September 6, 2011 - On return from the August break, Senate leadership of both parties urged adoption by the Senate of the House version (H.R. 1249) of the America Invents Act (“AIA”) without amendment.

Early this evening, the Senate invoked cloture on consideration of H.R. 1249 by a 93-5 vote. That vote cuts off the possibility of a filibuster, prevents consideration of amendments not filed before the cloture vote and limits further debate to 30 hours.

August 15, 2011 - An updated presentation on the Leahy-Smith America Invents Act is posted here.

August 8, 2011 - The Patent and Trademark Office (PTO) has established a "Leahy-Smith America Invents Act Implementation" page on its website. In addition to convenient links to materials available elsewhere, the PTO Implementation page includes links to a summary of the Act, "Areas for Comment" on new possible patent and Board rules, materials explaining the new fee-setting procedure and a summary of near term (less than 60 days) items. Our explanation of "What you need to know now," with references to sections of H.R. 1249 and existing law, is here.

August 2, 2011 - Led by Majority leader Harry Reid, 17 Senators today filed a motion for cloture, which would limit Senate debate on H.R. 1249, The Leahy Smith America Invents Act. A vote on the cloture motion is scheduled on September 6th, when Congress returns from its August break. If that motion is approved, as appears likely, the vote on approving the patent law reform bill probably will occur later in the week. The bill's manager, Judiciary Committee Chair Patrick Leahy, will reportedly offer the H.R. 1249 for approval without amendment; however, it appears likely some amendments may be offered on the Senate floor, if only to permit Senators to record their positions.

July 14, 2011 – Senate consideration of the America Invents Act (H.R. 1249) appears to be on hold, awaiting "floor time." It remains possible that the Senate will adopt that bill without change before Congress's August recess. Some major changes—such as first inventor to file priority, and the new post grant and inter partes procedures—would not be effective for 12 to 18 months. Many other changes in patent law, including a 15% fee increase, would take effect immediately when President Obama signs the law or shortly thereafter. Our summary of those provisions of the 152 page patent law reform bill with an early effective date is here.

July 13, 2011 – Bipartisan Congressional support for the patent system remains strong. Today, the House Appropriations Committee approved a bill including provisions that should give the USPTO access to all fees it collects in FY 2012, an estimated 28% increase over the current appropriation. However, it is unclear whether the full House and Senate will approve that bill before FY 2012 begins on October 1, 2011.

June 27, 2011 – The "engrossed" version of H.R. 1249 as adopted last week by the House of Representatives has been released. A copy is here. Although there have been many expressions of doubt whether that bill would really end PTO fee diversion, momentum is building for adoption of that bill by the Senate, without amendment.

June 23, 2011 – The House of Representatives approved the renamed Leahy–Smith America Invents Act (H.R. 1249) this afternoon by a bipartisan vote of 304-117, following adoption of the Manager's Amendment and minor amendments on the following subjects: a study of diversity of patent applicants, requirements for the satellite office location process, a "sense of Congress" statement regarding the importance of protecting small businesses from predatory behavior involving innovation, a study on assistance to small businesses to obtain and enforce foreign patents, calculation of a deadline for seeking patent term extension, and addition of provisions directing the PTO to prescribe requirements for proof of derivation.

The very strong support for adequate PTO funding was indicated by the 329-92 rejection of a proposal to remove the PTO fee-setting provisions; however, the procedural rule for consideration of the bill provided no opportunity to amend the compromise on fee diversion, discussed in our June 21 and 22 Updates, which is in the bill as adopted.  

The subjects of other rejected amendments included a proposal to strike the first-to-file provisions, postponement of a first-to-file system until other nations adopt the U.S. grace period, a proposal to conform the prior user rights provisions in H.R. 1249 to those in the House's 2007 bill and in S. 23, a proposal to strike the transitional program for review of covered business method patents, and a proposal to limit the tax planning patent provisions to applications filed after enactment. The proposal for severability of provisions found unconstitutional by the Supreme Court was withdrawn. A summary of today's proceedings is here.

