The Wall Street Journal is reporting that President Obama will today announce a proposal that would merge six agencies that focus on trade and commerce into one new department. Apparently the belief is that the restructuring will make it easier for businesses to navigate government bureaucracy. Notwithstanding, the proposed restructuring may better be thought of as a reshuffling since it seems that the plan would only save several billion dollars over 10 years. Thus, the real savings and streamlining may be minimal and likely won’t make the bureaucracy any more friendly unless regulations are minimized, but that is another topic for another day.
The Obama government restructuring plan is of particular importance within the patent community because it will affect the Commerce Department as well as five smaller agencies. As soon as I heard that my Spidey-senses started tingling. Wasn’t there something in the the Leahy-Smith America Invents Act (AIA) that applied only so long as the United States Patent and Trademark Office remained an agency within the Department of Commerce? Sure enough, there is. The new fee setting authority vested in the USPTO is contingent upon the Patent and Trademark Office remaining within the Department of Commerce.
News broke several days ago that Senator Jon Kyl (R-AZ) has raised the issue of funding for the United States Patent and Trademark Office in his role as a member of the so-called Super Committee, which is charged with finding $1.2 trillion in budget cuts over the next 10 years. See Super Committee Considering an End to USPTO Fee Diversion. This means the patent community has another chance to urge Congress to do the right thing and adequately fund the USPTO. Everyone in the patent community can and should get involved and be heard — patent attorneys, patent agents, patent bar groups, patent bloggers, corporations, inventor groups, inventors and industry organizations such as the ABA IP Section, the AIPLA and IPO. It is time to get involved!
Many will recall that recently we came up to the doorstep of putting an end to fee diversion through the creation of a revolving fund for the USPTO. The revolving fund proposed by Senator Tom Coburn (R-OK), would have tied a revolving fund together with taking the USPTO out of the appropriations process. This would have meant that the USPTO would be guaranteed to keep 100% of the user fees collected without Congress being able to divert fees over and above what they specifically appropriated. The revolving fund made it into the enacted America Invents Act, but not the part about taking the USPTO out of the regular appropriations process, which essentially just kept the status quo.
Today the U.S. patent community sits perilously in the path of an oncoming train. The Leahy-Smith America Invents Act (AIA) Act mandates – but fails to fund – a wholesale conversion of the USPTO from an expert examining agency to one that not only examines patents but also adjudicates patent disputes in ways that promise to be faster and cheaper than patent litigation in our courts.
Senator Kyl is raising PTO funding on the Super Committee.
Without predictable funding, the Congressionally mandated reforms of the AIA will likely turn out like the agency’s “fast track” and Detroit office initiatives: announced, planned, but then delayed by the lack of one essential element – money. Indeed, without predictable funding, the reforms mandated by the AIA will likely result in a greater patent backlog, significant additional delay in finalizing the value of disputed patents, and a confused and discouraged agency workforce, all of which will significantly delay the recovery of our national innovation-based economy.
The coming train wreck would have been avoided if the 95 Senators who voted for ending fee diversion (with the support of every significant stakeholder in the otherwise-divided patent community) had had their way. It can still be avoided at no cost to taxpayers. And it can be avoided quickly, before Thanksgiving’s leftovers are gone, via the Super Committee. Let me explain.
The United States Patent and Trademark Office (USPTO) released two Federal Register Notices on October 7, 2011, seeking written comments and announcing two public hearings for two studies the agency is required to conduct under the America Invents Act. Specifically, Congress is requiring the USPTO to study and report on the availability of prior user rights in foreign countries as well as options to aid small businesses and independent inventors in securing patent protection for their inventions. The USPTO reports for both studies are due in mid-January 2012.
“The objective of the written comments and hearings is to collect information from the public on the scope of the two studies,” said Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos. “Public participation in both the Prior User Rights Study and the International Patent Protection Study is necessary to assist the agency in preparing for Congress the most informed and accurate report possible.”
I was speaking with John White via telephone yesterday about the America Invents Act. Yes, John and I are thoroughly immersed in this legislation and coming up with wrinkle after wrinkle that you probably never thought about. Fun I know, but that is what two wild, crazy and tremendously charismatic patent attorneys talk about! In any event, I told him I was having difficulty and asked him — how do you describe prior user rights, post-grant review and supplemental examination simply? His response: “You don’t.” We went on to talk about how first to file isn’t all that simple either, although the name suggests otherwise. This thing, the monstrosity that is the America Invents Act, will be a full employment act for lawyers! But when is it ever good for clients when it is good for the attorneys?
In any event, on this note I embark upon Part 2, which will seek to make sense of prior user rights, post-grant review, preissuance submission and patentability changes. This will leave inter partes review, supplemental examination and derivation proceedings for the finale — Part 3. I will endeavor to describe these in the most straight forward way possible, but I am going to completely punt on Section 18 as it pertains to business methods and post-grant review, at least for now. I just see no way to explain that in a “simple” way. Notwithstanding, look for an article on Section 18 soon (a relative term I know), along with an article about specific peculiarities and likely unintended consequences of the Act.
Senator Leahy (left) and Congressman Smith (left) at AIA signing.
The America Invents Act reshapes U.S. patent law in fairly profound ways with established major industries benefitting, but providing unwanted challenges for some. The final bill changes the US system to a first-inventor-to-file system. It creates several post-grant review mechanisms whereby 3rd parties can challenge another’s patent application, including the allowance of submission of prior art by 3rd parties and the creation of a new, post-grant administrative review proceeding. The financial sector will get additional tools to address long-held concerns over “business method” patents such as those at that heart of litigation involving several large banks and a company which holds patents on processes for securing checks electronically. The AIA also effectively bans the practice of patenting tax strategies. The bill also restricts the practice of plaintiffs in infringement cases joining together large groups of defendants who may have no business relation to each other.
The ink is hardly dry on the America Invents Act and Congress is already about to take money from the United States Patent and Trademark Office in violation of the promise of Congressman Rogers, who chairs the House Appropriations Committee.
It isn’t exactly a newflash to announce that Washington, D.C. is dysfunctional, anyone paying attention over the past few years has long since come to that conclusion. Thus, it is hardly breaking news to report that Congress is on the verge of passing a Continuing Resolution rather than actually doing their job and passing a budget for fiscal year 2012. Why do today what is required of you to fulfill the responsibilities of your job when you can just kick the can down the road? Of course, by so doing Congress will embark upon a path that will divert some $600 million from the USPTO during FY 2012.
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