Senate approves major patent system overhaul

Changes put the U.S. patent system in step with most other countries and allow third parties to challenge a patent within nine months of it being awarded

The U.S. Senate has voted to approve a major overhaul of the nation's patent system, with the legislation allowing a new kind of challenge to patents granted by the U.S. Patent and Trademark Office.

The America Invents Act would also allow the USPTO to set fees for patents. The bill, potentially establishing the first major changes to the U.S. patent system in five decades, will give the USPTO enough money to whittle down a backlog of 700,000 patent applications, supporters said.

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The Senate's 89-9 approval of the America Invents Act sends the legislation to President Barack Obama, who is expected to sign the bill. The House of Representatives approved the same piece of legislation in June.

Many large tech companies, including Intel, Apple and Microsoft, have called for patent reform in recent years, and lawmakers have been trying to pass a bill for nearly six years. Earlier this year, the Senate stripped out limits on patent lawsuit damages that some large tech companies had supported.

The bill streamlines the patent review process at the USPTO and it would change U.S. patent rules by giving a patent to the first person to file for it, not the first person to create a new invention. Changing to a first-to-file system puts the U.S. in step with most other countries.

It would also allow third parties to file a challenge to a patent within nine months of it being awarded. The new process for challenging patents will weed out ones that the USPTO shouldn't have granted, supporters said

The legislation will create U.S. jobs through a much-needed update of the patent system, said Senator Patrick Leahy, a Vermont Democrat and bill sponsor in the Senate. "The creativity that drives our economic engine has made America the global leader in invention and innovation," he said. "The America Invents Act will ensure that inventors large and small maintain the competitive edge that has put America at the pinnacle of global innovation. This is historic legislation. It is good policy."

The legislation would allow the USPTO to keep most patent fees, with the money going to a capped USPTO reserve fund, instead of Congress taking the money for other government expenditures. Congress has diverted about $900 million from the patent office over the past two decades.

The Senate rejected three amendments to the America Invents Act, including one that would strengthen the ban on fee diversion, with Leahy arguing amendments could kill the bill. Any amendments would have sent the legislation back to the House, with House members unlikely to approve the changes, he said.

Senator Tom Coburn, an Oklahoma Republican, argued that all patent fees should go directly to the USPTO, instead of the reserve fund set up by the House. Patent fee diversion to the U.S. Treasury is "immoral, if not criminal," Coburn said.

Some opponents argued the bill, with its first-to-file and patent challenge provisions, favors large corporations over small inventors. "This is a big corporation patent giveaway that tramples on the rights of small inventors," said Senator Maria Cantwell, a Washington Democrat. "It is siding with corporate interests against the little guy."

The Innovation Alliance, an advocacy group that had opposed some earlier patent reform provisions, said the bill passed Thursday was an improvement over earlier versions. But the group said it is disappointed that the bill "does not end, once and for all, the diversion of patent office user fees."

Several tech groups, including the Business Software Alliance and Software and Information Industry Association (SIIA), applauded the bill's passage.

"The America Invents Act is an investment in innovation," Ken Wasch, SIIA president, said in a statement. "The legislation makes critical, necessary patent improvements that will drive our country's continued leadership in the software and information industries."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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