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Patent Reform Back on Senate's Agenda

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – The US Senate this year will again consider legislation that would reform the country's patent system, as a bi-partisan bill based on one that stalled in 2010 has been introduced early in the 112th Congress.

The bill proposes awarding patents to first filers, making changes to the system for reviewing patents and for funding the US Patent and Trademark Office, provisions that will change the way damages are calculated in lawsuits, and changes to improve the quality of patents.

The Patent Reform Act of 2011, introduced by Senators Patrick Leahy (D – Vt.) , Orrin Hatch (R – Utah), and Charles Grassley (R – Iowa), is a retooled version of a bill introduced last year and includes several compromise changes that brought in broader bi-partisan support.

"Patent reform is a commonsense, bipartisan effort to protect jobs and bolster the economy," Leahy, who is chair of the committee, said in a recent statement. "This will be the first piece of legislation considered by the Judiciary Committee this year, and I hope the Senate will act promptly on this job-creating bill."

Leahy called the 2011 draft of the reform bill "the product of years of careful consideration and compromise."

The bill "will help strengthen and improve our nation's patent system for all users while preserving the incentives necessary to spur the creation of high-wage, high-value jobs and sustain America's global leadership in innovation," said Biotechnology Industry Organization President and CEO Jim Greenwood in a recent statement.

"Without strong and predictable patent protection, investors would shy away from investing hundreds of millions of dollars, over a decade or more, in high-risk biotechnology companies, and will simply put their money into projects or products that are less risky or offer a more immediate return but are of less value to society," he added.

Greenwood said he expects that the changes in the bill would "improve the patent system in ways that would benefit all sectors of the US economy by enhancing patent quality and the efficiency, objectivity, predictability, and transparency of the patent system."

The bill also has received stated support from companies such as Abbott, Siemens Healthcare Diagnostics, and Beckman Coulter, and non-profit entities, such as the Association of American Medical Colleges and the Association of American Universities, as well as a number of private and public universities.

The push for making reforms to the patent system began to gain steam after a 2004 report from the National Academies of Sciences urged some changes to the system. Although continued innovation showed that the US patent system was working well, NAS said in "A Patent System for the 21st Century," the system was under strain and the pressure on it was mounting.

"Patents are being more actively sought and vigorously enforced," NAS stated in the report.

The sheer volume of applications to the [USPTO] – more than 300,000 a year – threatens to overwhelm the patent examination corps, degrading the quality of their work or creating a huge backlog of pending cases, or both. The costs of acquiring patents, promoting or securing licenses to patented technology, and defending against infringement allegations in court are rising rapidly," the NAS report warned.

The report also proposed several broad-brush recommendations intended to improve the system, potentially reduce backlog at USPTO, and to streamline the litigation process and harmonize it with international laws.

If passed, the law would update a US patent system that has not been changed significantly in 60 years, shifting to what the authors call a "first-inventor-to-file" system, which is closer to a "first-to-file" system common in much of the world.

The act also will give third parties the opportunity to submit information related to a pending application for consideration by a patent examiner, providing examiners with tools to assist in their granting of patents. The bill also creates a "first window," nine-month, post-grant opposition proceeding after the patents have been granted that will enable challengers to weed out patents that should not have been issued.

Another area that the latest Patent Reform Act aims to retool is assessment of damages. If it passes, the law would give the courts a "gate-keeping" role to assess the legal basis for the specific damages theories and jury instructions sought by the parties. Those changes would ensure consistency, uniformity, and fairness in the administration of damages law, according to the bill.

Other measures would create a supplemental examination process to incentivize patent owners to commercialize their inventions; prevent patents from being issued on claims for tax strategies, and would give the USPTO Director the authority to set fees to ensure that it is funded and can reduce the backlog of patent applications. The law also would mandate a reduction of fees by 50 percent for small entities and by 75 percent for micro-entities.