Patent-Overhaul Bill Clears House
By AMY SCHATZ
WASHINGTON—House lawmakers passed legislation Thursday to overhaul the U.S. patent system for the first time in nearly 60 years, despite disagreements over patent-office funding and a provision that could help large banks challenge some patents.
The House passed the America Invents Act on a 304-117 vote, a bipartisan tally with more than two-thirds of lawmakers from each party supporting the bill. The bill would change how the U.S. grants patents and award them to the party which is "first to file" an invention instead of the "first to invent" it. The change would bring the U.S. in line with other countries who adopted first to file patent systems years ago, a move that will simplify the patent process for companies that file applications in multiple countries.
The Senate passed similar legislation in March on a 95-to-5 vote. The House and Senate must now negotiate a final bill before patent overhaul can be sent to President Barack Obama to be signed into law.
The bill's supporters say it will improve patent quality by creating a new process for reviewing patents after they have been issued and allow third parties to provide information on other parties' applications. In a nod to university concerns, the bill would also give inventors a grace period to file for patents after publicly disclosing their inventions. It would also stop the ability of inventors to receive patents on tax strategies.
"This bill is designed to help all inventors," said Rep. Lamar Smith (R., Texas), who chairs the House Judiciary Committee and helped author the legislation. The current system "seriously disadvantages small inventors and companies" because it can lead to years of costly legal challenges to their patents, he said.
Congress has been trying to overhaul U.S. patent rules for more than a decade, but previous efforts to reach a compromise on new rules fell apart amid squabbling by various industries, including pharmaceutical and Silicon Valley companies. Many of the most divisive issues have been settled by the courts in recent years, however, leading to the current legislation.
The banking industry scored a victory when lawmakers included a provision in the bill which would make it easier for banks to get re-examination of patents on financial business processes such as check-scanning, in an effort to avoid paying patent-infringement fees. The U.S. Chamber of Commerce and the National Retail Federation joined the banking industry to push for the provision, which was opposed by some small inventors.
An amendment sponsored by six lawmakers to strip that provision from the bill failed. The banking industry measure is also in the Senate version of the bill.
Even though the legislation enjoyed broad industry support and was relatively uncontroversial, the House bill ended up filled with some thorny provisions that riled a few industry groups.
Some inventors and small businesses complained that switching to a "first to file" system would give large companies an advantage and hurt individual inventors. Opponents argued there is no reason to change the U.S. system. "Our patent system is the strongest in the world," said Rep. James Sensenbrenner (R., Wis.), whose effort to kill the "first to file" change failed.
Rep. John Conyers (D., Mich.), another opponent, said the legislation would "benefit large multinationals at the expense of independent inventors and small businesses" and would "harm jobs, harm innovation and harm our nation."
The Innovation Alliance, a lobbying group representing some biotech and tech companies including Qualcomm Inc., pulled its support of the legislation Tuesday over a disagreement over how patent office operations are funded.
Corporate America widely supported a funding provision allowing the patent office to keep all of the money it collects. The office runs on the fees it collects, however in the past two decades Congress has diverted upwards of $800 million in patent fees for other programs. Companies and inventors hope that allowing the patent office keep all its fees would help the office speed up its reviews and clear its backlog of more than 700,000 applications.
But in early June House Budget Chairman Paul Ryan (R., Wis.) and Appropriations Chairman Harold Rogers (R., Ky.), complained the legislation would eliminate annual congressional budget oversight of the patent office by giving it automatic use of any fees its raises.
Under a compromise reached earlier this week, House lawmakers agreed to let the agency keep patent fees but would put any funds excess of its annual budget into a reserve account overseen by Congress. The provision conflicts with the Senate's patent bill and the White House expressed concerns about the proposal Tuesday, saying the patent office "must be able to use all the fees it collects to serve the users who pay those fees."
Although the House and Senate bills must now be reconciled, the White House has already signaled its support for the legislation to be signed into law.
