Patent Reform Gaining Steam, Debate Continues in U.S. Senate

By Gene Quinn
March 2, 2011

Late yesterday afternoon it came to my attention that an article I recently wrote was referenced by Senator Jon Kyl (R-AZ) on the floor of the United States Senate. The article is titled Senate to Vote on Patent Reform, First to File Fight Looms and addresses the potential change from a first to invent system (which we have currently) to a first to file system (as proposed by S. 23). Needless to say, I was flattered by the attention given to this article by Senator Kyl.

As flattering as it was to be inserted into the patent reform debate in some peripheral way, the real news from yesterday was the Manager’s Amendment was passed by a vote of 97-2.  The Manager’s Amendment, cosponsored by Senator Patrick Leahy, Senator Charles Grassley (R-IA) and Senator Kyl, included language that would allow the United States Patent and Trademark Office to keep the fees it collects.  The Manager’s Amendment reportedly also included insertions favored by Congressman Lamar Smith (R-TX), who is chair of the House Judiciary Committee.   See Momentum build for patent bill.  Thus, it seems quite likely that patent reform will soon become a reality.

Section 9 of S. 23 already had fee setting authority included, so the addition of provisions akin to the Coburn Amendment, which allow the Patent Office to keep the fees it collects, would create a fully sustainable USPTO, and one that has the resources it really needs to once and for all address the enormous patent application backlog and unacceptably high average pendency.  In short, coupled with the efficiency enhancements Director Kappos has been able to achieve on the margins the full and complete self funding that will take place if patent reform is enacted will be enormously positive for all applicants.

The last remaining issue that seems to have the potential to derail patent reform is the first to file issue.  Senator Diane Feinstein (D-CA) is still expected to submit an amendment to strip first to file from S. 23, but yesterday she reportedly acknowledged that she likely does not have the votes to succeed in that effort.  See Momentum build for patent bill.

The argument that Director Kappos and others have used for a long time is that increasing the speed at which decisions are made on patent applications will result in worthwhile innovations being patented in a technologically relevant time frame.  Under the current delays many innovations stay pending past their useful life, so when a patent is obtained there is little realistic opportunity to leverage the patent to build a business, attract investors and create jobs.  Patents awarded on a quicker, technologically relevant time frame should absolutely lead to more job creation and organic growth of the U.S. economy through reliance on high-paying technology based jobs.

For those who might be interested in our moment in the spotlight yesterday, please see the video clip below, courtesy of C-SPAN.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 21 Comments comments.

  1. Bruce Young March 2, 2011 11:51 am

    I personally beleive that changing to a “first inventor to file” system is not a good thing. But it looks like it is going to change. Since a lot of the reason given is for “harmonization” with the rest of the world, why do we still have the “public use” and “offer for sale” bars? The biggest thing I am worried about in the transition is the lack of a grace period for those actions. It seems as if an inventor could have a non-disclosing public use or offer for sale and lose their US rights while still having the ability to receive a patent in other parts of the world. That would be wrong.

    -Bruce

  2. David Boundy March 2, 2011 12:04 pm

    Note the key thing in the manager’s amendment —

    — under current law, the PTO has fee setting authority so long as fees “recover the average cost to the Office of such processing, services, or materials.”

    — S.23 now gives the PTO to set fees any way it likes, so long as total fees in the aggregate equal PTO costs.

    This is a Congressional grant of authority to implement the continuations and claims and IDS rules through fee setting. The European 600 euros for claim number 16? Coming soon to a patent office near you.

    S.23 is a bad bill, and getting worse as it goes.

  3. Gene Quinn March 2, 2011 12:09 pm

    Bruce-

    I know that argument is going around with people claiming you can sell, publicly use and demonstrate an invention without having an application filed and still obtain foreign patent rights. That is not my experience and I think that argument is quite disingenuous. To a person any patent attorney will tell you that if you engage in any activity prior to filing of a public nature you have irreparably compromised your foreign rights. That is standard advice.

    So is there anything to a non-enabling disclosure not compromising foreign rights? Probably yes, but if you demonstrate your invention you would almost certainly have an enabling disclosure. Certainly if you sell the invention there would be an enabling disclosure because it could be reverse engineered. So the only time you could engage in any public activity pre-filing of a patent application and not irreparably compromise your foreign rights is when there is the proverbial “black box.” So seeing, using, reverse engineering the invention would not tell you what the invention is or how it works. Can this happen? It is theoretically possible and we can create interesting law school hypothetical fact patterns, but in real life 99% or more of public activity is going to irreparably compromise your foreign filing rights.

