US Patent Reform Advances Furthest In Congress In 10 Years

The US House of Representatives this evening passed HR 1249 – the closest action patent reform has come to being enacted into law in the past 10 years. But there were some changes made to the bill.

After numerous objections from many Democrats and some Republicans – ranging from the perception that the bill favours big business over smaller inventors, to the detriment of moving to a first-to-file system, to not providing the US Patent and Trademark Office with enough resources to get rid of its huge patent application backlog – HR 1249 passed by a vote of 304 to 117.

But because the Senate passed version, S 23, differs slightly from the House version, the two bills must be reconciled in conference committee, and then come back to each chamber’s floor again for final passage. It’s unclear exactly when that conference will happen. But the Obama administration still wants a definitive end to fee diversion – a controversial portion of the bill.

Fee diversion refers to when any fees collected by the US Patent and Trademark Office (USPTO) for its services are diverted to uses not related to patents, or to other agencies altogether. The bill voted out by the House tonight forces the USPTO to put any extra fees collected – those not included in the agency’s original budget – into a separate fund whose appropriations need to be approved by Congress.

“We are encouraged by the statements of so many members of Congress calling for the USPTO to have full access to all of its fee collections,” USPTO Director David Kappos said in a statement. “We are particularly thankful to Chairman Rogers [a Kentucky Republican] for his commitment to ensure that the USPTO has full access to its fees when fee collections exceed Congress’ annual appropriation for USPTO.”

“Full funding of the USPTO is necessary for the USPTO to successfully implement this legislation and to more effectively perform its core mission,” Kappos said.

Lawmakers in favor of the bill stressed that the money will only be used for patent purposes.

“For the first time we are establishing an exclusive PTO reserve fund that will collect all excess PTO fees and bring an end to fee diversion,” said Rep. Bob Goodlatte, the Virginia Republican who chairs the House Judiciary Intellectual Property Subcommittee. “Patent reform has been a long road … ending fee diversion has been an important goal for all of us.”

But many Democrats and some Republicans – as well as numerous stakeholder groups – argued that the door is still left open for those USPTO fees to be diverted for other uses, and that once again, Congress is shortchanging the agency from utilising all available resources to get rid of the backlog.

“That was the whole purpose for which we started off this process” – to give the USPTO its full funding, said Rep. Mel Watt, a North Carolina Democrat. “The manager’s amendment waters it down and makes it ineffective.”

Intellectual Property Watch provided steady coverage of the House floor debate this week, here (IPW, US Policy, 22 June 2011).

Other amendments that were approved today include:

-A measure to direct the USPTO to develop methods for studying the diversity of patent applicants, including those applicants who are minorities, women, or veterans.

-To add a sense of Congress that it is important to protect the rights of small businesses and inventors from predatory behavior that could result in cutting off innovation and may provide an undue advantage to large financial institutions and high-tech firms.

-To mandate a USPTO-led study on what USPTO, Small Business Adminsitration, and other agencies can do to help small businesses obtain, maintain, and enforce foreign patents.

-To direct the USPTO to prescribe a requirement that parties provide sufficient evidence to prove and rebut a claim of derivation The “derivation” process is one by which a party can defeat an earlier filed patent application by showing that the invention in that application was derived from the party’s invention or concept.

-To restore language for calculation of a 60-day period for application of patent term extension