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america invents act, IP, Patent

Can We Have An Intellectually Honest Patent Reform Debate In The House?

The senate is nearly finished with its work, as the Feinstein Amendment was defeated handily, and S.23, the America Invents Act is scheduled for a vote on Friday. Senator Feinstein tried to pare back the bill by removing the flawed first-to-file provisions, leaving in place revisions that are actually needed, like ending fee diversion.  Senators Leahy and Kyl showed their true colors when they described Feinstein’s amendment as a “poison pill.” The Senate Judiciary committee has apparently decided it will hold patent office funding hostage until the members plays ball on first-to-file (which may explain why the patent office has campaigned so hard in favor of S.23).

The fact is, S.23 will likely emerge from the Senate on Friday, and the debate will shift to the House where I hope the discussion can get a lot more honest.  First, the House needs to recognize that the first-to-file provision will put the US at a fundamental disadvantage relative to the rest of the world, despite the erroneous claims to the contrary. Second, the House needs to recognize that additional, drawn out post grant procedures will generate undesirable uncertainty and impose costs on patent owners. Third, the House should eliminate reforms that blatantly cater only to special interests and put a bill together that treats patent owners equally, regardless of political stature.  Finally, the House should carefully observe patent systems of foreign countries, where inventors are secondary to corporations, and recognize that primacy of inventors is one of the reasons the US patent system has flourished.

First-to-File

I’ll not belabor the point any more than I have for the past two days. The first-to-file revisions in S.23 are horrifically flawed, and will lead to undesirable results where inventions that are patentable in Europe and Asia will suddenly become unpatentable in America. Surely that  can’t be a desirable system.  Don’t take my word for it. Patent attorney turned professor Dennis Crouch reported that “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.”

Post-Grant

Under the current system, we have two kinds of re-examination, where patents can be given a second look if a petitioner can demonstrate a substantial new question of patentability. S.23 adds an addition post grant opposition procedure, and still keeps the inter partes re-examination procedure. With a patent office whose resources are already taxed to the point of 700,000 unexamined patent applications, why would we add these new procedures? Someone wanting to challenge a patent already has two options at the PTO, and can challenge a patent through a federal lawsuit. How many avenues for invalidating patents do we need?

Special Interests

S.23 includes two provisions that specifically cater to special interest groups, ignoring the policies and needs overall.  The first is the provision dealing with tax strategies, which I’ve written about before.  Although argued on a public policy basis, the actual law would legislatively dictate that tax strategies are not novel.  This is illogical and unnecessary.  The bill specifically does not apply to “technological” innovations that happen to involve applications of tax law (such as software), and Supreme Court’s decision in Bilski v Kappos eliminates patentability of any abstract ideas for exploiting the tax code, disembodied from software and machinery. This bill does not but create uncertainty and cater to tax and financial advisors.

The other provision was recently added to cater to the banking sector, which basically gives financial institutions yet another window to oppose and seek to invalidate patents that might be asserted against them.  This is reminiscent of the stunt pulled by Senator Sessions back in 2008, when he tried to slip in an amendment that would absolve banks from liability for infringing patents related to check imaging software.

There is absolutely no justification for giving special favors to specific businesses when it comes to patents.

Treatment of Inventors

This last plea goes back to a concept I touched on when I started writing in earnest about this most recent round of patent reform.  Of course, prior to that, I jokingly mentioned that a possible anti-patent reform argument could be to avoid copying the French. However, in all seriousness, an examination of the inventiveness of foreign countries compared to the United States is warranted. The US Constitution guarantees exclusive rights to inventors, and keeping in this tradition, the US patent office insists that inventors sign their patent applications, unless the present patent reform bill is passed (which will greatly relax rules for filing applications without inventor cooperation).  I recently noticed an example of a foreign corporation that treats inventors will very little respect.  Everyone should take a good look, as this could be where the US is headed.  A Chinese company paid an inventor a whopping $75 for each of three patents filed for the benefit of the company and believed to be fundamental technology.  The next time this employee has a brilliant idea that can improve his company’s competitiveness, would he be as willing to come forward with it?

Hopefully the House will actually take the time to consider these issues carefully, instead of rushing through a flawed, ill-conceived bill such as the one the Senate is foisting upon us.

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