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Senate Passes a Patent Bill, but Don't Hold Your Breath for Actual Reform

After six years of talking about patents but not doing anything about them, the Senate passed major reform legislation that many hope will lead to a more efficient U.S. Patent and Trademark Office. But even the 95 to 5 vote will do nothing if the House fails to take up the measure or passes something significantly different, both of which are strong possibilities.

To get a sense of the disastrous state of patent processing, take a look at the USPTO's data from September (click to enlarge):

Now compare them to the current numbers (click to enlarge):

Yes, the backlog of patents is down, and administrative changes by Director David Kappos seem to be the dominant factor. The number of patents issued in 2010 was a 31 percent jump over the previous year.

However, that still leaves a backlog of nearly 719,000, with the amount of time to get action on applications having dropped a little, but not that much. The patent process still needs considerable changes. As Dennis Crouch points out in his Patently-O blog, some of the more significant proposed changes include the following:

  • The USPTO would be able to set its own fees and there would be no fee diversion, a practice in which Congress has, at times in the past, taken some of the money generated by fees and diverted it to other uses.
  • Traditionally, the U.S. has used a first-to-invent system. Under the bill, it would move to a first-to-file system, used in Europe and Japan, in which the first person or company to the patent office would get the patent. Under that system, Microsoft's multi-touch patent application would have likely kept Apple from obtaining its major patent in that area. However, the bill would implement first-to-file differently from the rest of the world and potentially make it more difficult to get a U.S. patent than one in Europe.
  • Third parties would have more room to submit material for consideration of another company's patent application. Expect companies to attempt to block each other on a regular basis.
  • Anyone would have a ninth month window to ask the USPTO to review the claims of a granted patent. Even more opportunities for companies to block one another.
  • The attempt to limit damages in patent infringement suits seems to have been removed from the bill.
The changes, if passed, will have a number of effects. One will probably be increased strategic jockeying by companies to block the patents of their rivals, particularly through submitting third-party material to patent application examinations and to ask for review of claims.

The first-to-file approach could have a negative effect on small inventors, as large companies have more resources for filing. In the first-to-invent approach, a small company that could prove it had invented something before a larger competitor could still get the patent, even if the larger company filed first.

That point alone could mean that the House will oppose that important aspect of the Senate bill. Other aspects like post-grant review may be no more welcome. That could leave Congress split on the nature of reform, resulting in nothing happening in the near future.


Image: morgueFile user keithcr, site standard license.
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