Highlights on the Latest Patent Reform Bill

In the 1960s, there was a saying, “If the opposite of ‘pro’ is ‘con’ then the opposite of ‘Progress’ is ‘Congress’!”  However, when it comes to the recently advanced patent reform bill, nothing could be further from the truth.

In March 2011, by a nearly unanimous vote, the U.S. Senate passed a patent reform bill—“The America Invents Act.”  In that same month, a similar patent reform bill was introduced into the U.S. House of Representatives.  Some of the key provisions of these bills—which for ease will be referred to as “the patent reform bill”—include:

• Transitioning the United States to a first-to-file system. 
• Fee-setting authority for the United States Patent and Trademark Office (“USPTO”).
• Significant improvements in pre-grant and post-grant third-party submissions.

Unlike most of the world, the United States is a “first-to-invent” jurisdiction.  That is, in the United States patents are to be granted to the party who is first to invent the subject matter claimed in a patent.  Thus, the United States has been somewhat out of step because it is not a “first-to-file” jurisdiction.

Further, there are proceedings before either the USPTO or the U.S. Courts known as “Interferences.”  The main issue in Interferences is who is the first to invent.  In Interferences, the first to file is presumed to be the first to invent and accorded senior party status, with the other party, the junior party, bearing the burden of proving earlier invention.  Typically the senior party prevails.  Interference proceedings have been costly and a burden to patentees because they add an element of uncertainty.

By eliminating “first-to-invent,” the patent reform bill seeks to put the United States in step with the rest of the world, as well as do away with a costly proceeding that provided uncertainty to patentees.  However, a key feature of the patent reform bill is that a new administrative “derivation proceeding” is created to ensure that the first-to-file is a true inventor, and not merely a copier.

On fees, the current law does not enable the USPTO to have sufficient flexibility to assure that its revenues are commensurate with costs and that it can further modernize its operations.  As a result, the USPTO suffers a serious backlog in examinations. The U.S. Commerce Department has reported that the fee-setting authority in the patent reform bill will contribute significantly to reducing patent pendency and hence reducing the backlog in examinations.

Most significantly, the patent reform bill proposes to allow third parties to weigh in on patent applications, akin to amicus briefs before U.S. Courts.  In other countries or jurisdictions, such as before the European Patent Office, during prosecution, third parties may submit observations.  Presently, in the United States, a third party has only a three-month period after publication to submit art, and not comment on it—at most, the third party may quote from the art, to demonstrate its relevance.  As a result, there is really no effective pre-grant mechanism for the public to assist the USPTO.  The patent reform bill seeks to bring the United States more in line with other countries that allow for pre-grant observations.

Currently, after a patent is granted, a third party may initiate reexamination proceedings before the USPTO.  But, there have been some significant disadvantages to reexaminations, including the limited involvement of the Requester in ex parte reexaminations and limitations on the Requester in inter partes reexaminations.  Most other jurisdictions allow for post-grant oppositions before the patent office, within a period of time after the grant (such as nine months).

Like the current law in other jurisdictions, the patent reform bill creates a “first window” post-grant opposition proceeding to help weed out patents that should not have been issued.  The patent reform bill seeks to create a meaningful alternative to the very costly patent litigation option by establishing an adversarial inter partes review of granted patents by Administrative Patent Judges.  It is believed that if enacted, the patent reform bill, especially by its post-grant opposition proceeding, will provide a faster, less costly alternative to civil litigation to challenge patents, and it will improve patent quality by reducing abusive challenges and eliminate invalid patents.  The post-grant opposition proceedings proposed by the patent reform bill will bring the United States more in line with patent offices throughout the world.

When the patent reform bill is reviewed in comparison with patent laws in most major jurisdictions, the patent reform bill seems to primarily seek to bring the United States into line with the laws of most major jurisdictions.  Hence the patent reform bill represents Congress making Progress, despite the slogan of the 1960s, and it is hoped that at least the key provisions discussed herein become law while this Congress is in session.