June 22, 2011 – Debate of the America Invents Act began on the House floor tonight. The discussion of constitutionality of a first-inventor-to-file system, the general debate and debate of the proposed Managers Amendment were completed. The most time was devoted to disagreement over the anti-fee diversion provisions, with almost all agreeing that diversion should be stopped. Proponents argued that the Manager's Amendment, in its current form, was a reasonable compromise and maintained oversight of the PTO by Congress. Opponents, including those who opposed the bill for other reasons, said that future Appropriations Committees could not be trusted to adequately fund the PTO and the amendment should be defeated.

A brief, staged colloquy between Judiciary Chair Lamar Smith and Repr. Bass may have been the event of most enduring significance. Its purpose was to establish legislative history that Congress intends that the grace period in the new Section 102(b) cover the same type of actions by an inventor that otherwise might be a bar under the new Section 102(a).

June 21, 2011 – Patent law reform appears to have moved onto a fast track toward completion. A revised Manager's Amendment, filed by House Judiciary Chair Lamar Smith, reflects a compromise with the Appropriations Committee. That amendment is here. Fees collected by the PTO would be placed in a fund reserved for its use, subject to appropriations by Congress. The other principal change is that Section 27 would require the PTO Director to study ways to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for primary genetic diagnostic tests exist, a change from the earlier proposal that would have created an exception for second opinions in certain genetic testing.

A press release from Repr. Smith's office reported support for H.R. 1249  by House Speaker Boehner, Majority Leader Cantor and Appropriations Committee Chair Rodgers. While a press release by Senate Judiciary Chair Leahy reported that he was disappointed that the bill will not include the specific language contained in the Senate-passed bill to end fee diversion, he said, "I believe that the fee diversion language in the manager's amendment, coupled with a commitment by the House Appropriations Committee to provide the Patent and Trademark Office with access to the excess fees it collects each year, would be a concrete step in the right direction."

The House Rules Committee adopted a rule tonight for debate on the House floor of H.R. 1249. Twenty minutes is allocated for an initial debate of constitutionality. One hour is allocated for general debate and ten minutes for each of 15 amendments, starting with the Manager's Amendment. Each time period is to be divided equally between proponents and opponents. The rule not only governs the debate expected to occur within a few days, but also provides for an expedited procedure after the Senate considers the bill adopted by the House. A summary of the rule information is here.

June 13, 2011 – A proposed Manager's Amendment by House Judiciary Chair Lamar Smith and 38 other proposed amendments to H.R. 1249 were filed today. A summary of the amendments, with links to their texts, is here. The Manager's Amendment is here.

The Manager's Amendment apparently seeks to address the major disputed issues and differences from S. 23. Its principal substantive proposals are:

  • The broad prior user right now in H.R. 1249 would remain, but would be further defined. (p. 2)
  • The false marking penalty simply would not be applicable to marking relating to a patent that had covered a product, but has expired. (p. 22)
  • Second opinions in certain genetic diagnostic tests would be permitted by a limitation on infringement remedies. (p. 28)
  • A limitation would be added, "no patent may issue on a claim directed to or encompassing a human organism." (p. 32)

Other notable proposals in the Manager's Amendment include:

  • The end of time for filing a petition for Post Grant Review and the start of time for petitioning for Inter-Partes Review each would be changed from one year to nine months from patent grant. (pp. 8, 11)
  • Provisions would be added for inter-partes reexamination during its phase-out, increasing the threshold to a "reasonable likelihood" that the requester would prevail as to at least one claim. (p. 9)
  • The provisions including institutions of higher education in the micro-entity definition, for entitlement to reduced fees, would not be limited to public institutions. (p. 14)
  • A 15% surcharge on most PTO fees would be imposed 10 days from enactment. (p. 16)
  • Detailed requirements and a $4,800 fee for prioritized examination would be added. (p. 18)
  • The PTO Director would be required to confidentially refer evidence of material fraud in reexamination or supplemental examination to the Attorney General, in place of the current bill's provision for termination of supplemental examination. (p. 21)
  • Additional provisions would require the PTO to report to Congress with respect to spending plans and changes therein. (p. 24)
  • Provisions for a GAO study of patent litigation by non-practicing and patent assertion entities would be added. (p. 32)

June 6, 2011 – House Appropriations Committee Chair Harold Rogers (R-KY) and Budget Committee Chair Paul Ryan (R-WI) have written to Judiciary Committee Chair Lamar Smith (R-TX), opposing the PTO fee-setting and funding provisions of H.R. 1249. The letter argues that the bill would "essentially eliminate the ability of Congress to perform substantive oversight of the PTO" and, unfortunately, portrays this as a partisan issue.  The letter does not respond to the extensive criticism, placing much of the responsibility for the PTO backlog on past diversion of funds by the Appropriations Committee. The letter is here.

