Will Proposed Bill Offer Much Needed Patent Reforms or Merely Placate Large Corporations?

By Rob Abb *

The Senate recently passed a bill that, at least in its current form, would revolutionize the U.S. patent system.  Senate bill 23, or the “America Invents Act,” was passed with the bipartisan support of 95 Senators.   President Obama praised the bill that he argues will not only “increase transparency and certainty for inventors, entrepreneurs and businesses, but help grow our economy and create good jobs.”

                    Fee Diversion

In addition to a number of technical and procedural changes to the patent application process, the America Invents Act would allow the USPTO to keep all of the fees that it collects.  As discussed in one of my previous blogs, the USPTO diverts its fees to other governmental agencies.  This bill would end the “fee diversion” and mandate that all fees the USPTO collects from its patents stay in that office.   Further, the USPTO would have the authority to adjust its fees in a way that “in the aggregate” will recover the estimated costs of issuing and reviewing patents.  Proponents of the bill argue that the additional fees will help clear the backlog of patents and spur job creation.

Best Mode Requirement

The bill would also adjust the longstanding “best mode” requirement.  That is, under current US law (unlike many other countries) the inventor, when filing for a patent and making the necessary disclosures, must describe the “best mode” of making or using the invention.  For example, if the invention works best when heated to 150 degrees but the disclosure just says something like “should be heated above 100 degrees,” that would violate the “best mode” requirement.  Failure to disclose the “best mode” can be used, as of today, to invalidate an issued patent.  Although disclosure of the “best mode” is still required under the America Invents Act, failure to disclose it is no longer grounds to invalidate an issued patent.

First to Invent

The bill’s most significant (and controversial) proposed change would move the US from a first-to-invent (FTI) system to a first-inventor-to-file system (FTF).  Although both systems can become rather complicated, at their basic level, FTI and FTF are relatively simple.  Our current FTI system focuses on who was the first to invent the invention.  Even if another party files for a patent first, the first inventor could still be entitled to the patent.  Conversely, a FTF system focuses exclusively on which party files for the patent first.  For a more detailed explanation of FTI and FTF systems (complete with timelines), please see this post by University of New Hampshire School of Law Professor Ann McCrackin.

The idea of moving the US to a FTF system has been met with significant criticism. In a letter to Senator Feinstein, noted inventor Steve Perlman, President  & CEO of Rearden, OnLive and MOVA, used real world examples to argue against moving to a FTF system.  For example, Mr. Perlman outlined the process he went through at MOVA to develop the technology used for the computer-generated faces in The Curious Case of Benjamin Button.  He discusses how the American system is one of trial and error, and that he developed about 100 inventions during the 5 year development of the technology but only ended up using 6.  Mr. Perlman emphasized that, because of our FTI system, he only needed to spend the time and money to patent the 6 inventions he actually used instead of having to rush to be the first to patent the over 90 other inventions.  He also estimated it usually costs his companies between $20,000-$30,000 to obtain each “commercial grade patent.” Accordingly, filing an additional 90 patents could have become prohibitively expensive.

Other critics note that this FTF system puts individual inventors and smaller companies at a disadvantage because they don’t have the resources of the larger corporations to rush to the patent office.  However, proponents of the bill hope the new FTF system and the end of fee diversion will help reduce the significant backlog at the USPTO and reduce challenges to patents, since in most cases all that will matter is who filed first.  In spite of the support of the President and 95 Senators, the House is unlikely to address patent reform and if it does, there are already Congressmen talking about stripping the bill of some of its most important reforms, including the FTF system.

*Rob Abb is a second-year law student at Wake Forest University School of Law and is President of the International Law Society.  He holds a Bachelor of Arts and Science in Political Science and Asian Studies from the University of Michigan.  Upon graduation in 2012, Mr. Abb plans to practice international law.