Retired Judge Paul Michel, who formerly served as chief judge of the Federal Circuit Court of Appeals and retired in 2010 to participate in the debate over patent reform, recently published a comment on a House bill (H.R. 1249) provision that would single out “business method patents” for different treatment under the law. According to Michel, section 18 of the proposed legislation would add “a special new procedure in the patent office that favors financial firms in several unjustified ways.”

First, the section would require the creation of a new transitional post-grant review proceeding to review the validity of business method patents. Michel contends that this would allow “patents to be invalidated even though properly granted under the laws applicable at the time, even when they have been upheld by the courts or after re-examination in the Patent Office.” The section would also apply retroactively and impose new standards on courts deciding whether to stay a civil infringement action involving a patent undergoing transitional review. Michel claims this will allow “lawsuits to be stalled for years while the patent office reviews the old patents under the new laws” and will skew “the standards courts normally apply in deciding whether to freeze (‘stay’) the lawsuit until the patent office completes all reviews.”

Finally, Michel notes that the measure would create “an automatic right of appeal if the stay is granted, guaranteeing further delay and burdening the appeals court with reviewing trial court orders not normally appealable.” He further observes, “No other industry is so protected, no other type of patent so degraded. That is not equal justice under the law, but special interest legislation at its worst. Favoritism for financial firms will encourage other industries likewise to seek legislative exemption from normal rules and equal justice. That will further fragment patent law, expanding complexity and delay just when simplicity and expedition are needed to spur recovery and create jobs.” He calls for section 18 to be stripped from the bill before final passage.

When Michel testified before a subcommittee of the House Committee on the Judiciary in February 2011, he emphasized the need for reforms that would address delays and ameliorate crushing workloads at the U.S. Patent and Trademark Office (USPTO). He stated that the office needed several thousand additional examiners, dozens of additional board of appeals members and a major modernization of its IT systems. See Patently-O, July 7, 2011.

Shook, Hardy & Bacon Intellectual Property Of Counsel Tom Moga has also expressed concerns about the proposed reforms; he was quoted in the June 29, 2011, issue of GEN Magazine: Genetic Engineering & Biotechnology News as saying, “I understand the benefits of first-to-file, but I’m very concerned that now that it’s a race to the patent office, the quality of our patent applications will suffer.”

He also suggested that the House version, by failing to allow USPTO to keep the fees it collects, could jeopardize U.S. leadership in the biotech arena. He said, “If we don’t get our biotech patent group organized and fix this, we are certainly going to fall behind in one of the areas that we’ve been leaders in. . . . On the one hand, you hear people in Congress grouse about our lack of competitiveness. On the other hand, they won’t take the steps that are necessary to make sure our patent office has the funds it needs to keep up with the technology and provide the services that applicants need to move their applications along at a reasonable time frame.”