Rep. Don Manzullo (R-IL) issued a press release urging the House leadership to "shelve" H.R. 1249, arguing that it would be would be inconsistent with statements in the Supreme Court's decision in the Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. that, under existing patent law, an invention belongs to the inventor. "Today's ruling by the Supreme Court affirms 'first to invent' and indicates H.R. 1249 would not pass constitutional muster." Neither the press release nor other recent comments which raise similar constitutionality questions (1) discuss the actual provisions of Article I, Section 8, granting Congress considerable discretion in how to protect inventors' "discoveries," (2) address the specific provisions in S. 23 and H.R. 1249, intended to limit patent grants to true inventors, or (3) consider the argument that the legislative proposal simply specifies a way of determining which inventor was first. The press release is here.

June 1, 2011 – Today, the House Committee on the Budget "discharged" (consented to) H.R. 1249 and the House Judiciary Committee published its report. A copy of the report, including the bill as reported by the Judiciary Committee, is here.

Pages 1-38 of the report comprise a compact copy of the bill. A useful statement of the purpose and summary of the proposed changes in the law is at pages 38 – 57. The favorable budget impact, resulting from the new PTO fee arrangements, is discussed at pages 63 – 72. A section-by-section analysis is at pages 73-84. A markup of existing law, indicating changes that would be made by the bill as reported, is at pages 89 – 161. The report closes with statements of dissenting and additional views. 

Our informal comparison of the reported version of H.R. 1249 with S. 23, as adopted  by the Senate on March 8, 2011, is here. Most of the major differences have been discussed in our previous updates.

The first-to-file vs. first-to-invent dispute remains barely alive. In a letter to the House Rules Committee leadership, Dana Rohrabacher and 49 other Representatives have requested that a separate period of at least 20 minutes be provided for debate on the House floor of the constitutionality of H.R. 1249. A link to that letter is here. At a press conference today, Reps. Rohrabacher and Kaptur also called for complete rejection of H.R. 1249 and replacement by a bill that "straightens out the current mess of backlogs, delays, and inadequate funding at the US Patent and Trademark Office." This and other opposition appears to be primarily directed to assuring various constituencies that their proposals have been considered. 

Some House members may suggest omission of the proposal to permit purging inequitable conduct by supplemental examination, in light of  the Federal Circuit's May 25 en banc opinion in Therasense Inc. v. Becton, Dickinson, which tightened the elements of materiality and intent necessary for proving the inequitable conduct defense. That might permit the House to avoid addressing the problematic supplemental examination amendment discussed in  our May 16th Update. Dropping the supplemental examination proposal, however, may be premature. Becton, Dickinson is reported to be planning a petition to the Supreme Court, and the PTO has yet to announce its reaction to the Therasense decision and potential impact of the duty of disclosure.

May 31, 2011 – Commerce Secretary Gary Locke wrote letters to House Judiciary Committee Chair Smith and Ranking Member Conyers expressing his department's endorsement of the America Invents Act and urging swift approval. The letters expressed strong support for the first inventor to file provisions and for granting fee-setting authority to the PTO, coupled with the right to use all fees paid by patent applicants without fiscal year limitation. Secretary Locke also endorsed provisions in H.R. 1249 (but not in S.23) that would expand the current prior user defense to all areas of technology. The letters are here.

The House Judiciary Committee has not yet released its committee report, including the consolidated version of H.R. 1249, as amended on April 14. The bill still appears to be on track for consideration by the full House in June.

May 16, 2011 – It appears likely that the version of H.R. 1249, as amended a month ago by the House Judiciary Committee, will be released with a committee report in the week of May 23rd. It also is likely the bill will be brought to the House floor in mid-June, together with a further Managers Amendment.

