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.
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.