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Patent Reform on Cusp of Senate Passage

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – A patent reform bill that would shift the US to a system in which the first person to file the patent is the owner of the patent moved forward in the US Senate and closer to passage today.

The key change in the America Invents Act (formerly the Patent Reform Act) is the proposal to award patents to first filers, but it also includes 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 central proposal in the bill has had wide bipartisan support, and lawmakers today voted down an amendment (87 to 13) introduced by Senator Dianne Feinstein that effectively would have neutered the 'first-to-file' part of the bill in favor of the current system.

The bill's supporters say that moving to a first-to-file patent system, which is commonly used among other industrialized nations, is to clarify ownership of the intellectual property, streamline the overall patent process, and provide certainty that could help avoid expensive patent lawsuits.

Feinstein does not agree that the bill, introduced by Senators Pat Leahy (D – Vt.) and Charles Grassley (R - Iowa), will spur more innovation by moving the US to a first-to-file type system.

"Under our first-to invent-system our nation has been by far the leader in the field of innovation, new patents, new discoveries," she said in a Senate debate today before a vote on her amendment.

"I wouldn't' trade our record of innovation for any [other country's]. Think about the history of innovation. What sets America apart is that so many of our innovations start out in garages and small labs … Hewlett Packard, Apple, and Google," she said.

The Coalition for Patent Fairness, an advocacy group representing hi-tech businesses, including Google, Apple, Dell, Intel, and many others, said this week that it would support the reform bill, after an amendment Monday was agreed upon that struck changes in inter partes reexamination policy that it said would be "burdensome."

"Addressing the key set of [PTO] funding and patent quality reforms is critical for maintaining a modern and effective patent system," the group said in a statement.

The Obama Administration also said this week that it supports the proposed change to a first-to-file system, making clear that these changes fit into the "Winning the Future" campaign that the White House laid out in its recent budget proposals.

"As President [Barack] Obama said recently, we need to out-innovate the rest of the world if we're going to win the future," Commerce Secretary Gary Locke said this week, arguing that an "efficiently operating patent system is critical to this goal."

"While the USPTO has made significant strides in reducing its backlog of more than 700,000 unexamined patent applications and the time it takes to process a patent, reforming the patent system is critical to speeding the transformation of an idea into a market-making product that will drive the jobs and industries of the future," the Commerce Department said.

In a statement, the White House said that the law would "reduce legal costs, improve fairness, and support US innovators seeking to market their products and services in a global marketplace."

"Further, by providing authority for the USPTO to establish and adjust its fees to reflect changes in costs, demand, and workload, the bill would enhance productivity – reducing delay in the patent application process – and ensure full cost recovery at no taxpayer expense," the White House said.

Although the bill is still subject to change through amendments, it includes several other provisions beyond the first-to-file change. The act would give third parties the opportunity to submit information relating to a pending application for consideration by a patent examiner. It also would create a "first window" post-grant opposition proceeding after patents have been granted that will enable challengers to weed out patents that should not have been issued.

In addition, it would give patent court judges a "gate-keeping role" in assessing damages, in an effort to ensure consistency, uniformity, and fairness.

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 provide the USPTO director with the authority to set fees to ensure that it is funded and can reduce the backlog of patent applications.

The Association of American Universities recently released a statement supporting the bill without the Feinstein amendment, saying the bill is "the successful culmination of a thorough, balanced effort to update the US patent system."

On the Senate floor today, Leahy disputed Feinstein's stance that the bill would be unfair to smaller inventors and those working in garages. He said the proposed law would actually be better for the 'little guy' than the current system.

He said that patent dispute cases typically cost about $400,000, but that the fee for the patent may cost only $110. The system the US has now is an "outdated, cumbersome, and expensive system," said Leahy.

Making her case a final time before the vote, Feinstein described the first-to-invent policy as a "fairness issue."

In the current system, "the person who created the invention gets the benefits of that creation — not the person with the fastest tennis shoes. With creativity on the line, it should be the person who actually does the invention who reaps the benefits," she said.

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