House IP Subcommittee staff members have reportedly been working, in cooperation with the Senate Judiciary staff, to clean up the bill, and minimize the differences between the House and Senate versions. In particular:

  • The first-to-file principle in the new Section 102 appears secure; however, an effort is being made to clarify its standard of a "disclosure" that would constitute prior art. (Incidentally, both versions of the bill would give a broader preclusive prior art effect than the European Patent Convention.)
  • Current versions of S. 23 and H.R. 1249 have a more limited grace period than intended by at least some of the proponents. In contrast to patent law reform bills in recent years, the grace periods in the current bills would exclude from the prior art only "disclosures" by an applicant within one year before filing her first patent application, and would not literally exclude "on sale" and "public use" activity in that period.  
  • The supplemental examination provisions were intended to permit patentees to purge inequitable conduct. Unfortunately, however, most members of the House Committee apparently did not recognize the purpose of this provision—analogous to purge of patent misuse—and approved an amendment that would bar its use in cases where fraud was practiced or attempted.

House Judiciary Chair Lamar Smith recently predicted that "we're almost there," and that little time would be required to reconcile the House and Senate bills after passage by the House.

April 14, 2011 – "Wow, that is great!" House Judiciary Committee Chair Lamar Smith said following the clerk's report that the committee had just voted 32-3 to approve H.R. 1249, as amended, and send it to the House floor. The full committee had spent all day in a mark-up session, during which a Manager's Amendment and 12 other amendments were adopted, and a few other proposed amendments were rejected. Shortly before the final vote, Chairman Smith announced receipt of letters of support from a diverse array of interest groups, which—together with the bill's strong bipartisan support in the committee and the Senate's overwhelming approval of S. 23—suggests a high likelihood that patent law reform will move forward to enactment.

As approved, most of the bill is substantially the same as when it was introduced 15 days earlier. Perhaps most significantly, the threshold for inter partes review was changed from "a substantial new question of patentability" to "a reasonable likelihood that the petitioner will prevail with respect to at least one of the claims challenged in the petition." Several definitions were added, including an important clarification of disclosure to the public in Section 102. A further limitation would be imposed on actions for false marking with expired patent numbers. Surprisingly, in light of earlier deletions of litigation proposals, the amended bill would limit joinder of defendants in a single action to parties engaged in related acts of alleged infringement, excluding joinder simply on the ground of having infringed the same patent. Also, stays of actions against nonmanufacturing parties would be encouraged and the bill would require that manufacturers be permitted to intervene inactions against their customers. If the bill is enacted, the General Accounting Office will conduct a study of litigation by nonpractising entities and report within one year.

March 30, 2011 – House Judiciary Chair Lamar Smith filed H.R. 1249 today. It is the House version of the "America Invents Act," which was referred to the Budget and Judiciary Committees. The House IP subcommittee held a hearing on the new bill today. Committee members emphasized that the remaining differences are non-partisan and that compromise is necessary. The hearing  witnesses were PTO Director David Kappos, Steve Bartlett of The Financial Services Roundtable, Steven Miller of Procter & Gamble Co., Mark Chandler of Cisco Systems, Inc. and John Vaughn of the Association of American Universities. It is not clear when the Budget Committee may find time to consider the bill.

H.R. 1249 is not very different from the version passed by the Senate on March 8th, S. 23. It retains the provisions for a first to file system, PTO fee setting authority, PTO financing through a revolving fund, and limits on recovery in private false marking actions. The bill would also set a patent fee schedule effective upon enactment, with major fees increased by 10%, as requested by PTO Director Kappos.

The most significant change is an expansion of the prior user defense in 35 U.S.C. § 273 to cover "use of the subject matter of a patent in or outside the United States," removing the current limitation of that defense to "a method of doing or conducting business." The defense would not be applicable where the subject matter of the patent was developed pursuant to a federal government funding agreement, or by a nonprofit institution of higher education or an affiliated technology transfer organization that did not receive private funding in support of that development (Sec. 4). In the hearing today, it became clear that the prior user defense had been expanded because such rights exist in substantially all other first to file systems and was sought by high tech companies. The exception was in response to university concerns.

The period in which Inter Parties Review could be sought was expanded from nine months to one year from patent grant. The threshold would be changed to the current reexamination standard of "a substantial new question of patentability" (SNQ). (The standard proposed in S. 23, which was  "a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition".) Responding to questions at today's hearing, PTO Director Kappos defended the SNQ standard, noting that recent data reexaminations conducted under that standard shows a very high percentage of rejections of at least one claim.

