‘Long Overdue’ US Patent Reform Deal Reached; House Could Vote This Week

US lawmakers this evening agreed to a manager’s amendment to the pending patent reform bill. The legislation could come to the floor of the House of Representatives for a vote as soon as tomorrow (22 June). The Senate version, S. 23, was passed in March.

The most controversial provision of late in the House version of the America Invents Act (HR 1249) has been Section 22, which would allow the US Patent and Trademark Office (USPTO) to keep all the fees it collects for its services – even if they amount to more than what the agency originally budgeted for – rather than having that extra money diverted to other agencies’ use.

In recent days, there was a flurry of activity as many stakeholders wrote letters to lawmakers opposing attempts to remove language that would permanently end fee diversion and give Congress the power to decide what to do with the extra money. Many groups, however, are still skeptical that the bill will do much to end fee diversion.

The manager’s amendment [pdf] will allow the USPTO to keep all of the money collected, but it would have to deposit those dollars collected over budget into a special Treasury account. That account would be subject to the appropriations process, so Congress can approve how the agency would use the money.

Although the Obama administration said Tuesday it supports passage of the compromise HR 1249, it said “final legislative action must ensure that fee collections fully support the nation’s patent and trademark system.”

“To carry out the new mandates of the legislation and reduce delays in the patent application process, the USPTO must be able to use all the fees it collects to serve the users who pay those fees,” said the statement from the Office of Management and Budget (OMB). “In this light, the administration is concerned that Section 22 of the Manager’s Amendment to H.R. 1249 does not by itself ensure such access. The Administration looks forward to working with Congress to provide additional direction that makes clear that the USPTO will have timely access to all of the fees collected, subject to the congressional oversight provisions in the bill. “

Many lawmakers and industry groups, including the American Intellectual Property Law Association (AIPLA), American Bar Association, Coalition for 21st Century Patent Reform, Biotechnology Industry Association, National Association of Manufacturers, National Association of Realtors, and others were opposed to fee diversion.

“The compromise language released yesterday does not end fee diversion permanently and enable USPTO to plan predictably and on a sustainable basis,” Innovation Alliance Executive Director Brian Pomper said on 21 June before the amendment was agreed. “In fact, it requires the USPTO to continue to rely upon the appropriators to have access to and use of all the application and other user fees it earns. Any future appropriations bill could easily divert USPTO funds to other uses.”

But after the agreement was made, some groups – albeit somewhat reluctantly – agreed to support the bill and continue work on the fee diversion issue.

“While we preferred Section 22 of H. R. 1249, as reported by the Judiciary Committee, addressing the diversion of fees paid by users of USPTO services, we have decided to support the USPTO funding agreement that, if fully implemented, is intended to provide the Office with full access to the fees paid by inventors,” said a statement from the Coalition for 21st Century Patent Reform. “We look forward to working with Congress on the additional steps required to complete the implementation of the agreement.”

Senator Patrick Leahy, the Vermont Democrat who spearheaded the Senate bill, said that although he is “disappointed” the House bill doesn’t include the language ending fee diversion, he wants to see the bill passed.

“I believe that the fee diversion language in the manager’s amendment, coupled with a commitment by the House Appropriations Committee to provide the Patent and Trademark Office with access to the excess fees it collects each year, would be a concrete step in the right direction,” he said. “As a senior member of the Senate Appropriations Committee, I will remain vigilant to ensure that language authorizing USPTO access to all of the fees it collects remains in each year’s appropriations bill.”

Lawmakers have been taking to the media to plea their case for or against various aspects of the bill.

Two former chairmen of the House Judiciary Committee, Reps. John Conyers, a Michigan Democrat, and Jim Sensenbrenner, a Wisconsin Republican, wrote in The Hill newspaper on 21 June that “reforming the patent system is long overdue,” but they opposed fee diversion.

Rep. Dana Rohrabacher, a California Republican and member of the House Science and Technology Committee, on 20 June wrote in Politico that the bills as they stand will “weaken our unique U.S. system by forcing our country to ‘harmonize’ U.S. patent standards downward to the level of the weaker systems in Europe and Asia.”

“Passing this bill would undermine our patent system, which has encouraged innovation and led to America’s unmatched economic strength in the world,” he added, calling the House bill a “patchwork of bad ideas and carve-outs cobbled together in a back room.”

Republican House Appropriations Committee Chairman Hal Rogers of Kentucky and Budget Committee Chairman Paul Ryan of Wisconsin both had urged lawmakers to slow down, opposing the idea of taking away congressional oversight on how the USPTO could use the extra money.

HR 1249 would also, among other things: Convert the US patent system to a first-to-file system – common in Europe and the rest of the world – in contrast to the first-to-invent that this country has used for more than two centuries; establish a post-grant review process; and add pre-issuance submissions of prior art.

Lack of harmonisation of national patent systems, including the US uniqueness on first-to-invent, has for years created problems for international negotiators seeking to boost protection for US patents.