A patent law reform bill, S. 23, was approved today by the Senate Judiciary Committee of the 112th Congress . It is very similar to S. 515 that expired with the final adjournment of the 111th Congress in December 2010.

The patent reform bill passed out of committee today contains a number of different elements. Some of the more notable changes in the patent law are:

  • Replacing our traditional First-to-Invent system with a First-to-File system. The primary justification for the change is patent law harmonization with much of the rest of the world.  
  • Accompanying the First-to-File system is an elimination of most of the filing grace periods. There is also a significant move towards an absolute novelty standard, as employed by many other countries. This means a loss of patent rights if an inventor inadvertently discloses his invention or tries to sell it before he files a patent application.  
  • A “derivation” procedure is introduced to replace the current interference practice. In some situations, in the new First-to File system, an applicant can overcome an earlier filed patent application covering the invention provided the applicant can prove that the earlier filer derived his invention from that of the applicant.  
  • There is an opportunity for third parties to submit prior art related to a pending patent application. Additionally, third parties can submit prior art to the United States Patent and Trademark Office (U.S.P.T.O.) to challenge a patent up to 9 months following its grant.  
  • An adversarial inter-partes review, by Administrative Patent Judges, is introduced as an alternative to litigation and the current inter-partes reexamination procedure.  
  • A judicial gate keeping role for the courts for screening the legal basis for specific damage theories and jury instructions is introduced.  
  • The bill codifies the current judicial standard for willfulness and enhanced damages by requiring a clear-and-convincing evidence standard and requires willfulness be pled with particularity.  
  • The U.S.P.T.O. will be granted fee setting authority.

The primary groups pushing the legislation are big high-tech multi-national companies, such as IBM and Microsoft. Their interests seem to be to weakening the patent system for small companies and independent inventors in this country who file patent infringement suits against them, while not weakening the patent system for themselves. These companies tend to have large overseas operations generating patents, and as a result, are already conforming to a First-to-File system. They argue that a First-to-File system would make the U.S. more competitive, but do not actually explain why.

On the other side of the debate are small companies, independent inventors, and larger companies that do not file a lot of patents or do not do so outside the United States. Part of their argument is that by weakening the patent system, their ability to raise funds based on their patents and patent applications will be adversely impacted.

The proponents of the legislation have worked for a number of years for its passage, and it appeared that the patent reform bill might pass the week before the Congressional summer recess, when a lot of pending legislation was combined into an omnibus bill. However, the legislation did not reach the floor before recess.

In the new 112th Congress, it initially appeared that the House Judiciary Committee members were more avid for patent reform legislation than was the Senate, which had carried the brunt of process in the previous Congress. But most recently, some of the Republicans on the Committee have started questioning the legislation and ask if it really is best for the country, or just best for the large high tech multi-national companies pushing the legislation. If you or your company wants to voice an opinion on the patent reform law, please contact your congressional representatives.