    I have some reason to believe that those circulating this myth are doing so intentionally as a misdirection to derail patent reform for their own reasons. The truth is that you simply cannot engage in any public activity pre-filing and still get a foreign patent.

    -Gene

  4. David Boundy March 2, 2011 12:16 pm

    Gene, “the truth” is much more subtle. The problem we’ve had all along is a lack of analytical precision. Some people have read the proposed statute very carefully to try to figure out what it means–and found that there are huge ambiguities and inconsistencies, and try to state their views and explain the problems with some precision. I try really hard to stay in that category.

    Others
    — haven’t done the homework of careful reading (it’s an amazingly opaque text, a problem all by itself)
    — make glib sweeping statements
    — extrapolate that if “most” do things this way, then the option to do things any other way can be sacrificed with no consequence.

  5. Gene Quinn March 2, 2011 12:35 pm

    David-

    Let me be very clear for you and everyone. You are not one of the ones that I think are trying to hijack the debate. I have always enjoyed our debates, both via e-mail and in the comments. We have gone pretty hard at each other substantively at times. I was very glad that when we met it was very cordial and there seems to be mutual respect. I certainly respect you, your views and everything you have done for the patent system and industry. Your appeals victory was nothing short of miraculous.

    There are those that I disagree with on points in the patent reform debate, and in important ways I think you and I disagree on some issues, perhaps even big issues. I don’t think you are being dishonest at all, we just share a different view of things.

    In my experience you always stay grounded in facts, what is actually present and filter it through the reality that you know through working with businesses and innovators. We all have a bias. Bias is not a bad thing. An agenda is a different story in my opinion. I don’t agree with playing fast and loose with facts to achieve an outcome, but certainly realize that reasonable people who are educated on the issue can and will have a difference of opinion.

    I also agree with your characterization of others.

    Cheers.

    -Gene

  6. TINLA IANYL March 2, 2011 12:58 pm

    Bruce,

    Perhaps your fears regarding lack of grace period for those actions (non-enabling demonstration, offer for sale, etc.) can be calmed by reading the proposed 102(b), which lays out the exceptions. These exceptions include a provision that that the inventor’s (or anyone who obtained the disclosure from the inventor) own disclosures occurring less than one year before filing shall not be prior art against the application. Additonally, disclosures by others occurring after the inventor (or anyone who obtained the disclosure fromt he inventor) has disclosed the invention shall not be prior art either. You might want to think of it as: “the first inventor to file or disclsose within one year of filing.”

    However, if you had been correct in thinking that there was no grace period under the proposed law, then it is true that some foreign countries, like Canada, Mexico, and Japan, have grace periods that would have permitted obtaining a patent in spite of the prior disclosure. In effect, the proposed legislation would cause the US to have a grace period much like the one offerred by Mexico.

  7. Blind Dogma March 2, 2011 2:27 pm

    Gene,

    Noticed the blurb at http://www.inventorsdigest.com/?p=5793

    Noticed also your post thanking them.

    Did not notice if you noticed that their story used your trademark dog with magnifying glass at the top of their story (without the additional lettering). Now on first blush I was indeed confused as to the provider of the story as I associate the little watchful dog expressly with your product. It does make me wonder (just a little) if you have applied for registration of the trademark (and how).

  8. Mark Nowotarski March 2, 2011 2:38 pm

    I heard that the manager’s amendment has a provision about special reexamination procedures for business method patents. Does anyone have the exact language?

  9. Mark Nowotarski March 2, 2011 2:51 pm

    Asked and answered
    http://thomas.loc.gov/cgi-bin/query/C?r112:./temp/~r112j04M3j

    A very interesting definition of “business method patent”.

    (d) Definition.–For purposes of this section, the term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except that the term shall not include patents for technological inventions.

    If this passes, can we have a do over on Bilski?

  10. ben March 2, 2011 3:07 pm

    The problem is that the needs and views of small entities have been largely ignored by Congress in drafting this bill, though small entities account for the lion’s share of new jobs. Small entities rely more on patents than large firms as small entities need patents to get funded. Large firms can dominate their markets by their size alone. Any bill which is passed before small entities have a fair say in this matter is premature and dangerous.

    http://www.ieeeusa.org/policy/policy/2011/021511a.pdf

  11. Stan E. Delo March 2, 2011 3:09 pm

    Just an update to what has happened on the Senate floor as of last night, it appears as if the Coburn amendment to end fee diversion passed, which is a great relief to me as I have a patent pending. Senator Hatch actually even mentioned the $800 Billion that Congress has taken out of the PTO, and even called it obscene. I think the Feinstein-Risch amendment to remove the FTF portion of the bill will be coming up in the next few hours.
    http://www.c-span.org/Live-Video/C-SPAN2/

    Stan~

  12. Blind Dogma March 2, 2011 3:11 pm

    Mark,

    Does the manager’s amendment also define what a “technological invention” is? I am pretty sure that almost any “apparatus for performing data processing operations” can be labeled as a “technological invention” .

