Congress Gives US Patent Process Extreme Makeover

After six years of debate over patent reform, the U.S. Senate last week overwhelmingly approved the America Invents Act, a sweeping overhaul of the U.S. patent system that intends to weed out unnecessary patents and put the country more on par with international patent procedures.

The bill, authored by Sen. Patrick Leahy, D-Vt., passed with a bipartisan vote of 89-9 in the Senate. The House approved it 304-117 in March. It was popular among both parties for its focus on speeding up the invention and innovation process, especially after reports that China has surpassed the U.S. In number of patents filed.

The legislation is particularly important in the technology industry, which has become embroiled in patent disputes of late. Some have become highly public battles with the potential to scare off investors and customers.

The bill now awaits the signature of President Obama, which seems likely to occur sooner rather than later, since he mentioned the reforms in last week’s jobs speech to a joint session of Congress.

Patent Overhaul

The legislation makes several reforms in the way a patent is filed and how funds are allocated to the patent office. The biggest change is the switch to a “first-to-file” system. The U.S. system currently operates under a “first-to-invent” system, meaning that the date of the invention itself trumps the date the patent application is filed. Since it’s difficult to prove when a product or concept was invented, this procedural change will make long, drawn-out court battles less likely.

The first-to-file system could large corporations and big businesses with large balance sheets a better chance of filing first and receiving the patent, to the detriment of the “little-guy” inventor the patent system was born to protect, suggested Raymond Van Dyke, a Washington, D.C.-based technology attorney and consultant.

“Large companies, particularly global companies, have deep resources and can file patent applications more quickly than the small inventor, who is now faced with a race to file their patent before any of a number of potential events occur,” he told the E-Commerce Times.

The small investor community felt it wasn’t accurately represented in the debate, he said, but was “largely frozen out of the hearings on this bill, [while] the corporate lobbyists had control.”

Out With the Bad

The bill aims to weed out broad, sweeping patents that bog down the system, especially in the tech world, where they are often bought up by large companies trying to boost their patent portfolios and keep technology away from competition, even if the patent-owning company isn’t ready to develop it yet. This “patent troll” strategy is one of the main causes of messy disputes in the industry.

The bill aims to end the practice through a new post-grant review process.

“One of the problems at the heart of the tech wars was created by too many low-quality, overly broad patents having been issued,” Judiciary Press Secretary Erica Chabot told the E-Commerce Times. ” The America Invents Act is designed to improve patent quality, and this will help with overlapping patents.”

In addition, the U.S. Patent and Trade Office will be able to set its own fees, a job that Congress has been doing. This will give the Patent Office more control over its budget, allowing it to schedule much-needed IT and process updates.

“Money doesn’t solve everything, but a big part of the problem has been resources at the agency,” Scott Bain, chief litigation counsel for the Software & Information Industry Association, told the E-Commerce Times.

While the patent overhaul is expected to have a great impact in some areas, the tech world in particular is a bloody battle zone for patent litigation, and that’s not likely to change overnight.

“It may not solve the problem tomorrow, but it will improve the overall system, which will help prevent this type of ‘patent war’ in the future,” said Chabot.

Still, with the changes to the overall system, the patent disputes that must be fought may have better overall outcomes.

“There will always be legitimate patent litigation,” noted Bain, “but this leads to a more balanced system.”