This year, for the first time, China is expected to become the world’s number one patent publisher, surpassing the U.S. and Japan in the total and basic number of patents. We must do more to help America’s innovators and job creators to keep pace in the global marketplace.
The last major patent reform was nearly 60 years ago. Since then, U.S. innovators have developed cell phones and launched the Internet. And yet the laws protecting the technologies of today are stuck in the past. We need a system that ensures patent certainty, approves good patents quickly and weeds out bad patents effectively.
The America Invents Act (H.R. 1249) brings our patent system into the 21st Century. It has broad support from industry leaders, academic institutions and independent inventors. The bill passed out of the House Judiciary Committee by a vote of 32-3. And similar legislation overwhelmingly passed the Senate by a vote of 95-5.
As former Attorney General Michael B. Mukasey recently wrote, H.R. 1249 is both “constitutional and wise.”
The bill adopts a first-inventor-to-file standard to reduce frivolous litigation over patent ownership. This provision actually returns us to a system similar to what our founders created and used: first- inventor-to-register. This switch creates certainty over patent ownership, which is critical for inventors seeking to raise capital, grow their businesses and create jobs.
This provision protects independent inventors from companies by limiting costly litigation over patent ownership that independent inventors often lose. It costs anywhere from $400,000 to $500,000, according to the patent office, to pursue an interference proceeding — claiming the right to a patent based on an earlier invention. As The New York Times recently pointed out, “Most small inventors don’t have that kind of money. Big corporations do.”
H.R. 1249 also helps weed out bad patents that the PTO admits should never have been approved. The mistakes occurred in the late 1990s following a federal court ruling that created a new class of patents called business-method patents. The PTO was ill-equipped to handle the flood of business-method patent applications that followed the ruling. Few examiners had the necessary background and education to understand the inventions and lacked information regarding prior art. As a result, the PTO issued some weak patents that have led to frivolous lawsuits.
Section 18 of the bill establishes a pilot program that allows the PTO to reexamine a limited group of questionable business-method patents. If someone is being sued by a business-method patent holder, that individual can petition the PTO to review the patent in question using the best prior art available.
Bad patents that never should have been issued will be eliminated. Good patents that pass muster under this scrutiny will have even stronger legal integrity. This isn’t favoritism; it is a fair result for all parties.
H.R. 1249 also puts an end to fee diversion and ensures consistent funding of the PTO to help address the current backlog of patent applications. The PTO collects fees for services provided to independent inventors and businesses applying for patents. But rather than retaining the fees it collects, the money is diverted to other federal programs. Since 1992, nearly $1 billion has been diverted from the PTO.
The new language negotiated by the Judiciary and Appropriations Committees ends fee diversion by creating a fund for fees collected by the PTO. The money in the fund will be reserved for and used by the PTO and only the PTO. This maintains congressional oversight, while making sure that fees collected by the PTO can no longer be diverted.
Allowing the PTO to retain the fees it collects means more patent examiners to help make sure good patents are approved more quickly. And that means more products for American consumers and more jobs for American workers.
Rep. Lamar Smith (R-Texas) chairs the House Judiciary Committee and is the author of H.R. 1249, the America Invents Act.