  13. Mark Nowotarski March 2, 2011 3:59 pm

    Blind Dogma,

    I would agree particularly with the way claims have to be drafted to satisfy the Office on Bilski these days.

    That leaves a “method…for performing data operations…” as a candidate for a nontechnological patented invention.

    The only case I can find that uses that term is In Re Nuijten http://bit.ly/Nuijten. That was used in the context that Congress intended 35 USC 101 to cover only “technological inventions” and not “abstract ideas”.

    I suspect that Congress is thinking about where the “inventive step” is. If so, then it seems to me that they are explicitly acknowledging that what makes a method claim not obvious can reside in the nontechnical aspects of it, such as a particular financial arrangement.

    If someone can point to anything in the record that clarifies this, that would be helpful.

  14. Steve M March 2, 2011 4:06 pm

    Along with Blind: Yes; please define, dear congress, “technological invention” . . . and while you’re at it: “financial product” and “financial service.”

    ’cause if you all can’t, won’t, or don’t . . . here come more court cases to try to figure out what you meant/intended.

  15. Stan E. Delo March 2, 2011 4:27 pm

    BD and Steve M-

    Senator Feinstein also pointed out several other terms in the grace period languange of the manager’s amendment that had glaringly not been defined anywhere. Sloppy legislation like that is not responsible, and should be eliminated, which I sincerely the Feinstein-Risch amendment will accomplish by removing the FTF protocal from the S. 23 America Invents Act, which title sounds a bit like something that Louis Foreman would dream up to make it more appealing to whomever is gullible enough to buy it.

    Stan~

  16. Steve M March 2, 2011 7:18 pm

    . . . and it occurs to me that congress’s generally poor past and present record on IP issues would suggest a more appropriate title to this legislation:

    “The America Invents and Congress Squashes Act”

    Truth in advertising is nice. For those all-to-rare times when we can get it.

  17. Patent Litigation March 2, 2011 11:57 pm

    Here is a similar story

    A senate committee voted Wednesday to legalize Internet poker, as long as gamblers play on Iowa sites.
    The measure, approved 9-6 by the State Government Committee, is now headed to the full Senate.

  18. Bruce Young March 3, 2011 8:35 am

    Gene,

    I am not an expert in European patent law but I have been told by more than one European practitioner that a public use or offer for sale is not a bar to a patent in Europe unless it is enabling. And I respectfully disagree that nearly all such events are enabling.

    For example lets say that a company invents a new valve that opens more quickly and uses it to improve an existing product to have improved performance. The valve built into the device and it is not possible to see the valve in the improved product let alone how the valve works. The company goes to a trade show and demonstrates the improved product, but never shows the inside of the product, never describes how it works, only talks about the improved performance. The company also starts accepting purchase orders for delivery in 3 months.

    By my understanding this would not be an enabling disclosure as an attendee might be able to figure out that there is a valve that opens more quickly, but would have no way to figure out how the valve operates. While I think we can all agree that it would be best to file for patents before the trade show, Under current law, the company would still be able to file to both US and foreign patents up until the products were shipped and therefore available to be reverse engineered (thereby losing foreign rights). But under S.23, as I understand it, US rights would be lost by the non-enabling public use and offer for sale as of the date of the trade show.

    I don’t think similar scenarios would be that uncommon.

    -Bruce

  19. Gene Quinn March 3, 2011 12:26 pm

    Bruce-

    You make all kinds of assumptions… what if… and if they don’t… they explain but don’t… How often do you think what you describe actually happens?

    Do you REALLY think that someone skilled in the art could know that there is a valve that opens more quickly and that is the core uniqueness and they couldn’t figure it out on their own? If they can figure it out on their own that is enabling.

    I suppose we are going to have to agree to disagree. You raise excellent legal arguments why after the fact something that was an enabling disclosure might be argued not to be an enabling disclosure. In reality, however, what you require us to assume just doesn’t comport with life.

    -Gene

  20. patent litigation March 7, 2011 6:11 pm

    Great news on the fee diversion and fee-setting issues; inclusion of these two provisions alone may sway my opinion in favor of the patent reform bill — my other main point of hesitation being the curtailing of the grace period traditionally allowed for inventors.
    http://www.aminn.org/patent-reform-act-2011-s23