The America Invents Act passed the Senate and is moving onto the House possibly by the end of the month. (Quick overview here) There was a large bipartisan majority with only 5 votes against the bill, all coming from western states. There are a range of views and commentaries on the advantages and disadvantages of the bill and we have decided to show a few of different sides of the debate in this post.
Some of the changes include a move to a first-to-file system, limitations on damages, third party and post grant review, elimination of the best mode requirement, and the creation of “microentity” status (providing 75% reduction in fees) to name a few.
Jessica Dye at Law360 notes
“If passed by both chambers, the legislation would constitute the first significant overhaul of the U.S. patent system in nearly 60 years. Among other things, it would give third parties the opportunity to submit information related to a pending patent application to the examiner and improve the current system for making administrative challenges to the validity of a patent throughout its life.”
AIPLA approves of the bill stating that it reduces subjectivity of the law as well as negative effects:
“[The America Invents Act] will address the harmful impact on the system caused by questionable patents; and it will protect the basic interests of patent owners with respect to damages, venue, and the best mode requirement. The legislation will also allow the USPTO to make necessary operational improvements and, by moving the U.S. to a first-inventor-to-file system, give small inventors greater opportunities to compete in a global environment, while reducing workload at the USPTO.”
Some think there is not enough reform in the bill while others think there is too much. Others think the focus is all wrong. The bill has not changed much since it was amended last year, but Computer & Communications Industry Associationstill finds it a “disappointment to the tech sector” and “ironic that it was the concerns of our sector that drove the beginnings of the reform effort six years ago, and yet from our perspective S.23 would leave our industries worse off than before.”
Edward Wyatt in an article from the New York Times describes the changes and debate from the view of tech companies.
“The change in the application system was favored by the large technology and pharmaceutical companies, which argued that it would put the United States in sync with other national patent offices around the world and make it easier to settle disputes about who has the right to a certain innovation.
Many smaller companies and inventors opposed the change, however, arguing that it favored companies that could hire legions of lawyers to quickly file applications for new permutations in manufacturing or product design….[A]dding a postgrant review system … would help to keep more patent challenges out of court. …
A consortium of technology and computer companies are already lobbying House members to resist addressing procedures to re-examine patents in their bill. The Information Technology Industry Council, whose members include Dell, Google, I.B.M. And Microsoft, said in a letter to Mr. Leahy earlier this month that it opposed the bill’s provisions to alter how patents could be re-examined, asserting that this would increase litigation rather than reduce it.”
Alex Philippidis describes the impact of first-to-file on small business in comparison to large corporations.
“[T]he amended bill still favors corporate giants over start-up companies and individual inventors….To be fair, smaller businesses benefit from a provision of the amended bill that cuts by half the fees charged to them if they pursue fast-track reviews of their patent applications. But they lose on the bill’s key provision, which changes how patents are issued from first-to-invent to first-to-file…. In practice, biotech and pharma giants can afford staffs of lawyers specializing in rushing patent applications, while start-up CEOs must juggle IP management with duties ranging from basic science to fundraising to facility oversight and commercialization.”
The article also mentioned studies that need to take place on the effect of the bill on small businesses.
However, Kevin Gorgan in a Pharma Times article describes the positive reaction from pharmaceutical and biotech companies. The article describes the Pharmaceutical Research and Manufacturers of America stating the bill demonstrates an “appreciation for the importance of intellectual property protection to the US economy and to the jobs – and life-saving innovation – that it provides”. It also mentions that the Biotechnology Industry Organization noted that improvements of America Invents Act would “would benefit all sectors of the US economy” and enhancing patent quality will attract investor to fund research and development process that lead to patents in small biotech companies.
Kevin L. Kearns and Alan Tonelson in an article from The Hill describe the bill as having an affect on litigation rather than on innovation and promote staying with the current system.
“This [America Invents Act] will actually undermine the nation’s technological progress and growth by promoting intellectual property theft, not protection. …The problems that exist do not require uprooting a successful 220-year-old system.The U.S. Patent and Trademark Office (USPTO) takes too long to issue new and genuinely secure patents. The “reformers” blame antiquated regulations and procedures, but it’s really an issue of funding, training, and retaining sufficient numbers of qualified patent examiners.Doing so will immediately improve the quality and validity of patents, and remove the scandalous 720,000 applications backlog at USPTO. …
Further, and perhaps most importantly, since over 70 percent of the value of American companies is now in their IP – historically it was in land, factories, machinery, and the like – the Leahy bill could well destabilize many American business through the wholesale devaluing of intellectual property assets. Making major changes to the US patent system at this time of economic distress could worsen the financial crisis.”
As currently established, the U.S. patent system provides protection for the first person to invent a new and useful invention. In an effort to harmonize with the rest of the world that uses a first-to-file system, the America Invents Act will change the system to a first-inventor-to-file system. Though this will not have much of an overall change to whom will obtain inventorship, it does encourage early disclosure rather than fully developing the invention. For a better and more academic view of understanding the difference between our current system and the proposed system, see this article by a few of our UNHLaw members. Theoretically, the system would eliminate litigation resolving who was the first to develop an invention.
A Huffington Post article by Gary Lauder describes the change as “superficial” and “succumbing to peer pressure” to the point where it makes it more difficult for U.S. filing compared to overseas. Lauder provides a look at Canada’s harmonizing switch.
“Canada shifted to FTF in 1989, and a 2009 study found an “adverse effect on domestic-oriented industries and skewed the ownership structure of patented inventions towards large corporations, away from independent inventors and small businesses.” The EU, which has had FTF for a while, last month declared an “innovation emergency” due to how far behind us they are falling in innovation and R&D investments. It’s not working for them.”
Lauder also makes the point that some countries are trying to change their system to be more like ours. So should we keep the system we have or is the U.S. system due some change. The Patent Law Forum encourages the debate to continue. Please post comments below.