideration and inclusion in the record of a patent application, any patent, published patent, or other printed publication of potential relevance to the examination of the application (Section 7);
  • Creation of a small-business ombudsman at the USPTO (Section 22);
  • Modification of current bans on tax patents to allow patents for certain types of tax-return filing software (Section 14);
  • Amendments to 35 U.S.C. § 292 restricting the availability of false-marking damages to the federal government and those persons who have suffered a competitive injury as a result of false patent marking (Section 2);
  • Requirement that the USPTO disclose the amount of time it takes to conduct inter partes and post-grant reviews (Section 5);
  • Provision allowing the USPTO to set its own fees (Section 9);
  • Elimination of fee diversion from the USPTO to the U.S. general treasury (Section 20);
  • Set new fees for applicants that select not to use electronic filing methods (Section 9); and
  • Establishment of three or more USPTO satellite offices (Section 21).

The senate bill gained support as it moved towards passage last week, especially after the Senate decided to strike litigation-related provisions pertaining to rules for determining damages, willfulness, and venue transfer in district court infringement proceedings. According to the American Intellectual Properly Law Association President David Hill, "Senate passage of S. 23 is very encouraging. . . . We are hopeful that patent reform will soon become a reality."

Focus now shifts to the House of Representatives. Debate is expected to center on the transition to a first-inventor-to-file system of determining patent ownership and the formation of a new post-grant review procedure to challenge patent validity in the nine-month period after issuance.  Amendments to these provisions in the Senate were withdrawn early in the floor debate. In addition, S. 23 differs substantially from the patent-reform bill most recently passed by the House in September 2007. Unlike S. 23, House Bill H.R. 1908 (titled the "Patent Reform Act of 2007") centered primarily on litigation reform.

The House Judiciary Committee Subcommittee on Intellectual Property, Competition, and the Internet has scheduled hearings for March 9 and 10, which presumably will concentrate on patent reform. Given the present high priority on legislation relating to the administration's budget for fiscal years 2011-2012, however, it is unclear what, if any, priority the House will place on patent reform. Furthermore, it is uncertain whether the House currently intends to adopt the Senate bill in whole cloth or advance its own version of patent reform. Although the Subcommittee's Chairman, Lamar S. Smith, R-Tex., confirmed on February 11 that he is developing a House version of the bill, Senator Leahy (S. 23's primary sponsor) suggested during Senate floor debate that he worked with Smith to incorporate the House's ideas into the Senate bill.

Although its too early to say whether patent reform will become a reality, one thing is certain: it's been a long time since patent reform has come this far. We will be watching the House with baited breath and will keep you informed as to any further progress towards patent reform. If the House bill incorporates similar reform, air traffic controllers may indeed report sightings of airborne porcine.