Letter from AmeriKat: America Invents Act Remix

The AmeriKat taking what would
be the first of many Kleenexes this
(picture by prettyinprint reporduced
here under CC licence)
Summer - a time meant for lounging on Scottish wool blankets nibbling on sandwiches flanked by the grounds of a National Trust property. Or for traipsing down some tree-lined avenue with branded bags of summer sales goodies swinging from one's arm. Or for skipping out of work into the summer night to drink Pimms with friends. It is not meant, submits the AmeriKat, to be inundated with torrential rain (cue view outside) or to be suffering from a summer cold (cue view inside). The AmeriKat is currently, and embarrassingly for a Kat, barking like a dog (shudder) as she is battling a bout of bronchitis that has seen her boringly bedridden for the past 48 hours. Those who know her know its a feat to get her to rest and keeping to form, she has kept her mind active by reading the latest US IP reports and listening to hours of Senate and House debates on patent reform on C-SPAN. Exciting times...

Race to Obama - America Invents Act clears House hurdle

The oracle that is USPTO Director David Kappos predicted earlier this spring that he was "off-the-charts optimistic" that the House would pass similar patent reform legislation to the Senate's earlier success of S.23. Sure enough, on 23 June 2011, the House of Representatives passed HR 1249 - the Leahy-Smith America Invents Act (AIA) -with a bipartisan vote of 407 to 117. The bills are substantially similar, but with some important differences (see below). Given there are differences, the two bills will now have to be negotiated and reconciled in a House and Senate conference committee before it goes to the Senate vote and finds it way before President Obama for signing into law.

Both patent reform bills introduce, for the first time in 60 years, a considerable overhaul of US patent law. The biggest change to US patent law is the transition from a first-to-invent system towards a first-inventor-to file (FITF) system whereby each patent application would be allocated an “effective filing date” (the FITF
provisions in HR. 1249 and S.23 are substantively identical). Like in the EU, the application’s novelty and obviousness is then judged on the prior art available before the effective filing date of the patent, but with a one year grace period still remaining in effect in respect of the inventor’s own disclosures (see controversy re grace periods and the AIA here and as debated in the House here).

But, as previously reported by this Kat and others, the introduction of FITF was not without vocal opposition in both Houses. Democratic Senator Dianne Feinstein's proposed Amendment No. 133 to S.23, which sought to remove the "first-to-file" provision given its arguable burden on a small independent inventors, went on to be voted down 87-13 by the Senate. During the House debates of the same provision in HR 1249, Constitutional arguments were bounded about claiming that "first-to-file" violated the Constitution as it rewards the winner of the race to the USPTO's doors rather the actual "inventor". Arguments against this opposition were that the availability of applications such as pre-issue disclosure, post-grant review and inter-partes review would rebalance any alleged burden that the first-to-file paradigm could create (even if these same measures are argued to increase the USPTO's patent backlog). (picture, above left - former Attorney-General Michael Mukasey)

Constitutionally, the proponents stated the FITF is consistent with the Constitutional requirement that patents be awarded to the inventor; a mere $110 filing fee for a provisional application, it is argued, allows any inventor, large or small, an inexpensive way to obtain an early priority date with a year to submit a formal patent application. Under the current system, however, an interference proceeding (where two inventors file their patents nearly simultaneously) could cost an inventor upwards to $500,000 - it was argued that such high legal costs act as a chilling mechanism on access to the patent system to inventors. Further, it was argued that FITF helps to ensure that US patent laws accomplish the goals in the Copyright Clause of the Constitution, i.e., by promoting the Progress of Science and Useful Arts (see former Attorney-General Mukasey's legal analysis and reasonsing here). Proponents of FITF also submitted that the patent filing system run by the Founding Fathers' generation in the 1790s, a first-inventor-to-register system, was similar to FITF and further argued the US courts did not even care about who was the "first to invent" until 1870 when the much criticized and expensive interference proceedings were introduced.

