The House Judiciary Committee has approved legislation (H.R. 1249) that would reform the nation’s patent system. The House version of the “American Invents Act” was reported favorably to the floor by a 32-3 vote; it is still pending before the House Budget Committee. According to a committee news release, the bill incorporates many of the reforms already approved by the Senate. Among other matters, the bill would adopt a first-to-file rule, establish a post-grant review process that would allow disputes over patent quality and scope to be settled, authorize a special ex parte re-examination of business-method patents, and provide the U.S. Patent & Trademark Office with authority to establish fees to recover the costs of services.

Judiciary Committee Chair Lamar Smith (R-Texas) said when opening the mark-up hearing, “The current patent system is outdated and dragged down by frivolous lawsuits and uncertainty regarding patent ownership. . . . This bill not only protects small businesses and independent inventors, it creates jobs and even helps bring manufacturing jobs back to the United States.” During the hearing, the legislation was amended with a “Manager’s Amendment” that, among other matters, was intended to fix an apparent problem with proposed statutory language relating to the “first-to-file rule.” According to University of San Diego School of Law Assistant Professor Ted Sichelman, the Senate bill and original House bill do not “effectuate Congress’s intent to keep the inventor grace period intact.” And the amendment, said Sichelman, “would effectively overrule many years of well-established judicial precedent that non-informing uses and sales by inventors and third parties, as well as a secret use of a claimed method by an inventor to manufacture products then sold to the public, count as bars to patenting.”

Sichelman suggested instead that “the provisions enumerating prior art should be left intact, and the exclusionary clause revised to make it absolutely clear that all inventor sales, uses, or other activities that make the invention available to the public less than one year before filing would be excluded as prior art.” Otherwise, the amended House bill “would allow inventors to commercially benefit from their inventions (without disclosing them) for an indefinite period of time before filing for a patent.” See Patently-O, April 12, 2011; Judiciary Committee Press Release, April 14, 2011.