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america invents act, IP, Patent

Banks Buy Another Patent Reform Amendment


Yesterday, the Senate made further modifications to S.23, now called America Invents Act, which present a slight gain from what the bill originally represented. Unfortunately, the insidious and problematic ‘first-to-file’ provisions remain, and yet another amendment bought and paid for by the financial industry.  While FTF has its supporters, including the AIPLA, and some outspoken attorneys, it is demonstrably harmful to all businesses and inventors, big and small, particularly in a global economy.

But first, the comprehensive manager’s amendment, which was put to a vote yesterday evening and passed by a margin of 97-2, puts an end to fee diversion (Section 20) and gives the patent office director greater rulemaking authority to adjust fees, provided small entities are still given a 50% reduction. Hopefully a cleaner version of the amended bill will be available soon, but the text of the manager’s amendment is in the Congressional record.

The amendment also adds a “transitional program” for business method post-grant review, which establishes a 4-year window for challenging any “covered business methods.”  In other words, for selected patents, a petitioner can use the post-grant review even if the more than 9 months have passed since its issuance.  This “transitional program” also eliminates the provisions restricting petitioners from filing simultaneous civil actions attacking the patent through the courts.

Reading the definition of what a “covered business method” is, it’s painstakingly obvious that the financial industry has purchased another special carve out (reminiscent of the Sessions Amendment from several years ago):

[T]he term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except that the term shall not include patents for technological inventions.

Subtle … very subtle.

Finally, kudos to Hal Wegner, and thanks to PatentlyO for bringing to our attention to the (hopefully unintended) consequences of the FTF provision.  Leaving policy aside for a moment, FTF will actually jeopardize and disadvantage US businesses when compared to our overseas’s counterparts:

To be clear, the issue arises when Inventor-A files a patent application and then, a few months later, Inventor-B files a patent application claiming a similar (but different) invention. It is usually the case that (1) Inventor-A will not immediately publicize its invention and (2) the first-filed application will not be published until 18-months after its filing. Under the proposed system, Inventor-B’s patent could be blocked on obviousness grounds based on Inventor-A’s application. In Europe and Japan, however, the earlier filed application would not be used in the obviousness (inventive step) analysis unless published prior to Inventor-B’s application date.

Thus, under our current invention-date-focused system, some inventions are patentable in the US that would not be patentable in Europe and Japan. On the flip-side, once the bill is passed, there will be a new set of inventions that are patentable in Europe and Japan, but not patentable in the US.

And unlike FTF apologists that only want to focus on interferences, this is no isolated matter:

In a recent study, I found that, on average, US patents cite to about 5.5 references that conform to this situation …

Via Patent Reform – An Important Amendment to the Bill

(UPDATE: Additional commentary on FTF and other aspects of S.23 from the folks at TacticalIP.com)

Some patent attorneys want to rush this bill through and “fine tune” later, but it will only get more difficult to cram the [stuff] back in the horse after it hits the fan …



11 thoughts on “Banks Buy Another Patent Reform Amendment

  1. I think the key phrase here is “except that the term shall not include patents for technological inventions.”

    The way the USPTO is applying Bilski these days, ONLY claims that read upon a technological invention are getting allowed.

    If this bill gets passed, it will be interesting to see if the USPTO and the courts acknowledge that there are inventions that are not technological and yet are patentable.

    Posted by Mark Nowotarski | March 2, 2011, 4:11 pm


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