USPTO Director David Kappos previously stated that the US is already effectively running a first-to-file system because in 2007 there were only 7 interference applications of which only one was decided on priority of the invention. However, Representative Lamar Smith (R-TX) (picture, right), who introduced HR. 1249, stated that the first-to-invent system was
"outdated and dragged down by frivolous lawsuits and uncertainty regarding patent ownership."
Well...which is it? Will the introduction not result any any noticeable difference, a la Kappos, or will result in a more efficient, less contentious patent ownership procedure, a la Smith? Or is this FITF rhetoric irrelevant and the real reason for it's introduction is just to, dare she say the word... harmonize the US position with its international trading partners? (click here for Matt the Kat's post about Director Kappos's views on the matter)

Harmonization of US patent law was exactly what spirited Rep. Rohrabacher (R-CA) during the House debate into calling the legislation a "travesty", adding to the PTO backlog and "break[ing] the back of small inventors...and empower[ing] multinational and foreign corporations" (see his fiery speech at minute 37 including a citation to a Hoover Institution report damning the AIA). Representative Rohrabacher, writing about the AIA in Politico in March stated:
" We're told [the first-to-file system] is necessary to harmonize with Japanese and European patent law. But these systems were established by elitists and economic shoguns interested in corporate power, not individual rights . If patent law is to be harmonized - their system should be raised to our high standards, not ours eroded to conform to their weaker ones."
Ahhh....this fondly reminds the AmeriKat of this Lewis Black skit (warning: his name is Black, but his language gets a bit blue). But despite the fiery opposition, in which Rohrabacher was not alone, both Houses passed substantively identical first-to-file provisions. First-to-file is here to stay, it seems.

There are several other tweaks to language and addition of some provisions in HR 1249 but one of the bigger changes is that of the funding of the USPTO. S.23 included an amendment which ended the annoying fee diversion whereby the excess fees collected by the USPTO (excess in that it is more than what the USPTO was apportioned in funding by Congress) go back to the federal government where the monies can be invested for things other than the USPTO. Frustratingly, this amendment did not make it in tact to HR 1249 and instead the House "decided to water down [the] language" according to Senator Tom Coburn, the introducer of the fee diversion amendment in the Senate. Now, the excess funds, instead of being controlled by USPTO would, under section 22 of HR 1249, be controlled by the Appropriations Committee. Yikes...kiss that money good-bye! (picture, above, left - Senator Coburn)

For the non-US readers, the Appropriations Committee basically controls the purse of the US government. He who controls the pursue, has the power. And he who hath the power, well...does not necessarily always do what is best. Senator Coburn has more damning things to say about the Appropriations Committee (click here for his press release urging the Senate to oppose Congress's version). Director Kappos, as an unelected member of the executive branch of the government, more coolly stated that
"We are encouraged by the statements of so many Members of Congress calling for the USPTO to have 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 the legislation and to more effectively perform its core mission."
The Wall Street Journal reports that despite the further compromise that the bill needs before President Obama sees it, the White House has already signalled its approval of HR 1249. So will there even be a fight on fee-diversion and other controversial provisions like expanded prior-user rights, or will the Senate just adopt the House version? Anyone want to put some money (or milk) on the Senate just voting through HR 1249's text as is?
Letter from AmeriKat: America Invents Act Remix Letter from AmeriKat: America Invents Act Remix Reviewed by Annsley Merelle Ward on Sunday, July 17, 2011 Rating: 5

No comments:

All comments must be moderated by a member of the IPKat team before they appear on the blog. Comments will not be allowed if the contravene the IPKat policy that readers' comments should not be obscene or defamatory; they should not consist of ad hominem attacks on members of the blog team or other comment-posters and they should make a constructive contribution to the discussion of the post on which they purport to comment.

It is also the IPKat policy that comments should not be made completely anonymously, and users should use a consistent name or pseudonym (which should not itself be defamatory or obscene, or that of another real person), either in the "identity" field, or at the beginning of the comment. Current practice is to, however, allow a limited number of comments that contravene this policy, provided that the comment has a high degree of relevance and the comment chain does not become too difficult to follow.

Learn more here: http://ipkitten.blogspot.com/p/want-to-complain.html

Powered by Blogger.