On Friday, September 16, 2011, President Obama signed into law “The America Invents Act” (“AIA”) which passed the Senate on September 8, 2011, by a vote of 89-9. The AIA passed the House of Representatives on June 23rd by a vote of 304-117. The measure, which is the product of a seven-years-long legislative battle among patent policy stakeholders, changes how patents are obtained and enforced in the United States. Important reforms to patent law are incorporated into the AIA and, just as significantly, several controversial proposed changes were deleted from the AIA before final passage.
Starting with President Obama’s State of the Union Address in January, where he made innovation and job creation key elements of his speech and specifically embraced passage of patent reform as a means of addressing both issues, patent reform was well positioned to be enacted in 2011. Moreover, Congress was desperate for legislative accomplishments in an environment where partisan differences, a weak economy, and government fiscal concerns dominated. Longstanding pro-reform coalitions and associations continued to expend considerable resources on the bill. Passage was deemed virtually assured when the Chairmen of the Judiciary Committees – Sen. Patrick Leahy (D-VT) and Rep. Lamar Smith (R-TX) – essentially agreed this summer on a common piece of legislation. But, as explained below, nothing’s ever as simple as it seems in Washington.
It looks like my prediction on Tuesday that the Senate would pass H.R. 1249, the America Invents Act, prior to President Obama’s much anticipated jobs and economy speech that begins at 7:00pm ET today, Thursday, September 8, 2011. The Senate voted to pass H.R. 1249 and send the House version of the America Invents Act to the White House for President Obama’s signature by a vote of 89 to 9. The Coburn Amendment, which would have once and for all put an end to fee diversion, was unsuccessful, being tabled by a vote of 50 to 48.
Beginning at 4:00pm ET the Senate started considering three separate amendments to H.R. 1249. The passage of any would have required the legislation to ping back to the House of Representatives, but that was not to happen.
The United States Senate voted 93 to 5 earlier this evening to end debate on patent reform, which should set up a vote on H.R. 1249 in the coming days.
The United States Senate first passed its own version of patent reform, dubbed the America Invents Act – S. 23, in February 2011. The House of Representatives took up patent reform in the Spring, ultimately passing H.R. 1249, also dubbed the America Invents Act. Because the House version of patent reform was not identical to the Senate version of patent reform the legislation pinged back to the Senate. Immediately before the Senate went out on its annual August recess Senate Majority Leader Harry Reid (D-NV) filed for cloture on H.R. 1249, scheduling the Senate’s first day back after the August recess as the day for the cloture vote. That cloture vote is what passed by a vote of 93-5.
Once upon a time I used to not get worked up at all about proposals for patent reform, because after all they almost always didn’t seem to go through, or even if they did what was passed was hardly what was suggested. Then, my good friend John White told me about six years ago that this time patent reform was going to happen, it was just a matter of time. Since then I have written numerous articles on proposed patent legislation, followed the issue, reviewed transcripts from Congressional hearings and have watched multiple Congressional hearings streaming online, even while on vacation one year. The end result is that not much has changed… at least not yet.
We have heard this all before, and to some extent it does sound a little like a “chicken little mentality” has captured the imagination of policy wonks and patent attorneys alike, but it is hard to deny the fact that there is growing momentum for real reform at the United States Patent Office. Sadly, what the United States Senate will vote on Tuesday, September 6, 2011, does not represent that real reform that so many are hoping for.
Occasionally, when we’re on the road, Gene and I take up the chance to speak at law and corporate clients of either of us or PLI. These talks can be free ranging, sometimes CLE, sometimes just patent focused topics of interest. Recently we gave a talk in Chicago on the likely and looming patent reform to a group of practitioners; the only question when we wrapped: is it too late?
For reasons that are not very clear, patent practitioners have been largely mute in the reform debate. Maybe we thought it would never happen, or maybe we thought it would never include some of the crazy ideas and language that was being bandied about. Oops. Wrong on both counts. So, now what?
What is cloture? Cloture is the only procedure by which the Senate can vote to place a time limit on consideration of a bill or other matter, and thereby overcome a filibuster. Under the cloture rule (Rule XXII), the Senate may limit consideration of a pending matter to 30 additional hours, but only by vote of three-fifths of the full Senate, normally 60 votes. Without 60 votes cloture fails and debate continues. Unfortunately for those who would like to see patent reform derailed, the fact that there was unanimous consent in the Senate for a cloture vote almost certainly suggests that there will be at least 60 votes to end debate on H.R. 1249, which will bring it to a vote, likely sometime later in the week of September 6.
It has now been several weeks since the U.S. House of Representatives passed H.R. 1249, dubbed the America Invents Act, which is commonly referred to as patent reform. In February 2011, the U.S. Senate passed S. 23, their version of patent reform. In their infinite wisdom, or lack thereof depending upon your perspective, the House did not pass a bill that was identical to S. 23, which means that before patent reform will become a reality it needs to once again be taken up by the Senate. But what are the odds of that happening any time soon?
Even the most casual observer likely knows that the United States is in the middle of a debt crisis. According to Treasury Secretary Timothy Geithner we have until August 2, 2011, within which to raise the debt limit and allow for more borrowing. Apparently the failure to raise the debt ceiling will trigger calamitous events that will cascade into an economic catastrophe. Yes, pretty big stuff seems to be at issue over the debt limit, which is consuming all of the oxygen in the room.