H.R. 1249 would also regulate the grant of stays in certain civil actions and ITC proceedings during Inter Partes or Post Grant Review by the PTO, and the estoppels resulting from such PTO proceedings would be extended to ITC proceedings.

Provisions limiting venue were added to the section providing "Transitional provisions for covered business method patents." The limitations on tax strategy patents were modified to permit patents on tax preparation and general financial planning methods and products. The proposal to remove the limitation on the place of residence of Federal Circuit judges was deleted.

March 22, 2011 – Our summary of S. 23, as adopted by the Senate, is posted here today.

March 17, 2011 – H.R. 1056, Repr. Issa's new bill addressing claims of false marking with expired patent numbers, originally scheduled for mark-up by the House Judiciary Committee today, was removed from the agenda without explanation.

March 14, 2011 – Repr. Issa (R-Cal.) introduced a new, stand-alone bill, intended to limit patent false marking litigation. H.R. 1056, entitled the "Patent Continuing Disclosure Act," would preclude a false marking penalty if no change in the manufacturing or production process of the item occurs after the expiration of the patent or the word "expired" is added to the marking. The bill has bipartisan sponsorship and is on a fast track, scheduled for mark-up by the full House Judiciary Committee on Thursday, March 17th.

March 10, 2011 – The House Judiciary IP subcommittee held patent law reform hearings yesterday and today to receive testimony from three law professors, and three inventors from two university research centers and a small company. Two inventors and a professor were opposed to ending the present first-to-invent system. All witnesses were questioned on that subject. Most of the arguments in favor of first-to-invent indicated an emotional attachment. The inventors did not appear to be familiar with the details of the proposed first-inventor-to-file system or the present system. 

March 8, 2011 – Following a few minor amendments, S. 23 was adopted today by the Senate in a 95-5 vote. The bill, as approved, is here.  

Most significantly, S. 23 would establish a first inventor to file system in the United States, would give the PTO fee-setting authority and would end PTO fee diversion. The definition of prior art would be expanded to include public use and "on sale" activity outside the United States. Substantial changes would be made in the procedures for post grant review of patents by the PTO. Private false marking claimants would have to plead and prove competitive injury. Earlier proposals to regulate trial of damages and several other litigation-related proposals have been omitted, primarily because the subjects are being addressed by the courts. 

March 7, 2011 – Late today, the Senate voted 87-3 to end debate on S.23 after a maximum of 30 more hours. That time is running continuously from opening to adjournment each day, including recesses and discussions of other topics. A few, minor amendments were approved today.

March 3, 2011 – The Senate continued consideration of proposed amendments to S. 23. A proposal by Senator Feinstein to strip the first inventor to file provisions from the bill was defeated by a vote of 87-13. Much of the other floor debate has been directed to non-germane amendments relating to the federal budget, etc. A "cloture" motion was filed, which had the effect of setting a deadline on Friday, March 4th for filing "first degree" amendments and requires a vote on Monday, March 7th. If at least 60 Senators vote then for cloture, further debate on S. 23 will be limited to 30 more hours before a vote on the bill must take place.

March 2, 2011 – S. 23 was renamed the "America Invents Act" and revised in a 97-2 vote approving a bipartisan Managers Amendment. Most significantly,  S. 23 now would establish a revolving fund to receive PTO fee income for use by the PTO without fiscal year limits or diversion. Also included is a version of Senator Schumer's proposal, creating a 5 year transitional program for a post-grant review of asserted patents that claim a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except patents for technological inventions.

February 28, 2011 – S. 23 came to the Senate floor today. In introducing the bill, Senators Leahy, Grassley, and Hatch emphasized that the bill is a hard-won compromise with broad, bipartisan support, that innovation builds jobs, and that the PTO is entirely user-funded. Senator Leahy offered an amendment to rename the bill as the "America Invents Act" and modify the PTO fee-setting authority. Amendments also were offered to reduce fees for accelerating examination of small entity applications and to encourage establishment of satellite PTO offices. Three non-germane amendments also were offered on general government financial and budget issues. 

February 11, 2011 – House Judiciary Committee Chair Lamar Smith announced that he is preparing a patent law reform bill that varies in some respects from S.23 as reported February 3rd by the Senate Judiciary Committee.

