Readers of this newsletter are aware that in every Congress since 2005, proponents of a major overhaul of patent reform have introduced bills, each time to no avail.
This year is different. Building on the lessons learned and momentum gained in the last Congress (2009-10 session), the Senate speedily passed by an overwhelming, bipartisan 95-5 vote the “America Invents” Act on March 8. House Judiciary Committee Chair Lamar Smith introduced the House counterpart (H.R. 1249) on Wednesday, March 30.
When was the last time you recall an overwhelmingly bipartisan vote in Congress?
The House bill has some differences from the Senate bill. However, the bigger story is how similar the Senate bill and House bills are. Together, they suggest sweeping change in U.S. patent law.
Foremost among these changes will be the change in priority where two inventors, or sets of inventors, come up with the same invention and separately seek patent protection for that invention. Apart from nearly every other nation, the United States previously and currently gives priority to the first party to invent. Both versions of the reform bill agree that the U.S. should harmonize with all other countries, to award priority to the first party to file its application to obtain patent protection instead. This has significant implications for smaller businesses. First, it means one must consult patent counsel early on, to consider filing for patent protection soon after the right arises. One still has the right to delay filing within the current time frame; it's just that with delay comes the risk that someone else will file first. That means businesses may have to decide whether to spend money on patent protection before they can fully determine the commercial success of the invention. It also means that some businesses will incur additional expense in later filings to improve or expand coverage of the patent as matters develop. Currently,the business can develop the invention further, then file the one time at a later date without significant consequence.
Other changes which appear likely to gain bipartisan support in both bill versions include allowing administrative proceedings after the patent issues to cancel the patent for invalidity (called post-grant review); eliminating invalidity challenges when an inventor fails to disclose the best mode of the invention known to the inventor; allowing non-inventor third-parties to introduce prior art to challenge the patent's validity; ensuring that the Patent Office may use all funds it collects, without diversion to other departments in the government; and allowing corporations to file patent applications for inventions created by their employee-assignors.
The House bill does have some differences. The biggest one may be “personal defense” provisions relating to non-public prior use by an alleged infringer who practiced the invention prior to the patentee obtaining patent rights to the invention. The Senate bill limits this defense to business method inventions; the current House version does not.
One commentator noted that another departure is that a declaratory relief action in federal court of non-infringement by an accused infringer would be automatically stayed upon the infringer’s filing for further Patent Office pre-issuance or post-grant review of the patent. This has significance to patent owners who wish to seek to enforce their patents but who fail to file their patent infringement suits before the would-be defendant files for declaratory relief in the defendant’s “home court.” In the House version, they would not only eventually have a battle of correct venue of the fight but would have to await the administrative review. Currently, the court decides whether it will choose to await such determinations.