Would US Senate Patent Reform Bill Harmonise US Law With The World?

The bill to reform United States patent law recently passed by the Senate purports to bring US law closer to laws of other major patent-filing nations. But how close would it come?

On 8 March, the US Senate overwhelmingly passed the Patent Reform Act of 2011, S.23, the America Invents Act [pdf], which is aimed at promoting innovation and at reducing the staggering patent backlog of the US Patent and Trademark Office.

One of the provisions of this Act is to change the current system which gives patent priority to parties claiming to be first inventors. It would instead give priority to inventors being first to file a patent application. There have been some doubts about the real effect of this switch.

The companion bill could be introduced in the House of Representatives as soon as this month.

According to the PatentlyO blog, the Senate measure includes:

– The ability for the USPTO to set its own fees and to eliminate the practice of fee-diversion.
– A transition to a first-to-file system
– Broader leeway for third-party submissions with explanations during ex parte patent prosecution.
– A new “first-window” post-grant patent opposition system with broader jurisdiction (but a shorter timeframe) than re-examinations.
– A provision that eliminates certain tax strategy patents.

PatentlyO said controversial damages limitations appear to have been removed from the bill prior to passage.

Optimism from Europe, but Still Differences

There has been some optimism in the international community over the steps taken by the Senate toward harmonisation, though differences would still exist between national laws.

The Senate approval “potentially heralds a significant and exciting change in US patent practice that would have implications internationally,” said Jane Hollywood, a patent attorney at Kilburn & Strode LLP in the United Kingdom. From the patentee’s perspective, it is potentially positive as “increased uniformity across patent systems worldwide promotes consistency and predictability in terms of obtaining patent protection.”

“Clearly,” Hollywood told Intellectual Property Watch, “the difference between ‘first to file’ versus ‘first to invent’ has many more implications and therefore the harmonisation of this aspect is important and would generally be welcomed by non-US applicants.”

The proposed language for implementing “first to file” in the US is “at first glance very similar to the corresponding provisions in at least the European Patent Convention (EPC) and the UK Patents Act,” she said. “However, the ‘grace period’, traditionally part of US practice, has survived in the proposed America Invents Act and would continue to represent a significant difference between practice before at least the EPO and in the UK.”

S.23 states that a claimed invention is novel provided it was not disclosed in a ‘printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention’ (Sec. 102), Hollywood said. “The effective filing date is defined in Sec. 2 of the same Act as meaning the actual filing date of the patent or the application or the filing date of the earliest application for which the parent or application is entitled to claim priority.”

This is essentially the same as the EPC and the UK Patents Act, she said, which “both state that an invention shall be considered to be new if it does not form part of the state of the art, where the state of the art comprises everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the application.”

She pointed out that there are “a number of countries around the world where different types of grace periods are in existence and this is not generally problematic to applicants.”

In general, “There are cogent arguments for a ‘first to invent’ system, particularly from the perspective of an individual inventor or a small company,” Hollywood said. “However, a non-US applicant will rarely plan to utilise the ‘first to invent’ provision, as their patent strategy will be based on the ‘first to file’ provisions already in place in every other patent system.” If the Act is implemented, “the substantial shift towards harmonisation of the US patent system with other patent systems round the world should be viewed with optimism.”

Another View: No Impact

Meanwhile, Greg Aharonian, editor of the Internet Patent News Service, argued that first-to-file would have “little to no impact on the costs of foreign patent acquisition, which are mostly driven by costly language translation fees, and having your specification and claims rewritten to the philosophies of foreign patent systems.”

“If we gave up first-to-file in return for Japan, China, Brazil and others examining patent applications in English, that would be a great deal for big and small inventors,” he said in his blog.

The fact that the bill would increase the patent office’s resources by enabling it to remain all the fees it collects would not speed up the review of patent applications, according to Aharonian, because that would require changing the USPTO workflow processes and management of patent application, and providing more tools and resources to patent examiners. Large companies would have to “stop clogging USPTO pipelines with crap applications,” he said in his signature phrase.

View from a US Opponent

Senator Dianne Feinstein, a California Democrat, in a floor statement explaining her failed amendment to remove the first-to-file provision from the bill, said the provision would undermine protection for small inventors who need time to understand and use the patent system to protect their inventions. She also questioned the notion that the bill harmonises US law with laws elsewhere.

“This bill would not actually harmonise on patent priority says with that of the rest of the world,” she said. “Many first-to-file countries use a more extensive use of prior art to defeat a patent application and provide for greater prior user rights than this bill would provide, and Europe does not provide even the limited one year publication grace period that this year does.”

She also highlighted the grace period provision and said the bill removes it too substantially to be useful to small inventors. Currently, a person’s right to their invention is protected for one year from describing their invention in a printed publication, making a public use of the invention, or offering the invention for sale. This is called the grace period, and “it’s critical to small inventors,” she said. Feinstein cited a letter from last year from 108 start-up and small businesses that said how important the grace period is to develop business and find funding.

The grace period protects them during this period from disclosures or leaks of their idea as they learn the system. S.23 eliminates this grace period, she said, leaving only a grace period from “disclosure,” which is not defined and thus will likely be left to be defined by the courts. This will in turn lead to uncertainty which will chill investment, she argued. Universities might be somewhat protected by this, but not small inventors who normally would not publish a technical disclosure, as confidentiality is crucial for small companies.

And according to Vermont Democratic Senator Patrick Leahy, one of the co-sponsors of the bill with Republican Sens. Orrin Hatch of Utah and Chuck Grassley of Iowa, the bill will boost US innovation and jobs. The transition of the US patent system to a first-inventor-to-file system, aims to “ensure that the USPTO has the funds necessary to process the backlog of more than 700,000 pending patent applications,” said a release.

The Biotechnology Industry Organization backed the bill in a release on 8 March, stating that “patents are often the main assets of small biotech companies, and they rely on this intellectual property to attract investors to fund the lengthy and expensive research and development process necessary to bring breakthrough new therapies and other biotech products to patients and consumers.”

And after years of trying, there are still some doubters about passage of a new patent law in 2011, according to Harold Wegner, partner at Foley & Lardner LLP, as Senate passage is just the first step towards the enactment of the new law, and the House of Representatives “clearly will not rubber stamp the Senate bill and will reach its own legislative solution.”