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Technology / technology

Patent Reform Faces Final Hurdles in Senate

A cloture vote on a compromise version of a patent-reform bill from Sen. Patrick Leahy, D-Vt., has been scheduled for Tuesday.(Chet Susslin)

photo of Josh Smith
September 5, 2011

With his landmark patent-reform bill on the verge of approval, Sen. Patrick Leahy, D-Vt., will have the task of shepherding a compromise version of the controversial bill through what may be the last few votes in the Senate.

Patent reform is one of the first issues the Senate will take up when senators return from August recess this week. Majority Leader Harry Reid has scheduled the America Invents Act, which would enact sweeping changes to America’s patent system, for a cloture vote on Tuesday night.

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Backed by signals of support from President Obama, who has tagged patent reform as part of the Democrats’ jobs agenda, Leahy will likely seek to avoid even one amendment to the bill, which could set up another fight with the House.

But debate is brewing again over so called “fee diversion,” a popular provision that would have given the U.S. Patent and Trademark Office full control of the fees it collects.

Critics have accused congressional appropriators of siphoning off nearly $1 billion from the Patent and Trademark Office to fund other programs. Sen. Tom Coburn, R-Okla., and others argued that when the fees don’t fund patent services, they become a de-facto tax on patents. The White House expressed concern that the House version didn’t end fee diversion, but has not indicated that it would stand in the way.

House Judiciary Chairman Lamar Smith, R-Texas, who forged the companion House version, was forced to compromise with congressional appropriators and weaken the fee-diversion protections earlier this year

That drew objections from Coburn among others, who pushed for the anti-fee-diversion measure in the Senate. And Coburn, who decried the House’s failure to end the “egregious practice” of fee diversion, is planning to work to reinstate the original provision, Coburn spokesman John Hart said.

“He will fight to get his language ending fee diversion, which is a tax on innovation, back in the bill,” Hart told National Journal.

Some observers say Reid’s decision to file for cloture signals that there may yet be teeth to those objections, but earlier debates suggest they may not be enough to derail the legislation. Despite prolonged debate, both the Senate and House eventually passed the bill by wide margins.

The Senate approved Leahy’s original bill on March 8 with a vote of 95-5, and the House passed the bill 304-117 on June 23, after frantic legislative wrangling delayed the vote for a week.

“Congress is closer than ever to enacting meaningful reforms to give American inventors and innovators the 21st-century patent system they need to compete in an evolving global marketplace,” Leahy said when Tuesday’s cloture vote was scheduled.

Efforts at patent reform have languished in Congress for half a decade, often falling victim to the extremely complicated and arcane issues that divide businesses.

And with this latest version just a few votes from the president’s pen, criticism continues.

“Even the streamlined patent-reform bill before the Senate is significantly controversial,” said Yar Chaikovsky, an intellectual-property partner at the law firm McDermott Will & Emery. “Some estimate the reform could create as many as 2 million jobs, but when you look under the covers, there does not appear to be any support for this. And small businesses, corporations, and individual inventors are significantly opposed.” 

Leahy, who fought off some significant amendments as he shepherded the bill through his Judiciary Committee and the full Senate, is already pressing his colleagues to support the legislation as a measure whose time has come.

“When the Senate passed the America Invents Act in March, I said the bill was not what every Senator may want, or what every stakeholder sought in the debate,” Leahy said in a statement. “But the bill the House has passed is an important and comprehensive step forward to help unleash American innovation, create jobs, and bolster our economy. The time has come to send the America Invents Act to the president’s desk to be signed into law.”

Industry groups remain divided over the bill, with some major tech companies such as IBM, Google, and Apple praising its passage, and others, such as the Innovation Alliance, which represents smaller tech companies, pushing for stronger anti-fee-diversion provisions.

Among other changes, the bill transitions the United States to a "first-to-file" system, under which the inventor who files an application first is awarded a patent. Currently, inventors can quarrel over who actually invented something first.

“The America Invents Act, as passed by the House of Representatives, largely tracks the Senate bill,” the Coalition for 21st Century Patent Reform, which represents companies like 3M, Caterpillar, and DuPont, said in a statement. “As such, the legislation will improve and clarify U.S. patent law in a balanced, thoughtful manner and will have a major, positive impact on investment in R&D, bringing new products to consumers and creating new high-paying jobs.”

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