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Reforming the US patent system

For the past six years, the US has been working towards a reform of its patent system. Reform bills have now been passed by both the Senate and the US House of Representative’s Judiciary Committee.

Both the Senate bill (S.23) and the House Judiciary Committee bill (H.R. 1249) passed with an overwhelming majority, and propose the same major reforms:

First to File 

The US is currently the only country to use a ‘First to Invent’ patent system; the first inventor is entitled to the patent, even if they were the second to file a patent application for that invention. These rights are enforced through Interference proceedings.

The proposed reforms seek to move to a ‘First to File’ system, in which the first person to file a patent application is assumed to be the true inventor. This would bring the US into line with the rest of the world, create greater legal certainty, and eliminate the need for costly and time-consuming Interference proceedings.

Post grant review system

Another proposed change is the introduction of a post-grant review system, aimed at reducing the need for litigation by providing a comparatively simple and cheap way to challenge the validity of a patent. The basic idea is the same in both S.23 and H.R 1249, though they vary in some of the details.

During the 9 months (S.23) or 12 months (H.R. 1249) after grant, a third party may challenge the validity of a patent. To raise an objection after this period an inter partes review may be requested, but only on the grounds of lack of novelty or obviousness.

Fee provisions

Currently, application and maintenance fees are set by Congress. Any money raised which is above the annual budget of the USPTO is diverted to general government revenue.

Both reform bills allow the USPTO to set its own fees, and to retain all of the money raised. It is hoped that this will enable the USPTO to hire new examiners and update technology, allowing it to begin to attack the current backlog of some 700,000 patent applications.

H.R. 1249 also includes a sunset provision, stipulating that control of fees would revert back to Congress after six years.

Other items

• An extension of the 50% discount for small entities to include application and search fees for fast track applications, and the introduction of ‘micro entity’ status which will entitle qualifying applicants to a 75% discount.

• Third parties will be able to submit information regarding the patentability of an invention during substantive examination of the relevant patent application.

• A four year pilot program of a post grant review system specifically for business method patents will allow someone accused of infringement to file a request for review of the patent at any time after grant.

• Details of the ‘best mode’ of carrying out a claimed invention will still be required in the specification, but failure to do so will no longer be cause to hold granted claims invalid or unenforceable.

• If a patent holder learns of new information relevant to the patentability of an invention which they are bound to disclose to the USPTO under the Duty of Disclosure, they will be able to initiate a ‘supplemental examination’ in order to avoid a charge of inequitable conduct.

It is hoped that a major reform of the US patent system will increase the quality of granted patents and discourage frivolous lawsuits, as well as making international applications more straightforward for US applicants.

However, these reforms are not popular in all quarters and face criticism from a number of areas, including small businesses and some Silicon Valley companies (eg Apple and Google), who are concerned that the legislation will hurt individual inventors.

H.R. 1249 will now go before the full House for debate. If it is passed in its current form, it will need to be reconciled with S.23 before it can be presented to President Obama to be signed into law.


20 April 2011

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