The House Judiciary IP subcommittee received testimony and written statements on patent law reform from three witnesses today. All of the witnesses emphasized the need for adequate funding of the PTO. Carl Horton, Chief IP Counsel of GE testified for the Coalition for 21st Century Patent Reform, which generally accepts the compromises reached in the Senate Judiciary Committee. David Simon, Associate General Counsel for IP Policy of Intel, testified for the Coalition for Patent Fairness. Like Mr. Horton, he noted that several of the issues in earlier legislative proposals have been addressed by the courts. His coalition would prefer to retain the present reexamination system and to have post grant opposition available through the patent term. They also support a prior user right in the first inventor to file system, as a substitute for the prior user protection provided by Section 102(g) under the present law. Paul Michel, recently retired Chief Judge of the Federal Circuit, testified as a neutral observer. He said the challenge is to pass legislation that will work the greatest improvements in operation of the patent system, while minimizing the risks of unintended consequences, such as increased delays, costs, uncertainty and complexity. He suggested that there is no need for court-related legislative provisions, because the perceived problems with damages calculation, venue, willfulness, obviousness, injunctions and eligibility for patenting are being adequately addressed by the courts.

February 3, 2011 (Rev. 2) – This morning, the Senate Judiciary Committee amended and approved the Patent Law Reform Act of 2011 (S. 23) by a vote of 15-0, with two Senators recorded as a "pass" (abstaining).

The bill incorporates a Leahy-Hatch-Grassley (Managers) amendment that is primarily a clean-up of S. 23 as filed, but also includes two additions desired by House Judiciary Committee Chair, Lamar Smith. An amendment proposed by Senator Feinstein regarding willful infringement was also included without objection.

Substantially all 10 committee members present spoke in favor of elimination of PTO fee diversion; however, Senator Coburn withdrew his amendment on that issue after an issue was raised regarding jurisdiction of the Judiciary and Appropriations Committees. Senator Coburn has promised to offer his amendment on the Senate floor and it appears likely to receive strong support from Judiciary Committee members.

Several other amendments proposed by committee members were withdrawn so S. 23 could move ahead with broad support. Some of those amendments may be offered on the Senate floor; however, they do not appear likely to achieve sufficient support to be more than a political gesture.

The amended bill, as reported by the committee, is here. A summary is posted here.

There may be a further Managers Amendment before a vote and debate by the Senate.

January 25, 2011 – Senate Judiciary Committee Chairman Patrick Leahy formally introduced the Patent Law Reform Act of 2011 with bipartisan support. The bill is posted here. View Senator Leahy's press releases from 1/20/11, 1/25/11, and 1/27/11. The bill is similar to the Managers Amendment to S. 515 in the 111th Congress. A mark-up hearing is expected very soon. 

Also that afternoon, the House Judiciary Subcommittee on Intellectual Property, Competition and the Internet held an oversight hearing entitled, "How an Improved U.S. Patent and Trademark Office Can Create Jobs." The principal witness was PTO Director David Kappos. The principal subjects of the Representatives statements, questions and witness testimony were jobs, the economy and how PTO funding would be beneficial. The Representatives were generally supportive of increased PTO funding and limiting or eliminating diversion; however, several acknowledged difficulties in attaining those goals. Ranking Member Mel Watt (D-NC) indicated his understanding that a patent law reform hearing by the Subcommittee is to be scheduled in the near future.

January 7, 2011 – The House Judiciary Committee has designated the leaders, members and subcommittee assignments. Chairman Lamar Smith (R-TX) has decided to have a subcommittee on intellectual property and the largest number of committee members have been assigned to that subcommittee. The subcommittee leaders are Bob Goodlatte (R-VA) Chair, Howard Coble (R-NC) Vice Chair and Ranking Member Mel Watt (D-NC). 

Also today, Repr. Bob Latta (R-OH) introduced a false marking bill, H.R. 243, based on his bill in 2010. It would limit standing to persons competitively injured by the false marking and would limit the statutory damages for false marking to $500 per patent.

Prospects in the 112th Congress

As 2011 begins, Senate Judiciary Chair Patrick Leahy and new House Judiciary Chair Lamar Smith both appear poised to move ahead with comprehensive patent law reform legislation.

