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UPDATE: Patent Reform Bill Passes House

This article has been updated with comments from an IP attorney and an executive from the Association of American Universities.

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – A bill that would make a fundamental change to the US patent system passed in the House of Representatives yesterday with strong bipartisan support, but not with the overwhelming support received by its similar Senate counterpart.

The America Invents Act (H.R. 1249) would change the US system to one in which the first inventor to file would receive a patent, create a post-grant review and opposition system, take measures to address the large and growing backlog of patent applications, and enable the director of the US Patent and Trademark Office to set the agency's fees.

The bill passed by a vote of 304 to 117, with 168 Republicans and 136 Democrats voting in favor. The Senate version passed on a 95 to 5 vote

The bill has received the backing of the Obama Administration and the USPTO.

The transition to a first-inventor-to-file system is "an essential feature of any patent reform legislation," USPTO Director David Kappos said at a House Judiciary Committee hearing for the bill in March , pointing out that the US is alone in keeping the first-inventor system.

"The transition will simplify the process of acquiring rights while maintaining a one-year grace period that protects innovators. It will reduce legal costs, improve fairness, objectivity and transparency, and support US innovators seeking to market their products and services in other countries," Kappos told the committee.

Allen Baum, a shareholder at the Chicago-based intellectual property firm Brinks Hofer Gilson & Lione, told GenomeWeb Daily News today that the Act, if passed, would "provide more certainty" in determining who is entitled to a patent, particularly in cases when inventions are developed around the same time. If it passes, Baum said, "It will be clear that it will be the first inventor to make it to the patent office and file an application" that has rights to the patent.

He said the FITF brings the US "in harmony with the rest of the world," in terms of patent policy.

John Vaughn, executive VP of the Association of American Universities, told GWDN that the 'harmonization' aspect of the reform act will benefit universities by streamlining processes and lowering costs.

AAU has supported the America Invents Act, particularly the FITF measure, by leading a coalition that includes several major university-affiliated groups and the Council on Government Relations.

"More and more university patents are filed internationally, and this will simplify that process because we have to now file twice under very different arrangements. It also should enable more even treatment of patent operations across the (international) systems."

The bill did not pass without opposition. Several key amendments were voted down yesterday that would have held off the changes to the 'first inventor-to-file' system pending a review process, another that would have removed the ability for the USPTO director to set the agency's fees, and others that would have weakened the changes proposed in the bill.

One criticism opposition groups and lawmakers have leveled against the new system is that it would give a competitive advantage to big companies over smaller firms or lone inventors because larger firms with more capital could be quicker on the draw in filing patents and would be less burdened by the process and fees.

But Baum suggested that the interference procedures the US currently uses have not helped small businesses because they are expensive and require the record-keeping capabilities only larger entities can afford. "I'm not sure the system is any better now for the small inventor, or the small company," he said.

He also said that this bill will reduce the filing fees by 50 percent for small entities.

Baum explained that the bill's proposal to create a post-grant review and opposition process is among "the most significant aspects of patent reform," because it enables you to avoid the expense and time investment of going to court to fight a patent. These proceedings would be handled by judges working for the USPTO, which will require the agency to hire a number of highly qualified people.

"This type of procedure has been widely used and very successful in Europe, and it is one of the reasons that they have much less patent litigation there," he said.

Vaughn said the creation of the post-grant review process is "a terrific thing."

"Some universities are concerned because this is another way to challenge a patent. But it is a way to challenge a patent in a less costly, more efficient, quicker way," and it can have the benefits of modifying or narrowing a weak patent, or invalidating a bad patent, Vaughn explained.

"It is available immediately upon issuance of the patent, and it can be challenged upon all issues of patent validity."

Another benefit of the post-grant review and opposition reform, as Baum sees it, is that "once these patents come out of opposition proceedings, they're treated as super-patents."

Vaughn told GWDN that AAU agrees with that point.

"The patents that survive this new post-grant review opposition procedure are in a much strengthened position. That's going to benefit universities," said Vaughn. "If they have patents that were challenged, and they survive, then they can go to companies with what are often these early-stage, higher risk patents, and say 'This is a solid patent that has been cleared twice by the PTO.'"

House Judiciary Committee Chairman Lamar Smith (R-Tex.), who introduced the House bill, praised its passage yesterday.

"The current patent system is broken," he said. "The average wait time for patent approval in the US is three years. The PTO has a backlog of 1.2 million patents pending approval. Unwarranted lawsuits that typically cost $5 million dollars to defend prevent legitimate inventors and industrious companies from creating products and generating jobs.

"In other words, the system intended to protect and promote new inventions has become a barrier to innovation and job creation," Smith added.

House Minority Leader Nancy Pelosi was among those Democrats who rose in vocal opposition to the bill, which she said in a statement yesterday is "misnamed the America Invents Act."

"It had been our hope that we would be voting on a patent bill that encourages entrepreneurship, protects intellectual property rights, and sends a message abroad that strengthens patent rights at home. The bill before us fails on all these scores," Pelosi said.

"Instead, by favoring large international companies, we have before us a missed opportunity to encourage entrepreneurship. It is a missed opportunity to strengthen intellectual property rights here at home," she added.

The House and Senate now will begin the process of hammering out a joint bill to send to the White House.

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