Senate Passes Patent Bill

March 8, 2011. The Senate passed S 23 [LOC | WW], the huge patent reform bill titled "America Invents Act", by a vote of 95-5. See, Roll Call No. 35.

Sen. Barbara Boxer (D-CA), Sen. Maria Cantwell (D-WA), Sen. Mike Crapo (R-ID), Sen. John Ensign (R-NV), and Sen. James Risch (R-ID) voted no.

The House and Senate have been working on patent reform legislation since 2005. Sen. Patrick Leahy (D-VT) and others introduced S 23 on January 25, 2011. The Senate Judiciary Committee (SJC) approved the bill on February 3. The full Senate began debate on February 28.

The Senate tabled an amendment on March 2 offered by Sen. Dianne Feinstein (D-CA) that would have removed the transition to a first to file system. The vote was 87-13. Most of the supporters represent Western states. See, Roll Call No. 31.

The Senate voted to cut off debate on March 7, by a vote of 87-3. See, Roll Call No. 34. Sen. Cantwell, Sen. Crapo, and Sen. Risch voted no.

Sen. Leahy stated in the Senate on March 8 that "This will keep America in its longstanding position at the pinnacle of innovation. This bill will establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs, while making sure no party's access to court is denied."

Sen. Hatch, a cosponsor, praised the bill. He said that it provides for "transitioning to a first-inventor-to-file system, which all the rest of the world has; allowing third parties to submit relevant prior art during patent prosecution; creating a patent quality-enhancing supplemental examination process; and instituting a post-grant review and an inter partes reexamination expansion." See, Congressional Record, March 8, 2011, at Page S1357.

He also said that it "provides fee-setting authority and addresses a long-felt need by the patent community and now by the majority of this body to end the practice -- the obnoxious practice -- of diverting fees from the U.S. Patent and Trademark Office."

Business Method Patents. Sen. Hatch also stated that the bill "makes important clarifications to tax strategy patents and creates a pilot program to review already-issued business method patents."

Senators discussed at some length the pilot program for business method patents, which was added to the bill on March 1 by an amendment offered by Sen. Charles Schumer (D-NY) and Sen. Jon Kyl (R-AZ).

Sen. Leahy said that "It is still unclear whether the subject matter of these patents qualifies as patentable subject matter under current law."

"If a petitioner provides evidence to the PTO and the PTO determines that the patent is on a ``covered business method patent´´ then the PTO would institute a post-grant review of that patent. In this review, the PTO could consider any challenge that could be heard in court." Sen. Leahy added that "The proceeding has a higher threshold than current reexamination before the PTO will even undertake a review of the patent. So as a practical matter, a patent without any serious challenge to its validity would never be subject to a proceeding."

Sen. Schumer stated that "The transition program created by the Schumer-Kyl amendment is designed to provide a cheaper, faster alternative to district court litigation over the validity of business-method patents. This program should be used instead of, rather than in addition to, civil litigation. To that end, the amendment expressly authorizes a stay of litigation in relation to such proceedings and places a very heavy thumb on the scale in favor of a stay being granted. It is congressional intent that a stay should only be denied in extremely rare instances."

House of Representatives. The House has not passed this bill.

Rep. Lamar Smith (R-TX), the Chairman of the House Judiciary Committee (HJC), stated in a release on March 8 that "Today's vote in the Senate is a victory for American innovators who create businesses, generate jobs and drive economic growth. The current patent system is outdated and is bogged down by frivolous suits and uncertainty regarding patent ownership. Patent reform unleashes American inventors and allows patent holders to capitalize on their innovations and create new products and more jobs.

He continued that "The Senate bill makes several important changes to our patent system. The House will introduce similar legislation this month".

Rep. Smith also stated that "Adopting a first-inventor-to-file standard creates certainty about patent ownership and makes it easier for American innovators to apply for patents around the world. The post-grant review process helps to reduce frivolous lawsuits filed by holders of weak or overbroad patents. And allowing for the third party submission of prior art helps prevent bad patents from being granted in the first place. These are just a few of the many provisions for which there is widespread support."

President Obama. President Obama supports this bill. He stated in a release on March 8 that "Creating new jobs and new opportunities in a fiercely competitive world demands policies that encourage and support American innovation and ingenuity. So I’m pleased that, on a bipartisan basis, the Senate has passed the most significant patent reform in over half a century."

He continued that "This long-overdue reform is vital to our ongoing efforts to modernize America's patent laws and reduce the backlog of 700,000 patent applications -- which won't just increase transparency and certainty for inventors, entrepreneurs and businesses, but help grow our economy and create good jobs."

Finally, "I look forward to working with the House of Representatives to pass patent reform legislation I can sign into law."

Secretary of Commerce Gary Locke also praised the bill. He stated in a release that "I urge swift action in the House so that long-awaited patent reform legislation can become law."