HOUSE PASSES PATENT REFORM LEGISLATION

After more than a week of negotiations to settle an intra-party dispute over patent fees, House Republicans were able to bring their patent overhaul legislation – H.R. 1249 – to the floor for debate on June 22 and 23. The bill passed by a vote of 304-117 on June 23. 136 Democrats voted in favor of the H.R. 1249, while 67 Republicans opposed the measure.

BACKGROUND AND MANAGER’S AMENDMENT

Sponsored by House Judiciary Committee Chairman Lamar Smith (R-TX), H.R. 1249 would make the first significant reforms to the U.S. patent system in decades. Among its many provisions, the legislation would transition from a first-to-invent to a first-inventor-to-file application system, would establish a first-window post-grant review to improve patent quality, would ban the granting of patents on tax strategies, and would create ombudsman and pro bono programs to support independent inventors and small businesses.

H.R. 1249 was approved by the Committee by a bipartisan vote of 32-3 in April, but ran into opposition as preparations were made to bring the bill to the House floor. Specifically, the Chairmen of the House Appropriations and Budget Committees objected to language to allow the U.S. Patent and Trademark Office (PTO) to keep all the fees it collects in an effort to assist the office with its sizable back-log of applications. The opposition from the two powerful Chairmen on the grounds that it circumvents the authority of congressional appropriators effectively stalled the legislation’s progress the week of June 13.

As a result, Chairman Smith worked to craft a compromise that will ensure the PTO receives more money while also respecting the authority of congressional appropriators. The new language allows fees collected by the PTO to be retained in a reserve fund, but those fees would not be available to be expended until appropriated by Congress.

The patent fee language was included in the manager’s amendment that Chairman Smith offered on the House floor on June 22. Additional provisions included in the manager’s amendment would:

  • Rename the legislation the Leahy-Smith America Invents Act;
  • Provide the Patent Trial and Appeal Board with authority to modify the naming of an inventor in any application at issue;  
  • Modify the prior-use defense provisions to allow individuals to use such a defense if they acted in good faith, and to place the burden of proof on the party claiming the prior-use defense; and  
  • Prohibit the issuance of a patent for a claim directed to or encompassing a human.  

The manager’s amendment was approved by a vote of 283-140 on June 23. It was supported by 81 Democrats, while 33 Republicans opposed the manager’s amendment.

OTHER AMENDMENTS

14 other amendments to H.R. 1249 were made in order by the House Rules Committee, six of which were adopted. They include:

  • An amendment offered by Rep. Gwen Moore (D-WI) to direct the PTO to develop methods to study the diversity of applicants, including minorities, women and veterans;
  • An amendment offered by Rep. Sheila Jackson Lee (D-TX) expressing the importance of protecting the rights of investors and small businesses from predatory behavior that may stifle innovation;
  • An amendment offered by Rep. Ben Ray Lujan (D-NM) to impose requirements when the PTO determines satellite office locations;
  • An amendment offered by Reps. Gary Peters (D-MI) and James Renacci (R-OH) to require the PTO and the Small Business Administration to conduct a study that would determine the best ways to assist small businesses with international patent protection through a grant or loan program;
  • An amendment offered by Reps. John Conyers (D-MI) and Edward Markey (D-MA) to make the 60-day extension period begin on the next business day, if the patent application is received after 4:30 p.m. eastern time on a business day, or if it is received on a non-business day; and
  • An amendment offered by Rep. Jackie Speier (D-CA) to require those involved in derivation proceedings to provide sufficient evidence to prove and rebut the claim of derivation.

Among the defeated amendments, the House turned back attempts to delay or eliminate the first-to-file transition, to exempt certain small businesses and individuals from the post grant review process, and to eliminate a transitional review program for certain business method patents.

NEXT STEPS

H.R. 1249 now moves to conference with the Senate to reconcile any remaining differences between it and S. 23, the patent overhaul legislation approved by the Senate in March. Chances for a smooth conference appear possible, given the similarities between the two bills, and given that the Obama Administration and the chief sponsor of S. 23, Senate Judiciary Chairman Patrick Leahy (D-VT), have indicated a willingness to accept the House’s revised patent fee language detailed above.