The Senate approved the first major overhaul of the United States patent system in nearly 60 years, voting 89-9 on Thursday evening to send the America Invents Act to President Obama, who quickly praised it as "action we need".
The bill changes the U.S. patent system by altering the Patent and Trademark Office’s fee system and creating a “first-to-file” system, under which patents would be awarded to the first person to file an application. It also creates new systems for challenging patents.
"Today you passed reform that will speed up the outdated patent process, so that entrepreneurs can turn a new idea into a new business as quickly as possible. That’s the kind of action we need," Obama said in proposing news jobs legislation to Congress Thursday night.
The Senate voted to retain language that critics said was designed to benefit a single pharmaceutical company, as well as a provision aimed at helping banks reduce lawsuits against them. The Senate also voted to leave in compromise language that gives Congress some control over patent application fees.
Although an arcane and complicated issue, patent reform has been closely watched by businesses of all sizes. But efforts to streamline the system have languished in Congress for years, undermined by competing business and political interests.
This year congressional leaders trumpeted its importance in helping the economy, Obama has cited the bill as a key way to help businesses create jobs, and the White House has signaled that the president will sign the legislation.
At an event on Thursday to celebrate the signing of the 8 millionth patent, Acting Secretary of Commerce Rebecca Blank said the legislation will help spark innovation and stimulate the economy. The vote came just hours before Obama laid out a new jobs agenda to a joint session of Congress.
The bill will provide the Patent and Trademark Office with the tools to “effectively expedite application processing, drive down the backlog of unexamined patent applications, and issue higher-quality patents that are less likely to be subject to a court challenge—all without adding a dime to the deficit,” said PTO Director David Kappos.
The bill's Senate sponsor, Judiciary Chairman Patrick Leahy, D-Vt., fought off three 11th-hour amendments that could have sent the sweeping legislation back to the House.
In a floor speech earlier in the day, Leahy said leaders in the House of Representatives told him that they would reject the bill if the Senate reinstated a provision that gave the PTO full control of the fees it collects.
Sen. Tom Coburn, R-Okla., pressed for the language to be restored, but Leahy and other leaders were intent on passing the bill out without new changes and Coburn’s amendment was tabled.
“The time to put aside individual preferences and ideological purity is upon us and we need to legislate,” Leahy said.
And in his remarks, Kappos seemed content with the bill as-is, saying it “substantially improves USPTO’s current funding situation.”
Both the Senate and the House had previously approved the bill by wide margins, but the House made several changes that made some Senators unhappy. In the end, the concerns were not enough to derail the bill.
The Senate also rejected two amendments that would have stripped language clarifying PTO application deadlines and establishing a review process for patents on business methods. The sponsors of those amendments said the provisions, added in the House, were inappropriately tailored to help specific businesses.
In a statement after the vote, House Judiciary Chairman Lamar Smith, R-Texas, said the bill was the most significant patent reform in 175 years.
"After more than six years of bipartisan efforts and negotiations, we have crossed the finish line on patent reform," said Smith, who sponsored the House version. "Today’s vote is a victory for America’s innovators and job creators who rely on our patent system to develop new products and grow their businesses."
Despite some lingering concerns, businesses and patent lawyers welcomed the legislation.
“While some controversial issues remain to be tackled, most in the patent community hope that these steps towards harmonization and procedures to filter out undeserving patents will go a long way towards strengthening the overall system without damaging the incentives to innovate," said Paul Devinsky, patent attorney at McDermott Will & Emery.
IBM said the bill would reinvigorate American businesses and help them compete globally, and Eli Lilly and Co general counsel Robert Armitage called the bill the “world's first patent law specifically crafted for the 21st century.”
“For a cutting-edge industry like software, operating under a 60-year-old patent system has sometimes felt like sailing with an anchor overboard. Today’s passage of the America Invents Act is like cutting the rope,” said Business Software Alliance president and CEO Robert Holleyman.
“Software companies have been especially burdened with poor controls on patent quality and opportunistic litigation,” Holleyman added. “The law also builds on a series of recent court decisions on issues such as damages and injunctions to help discourage what had become a destructive cottage industry of opportunistic patent litigation. Finally, by adopting a first-inventor-to-file system, the new reform harmonizes US law with international standards, which is critical in an interconnected, global economy.”
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