The vast number of America’s companies that need patents to prosper and grow should fear the post-grant provisions for challenging patents in H.R. 1249, the patent reform bill passed last month by the House of Representatives. In a system already plagued by delays in granting patents, they threaten to delay courts from enforcing patents once finally granted. This threat has received little attention, perhaps because advocates of the bill promise promptness that they cannot deliver.
Advocates’ promise of completion in one year rings hollow for several reasons. First, the one-year deadline does not count the year, on average, that the inevitable appeal will take. Second, the deadline is extendable to 18 months and, in any event, not enforceable. Third, the one year does not count the petition stage before the proceeding begins. That adds at least another 5 months—two months for the patent owner’s response plus three months, again unenforceable, for the patent office to decide whether the challenger’s petition warrants initiating such a proceeding. So, total elapsed time usually will be not one, but almost three years.
At approximately 5:50pm the United States House of Representatives passed H.R. 1249, which is known as the America Invents Act, by a vote of 304-117. This bill differs from the Senate version of patent reform, S. 23, so there will be no bill going to the desk of President Obama just yet. There are important differences between the two bills, chief among them is funding for the United States Patent and Trademark Office. The bill passed by the Senate put an end to the practice of fee diversion, which occurs when the Congress appropriates the USPTO less than they collect in fees. The excess in the fees collected from users of the USPTO then go to the federal government as general revenues and are used for purposes other than the operation of the United States Patent and Trademark Office.
Shortly after 2pm Eastern Time the United States House of Representatives voted on the Managers Amendment to the America Invents Act, H.R. 1249. The Managers Amendment passed by a vote of 283 – 140. The House then proceeded to address several amendments to H.R. 1249. It seems that there will be a vote on H.R. 1249 later today, and the way the amendments are going it seems as if the House will pass patent reform.
The one thing in the Senate version of patent reform that everyone agreed on was the end to fee diversion. The House of Representatives, however, has decided that an end to fee diversion should not be included in patent reform, which is causing a great unease within the industry.
The Senate had struggled with patent reform for years, and in February 2011 they broke through with a carefully crafted balance. The Senate version of patent reform is light on “reform” in any real sense, except for one. The Senate voted to end the practice of diverting fees collected by the Patent and Trademark Office to other, completely unrelated purposes. The House of Representatives, lead by Congressman Hal Rogers (R-KY) who is Chair of the Appropriations Committee, demanded that the USPTO do with the amount of funds appropriators want to give the Office, not the amount of funds collected from users who pay for the Office. This is causing many industry groups to openly withdraw support and fight against patent reform; a remarkable turn of events.
Earlier this year we learned that General Electric (NYSE:GE) paid no taxes for 2010. See G.E.’s Strategies Let It Avoid Taxes Altogether. Yes, the largest corporation in the United States had a very good 2010. They booked over $14 billion in profits, with over $5 billion coming from U.S. operations, yet they paid not a dime in taxes to the Federal Government. To add insult to injury, General Electric was able to claim a tax benefit of $3.2 billion for 2010, making its effective tax rate for 2010 substantially negative.
But General Electric was not the only large U.S. corporation not to pay taxes. According to Citizens for Tax Justice, General Electric had some company. In fact, American Electric Power, Dupont, Verizon, Boeing, Wells Fargo, FedEx and Honeywell all had tax rates between -0.7 percent and -9.2 percent for the stretch between 2008 to 2010. See Study finds many corporations pay tax rate of effectively zero.
On the other hand, the United States Patent and Trademark Office continues to have user funds siphoned off, making the USPTO a much larger taxpayer than the largest U.S. corporations.
Earlier this week two key House Republican leaders, Congressman Paul Ryan (R-WI), who is Chair of the House Committee on the Judiciary, was joined by Congressman Harold Rogers (R-KY), who is Chair of the House Committee on Appropriations, wrote Congressman Lamar Smith (R-TX) explaining that they oppose provisions in House patent reform legislation H.R. 1249 that would allow the Patent and Trademark Office to keep and use the fees collected to run the agency. See House Republicans Oppose an Adequately Funded Patent Office. This is an extremely myopic and ill conceived notion. The Patent Office is unlike other government agencies in that it is completely funded by user fees, takes absolutely no taxpayer funds and provides a valuable service for a fee.
Given that House Republicans seem to fear an adequately funded Patent Office I got to thinking — What could they be afraid of? With that in mind, here are the top 10 things that House Republicans just might be afraid of as they seek to oppose an adequately funded Patent Office. Can you hear the black helicopter squad swirling overhead, conspiracy theories in hand?
In a rather stunning development, key Republican leaders in the House of Representatives are opposing an adequately funded Patent Office. Indeed, the opposition to appropriate funding for the United States Patent and Trademark Office is becoming a political matter, and the language used to describe the issues suggests that Republicans seem to believe they can score points against the Obama Administration by opposing USPTO funding.
In a letter sent to Congressman Lamar Smith (R-TX), two key Republican Chairmen are opposing the USPTO funding mechanisms currently in place in H.R. 1249, which mirror those passed by the Senate earlier this year. Congressman Paul Ryan (R-WI), who is Chair of the House Committee on the Judiciary, was joined by Congressman Harold Rogers (R-KY), who is Chair of the House Committee on Appropriations, opposing provisions that would allow the Patent and Trademark Office to keep the user fees it collects, which are payment for services to be rendered.
How to Write a Patent Application is a must own for patent attorneys, patent agents and law students alike. A crucial hands-on resource that walks you through every aspect of preparing and filing a patent application, from working with an inventor to patent searches, preparing the patent application, drafting claims and more. The treatise is continuously updated to address relevant Federal Circuit and Supreme Court decision impacting patent drafting.
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