On June 23, 2011, the U.S. House of Representatives passed House Bill H.R. 1249 (the “Leahy-Smith America Invents Act”) by a vote of 304-117. This follows on the Senate’s 95-5 passage of bill S. 23 (the “America Invents Act”) back on March 8, 2011. As President Obama has indicated that he will sign into law the patent reform bill that arrives on his desk, significant changes to U.S. patent laws are only a reconciliation of the two bills away from becoming a reality. “So what does this mean for me?” you might ask.
The overlap between the House and Senate bills gives us a good indication of the modifications that are on the way. One important change is the move away from the first-to-invent system to a first-inventor-to-file system. Under the first-inventor-to-file system, the first inventor to file a patent application for a particular invention will be given priority over any other later filing inventors, with the only exception being where the first filer can be shown to have derived the invention from the second filer. Under the current first-to-invent system, priority may be given to a first inventor even when the first inventor is not the first to file a patent application for the invention. This change will bring U.S. laws into harmony with the patent laws of most other countries around the world, despite the success of the U.S. patent system in promoting innovation for more than two centuries without this feature. This aspect of the bills will significantly change current U.S. filing practice, heavily favoring early filings, eliminating interference practice and eliminating the ability to claim an earlier invention date than the filing date for an application. Some of the other changes that appear in both bills relate to limiting recoveries for private false marking lawsuits, eliminating “best mode” as a basis for challenging the validity of a patent, and adding new procedures for post-grant review of patents.
While there are many similarities between the two bills, there are also differences that will need to be worked out before a unified bill can be signed into law. The most significant difference relates to Patent and Trademark Office (“PTO”) funding. In that regard, the Senate bill provides the PTO with the authority to set the fees charged for its services and keep all of the fees received from applicants. The House bill also gives the PTO fee-setting authority, but keeps the current practice of having Congress appropriate a certain amount of funding to the PTO each year. Any fees collected by the PTO in excess of the appropriated amount are to be placed into a reserve fund. The PTO will have access to those funds only upon approval by an Appropriations Committee. Accordingly, under the House bill, the excess fees collected by the PTO may be diverted to other Congressional uses that are completely unrelated to the PTO’s activities unless the House agrees to appropriate PTO funds (i.e. patent and trademark fees from applicants and patentees) back to the PTO.
While patent reform has seemingly been a congressional “hot topic” every year for much of the past decade, it appears that 2011 may finally be the year that patent reform legislation makes it through the House and Senate, onto the President’s desk, and out into real world—for better or for worse. What does it mean for innovators? Time will tell, although the post-grant review procedures should be a significant improvement to ensure only properly granted patents survive.