There appear to be five key issues: adopting a first inventor to file system, post grant procedures in the PTO, limiting damages in patent infringement litigation, limiting inequitable conduct allegations and providing adequate funding for the USPTO.

Probably the  most important and difficult issue, is the need to assure adequate funding for the PTO. The current reality is that the PTO collects fees for patent services and maintenance (renewals), which are paid into the Treasury. Its spending is regulated by appropriations, which often—as now—are based in part on out-of-date estimates of income and the amount of work to be funded. Further, the House Appropriations Committee, where all appropriation bills originate, consider it within their authority to determine where funds in the Treasury should be expended. In the case of the PTO, a significant amount of fee income has been diverted for other uses. It may be difficult to overcome this entrenched practice..

Only a vocal minority still opposes a first inventor to file system. They have not shown significant benefits from the present system and their influence is reduced in this non-election year. A hurdle to overcome is that the reform bill passed by the House in 2007 tied adoption of the first inventor to file system to adoption by Japan and Europe of the proposed US grace period, which—in the case of Europe—would take many years, even if the Europeans found the proposal acceptable.

The dispute over damages legislation is likely to flare up again, as a major split between interest groups remains on this issue. Also, several commentators, including both former Federal Circuit Chief Judge Michel and his successor, Chief Judge Rader, have questioned whether some or all of the legislative proposals relating to the courts are necessary. In particular, some commentators argue that the Federal Circuit has been addressing the issues that have been the subject of the legislative proposals in the damages area.

The proposals for changing and expanding post grant review of patents in the PTO face two obstacles. One is the persisting lack of agreement among interest groups over the type and timing of such PTO reviews. The other is the cost of new administrative law judges and staff, which—even if recoverable from the parties in fees—may trigger concerns in Congress. It will be difficult to pass any legislation in the 112th Congress that is not revenue neutral.

Proposals to limit inequitable conduct allegations are another contentious area. Senator Hatch, who had been a sponsor of S.515, voted against it in the Judiciary Committee because it did not adequately address this issue.

Patent Law Reform in 2009-2010

We briefly summarize here some of the major activities in 2009-2010. Click here for our detailed archive of events before 2011.

Members of Congress became increasingly aware of the major need to provide adequate funding for the PTO, They were able to pass a bill providing 129 million dollars of increased funding, but other fee income was diverted and 2010 ended with no end to fee diversion and under budget funding to date for Fiscal Year 2011 (which started Oct. 1, 2010).

Some bipartisan progress was made toward omnibus patent law reform during the 111th Congress (2009-2010), but passage of a major patent law revision proved impossible. Similar omnibus patent law reform bills were introduced in March, 2009: H.R. 1260 and S. 515. They were based on the prior year's Senate bill, not on H.R. 1908, approved by the House in September 2007. Most of the provisions related to patent disputes, in the courts and the PTO. Almost all of the legislative activity was in the Senate Judiciary Committee, where a compromise was reached on the contentious issue of limiting damages for infringement. Amended S.515 passed the Judiciary Committee in a 15-4 vote in April 2009. A further,  Managers Amendment was prepared for vote by the full Senate in March 2010; but the leadership apparently found they could obtain unanimous consent or even the 60 votes necessary for passage without threat of filibuster. The House Judiciary Committee waited for the Senate to act. The most notable message from that committee was then-Chairman Conyers statement at a hearing in April 2009,  "This body is not a rubber stamp for the Senate."

The proposal by Repr. Issa (R-CA) for a pilot program to permit shifting patent cases to judges interested in handling them and to increase judicial expertise in handling such cases was enacted in the lame duck session of Congress, following the 2010 elections, and became Public Law. But passage was secured only after the bill was stripped of its funding provisions.

Two legislative proposals sought to address the large number of qui tam actions, seeking the penalties provided in 35 U.S.C. § 292 for false marking with expired patent numbers. Repr. Issa (R-CA) proposed in H.R. 4954 to limit the right to file false marking actions to persons suffering competitive injury as a result of a false marking violation and limiting the private remedy to damages. Repr. Latta (R-OH) also proposed in H.R. 6352 to limit standing to persons competitively injured, but would limit the statutory penalty to $500 damages per patent, rather than the current penalty of up to $500 for each mismarked article.. The Managers Amendment to S.515 included limits similar to those in the Issa bill.