Patent Reform Debate Moves to Senate in January 2014
Yesterday afternoon, the Innovation Act (H.R. 3309) passed through the House with ease by a vote of 325-91. The bill was quickly debated (3 hours) and only slightly amended. The one noteworthy change was the removal of the provision designed to repeal 35 U.S.C. § 145. As a reminder, 145 actions allow unsuccessful applicants for patents to challenge the denial of patent protection by the USPTO in District Court rather than the Court of Appeals for the Federal Circuit (CAFC). (The main benefit of the district court route over the CAFC is the ability to introduce new evidence).
145 actions are exceedingly rare. When instituted such suits can be a significant drain on the Solicitor’s Office of the USPTO, hence the original proposal to repeal 145. It seems legislators failed to realize some patentees like having an option 99.9% will never use.
With the House bill passed, debate will head to the Senate. It is expected that the Leahy bill will be revised to track H.R. 3309 so that conference can be avoided, and “reforms” can delivered for presidential signature in the early weeks of 2014.
Innovation Act Heads to Floor Debate for Last Push in 2013
Now that the Goodlatte Bill, also knows as the Innovation Act (H.R. 3309), has been reported out of the Judiciary Committee there will be a second round of amendment opportunities. The new amendments will be collected from house lawmakers on Monday December 2nd, and the Rules Committee is expected to calendar floor debate shortly thereafter (likely Wednesday or Thursday). It is expected that some of the same amendments that failed during committee markup will be reintroduced, along with a raft of others. Post grant patent issues are expected to be hotly debated, especially those pertaining to the potential expansion of Covered Business Method (CBM) patent challenges.
The Innovation Act remains on the fast track heading into the close of 2013. Meanwhile, the Leahy Bill will sit idle for the time being. While significant progress can be made in the next few weeks, it seems unlikely that any legislation will be passed into law until early 2014.
Critical Technical Fix to CBM Statute Left out of Leahy Bill
Wasting no time…the Senate has quickly introduced a companion bill to H.R. 3309. The senate bill (here), sponsored by Senator Leahy of Leahy-Smith America Invents Act (AIA) fame, largely tracks the post grant related provisions of the existing house legislation — with one major difference. The Leahy bill does not include the technical fix to the Covered Business Method (CBM) provisions of the AIA, Section 18(a)(1)(C)(i). This fix is included in the Goodlatte bill to permit CBM challenges on prior art qualifying under 35 U.S.C. § 102(e). 102(e) is a critical class of prior art for business method patent challengers.
As explained previously, the exclusion of 102(e) was a drafting mistake of the AIA. This drafting error significantly degrades the appeal of CBM for business method patent challengers. While mark-up and evolution of H.R. 3309 /Senator Leahy’s Bill will certainly continue, it is disturbing that this critical fix was seemingly deliberately left out of the Senate bill.
Pro Software Lobby Drives Legislative Rewrite
Last week, the proposed patent reform legislation (HR 3309) was seemingly stalled for the remainder of 2013. This road block was primarily erected by the Business Software Alliance, and other pro software patent lobbyist that were taking issue with certain proposed changes to Section 18 of the America Invents Act (AIA). As a reminder, Section 18 of the AIA defines the Transitional Program for Covered Business Method (CBM) patents. The CBM proceeding is a post grant patent challenge program managed by the USPTO’s Patent Trial & Appeal Board (PTAB). The CBM program has proven especially successful in cost effectively combating and shutting down business method patent litigation.
The proposed changes to the CBM proceeding drawing the most heat were: 1) the recalibration of the definition of a business method patent to de-emphasize financial services aspect, while expanding the definition to embrace more generic software functionality; and 2) repeal of the “transitional” nature of the program (8 years) to make it permanent. Not surprisingly, large software patent filers were not at all enthusiastic.
Faced with the prospect of further hearings and delay, and with the White House clamoring for something, anything that can be spun as progress in the wake of the Obamacare fallout, HR 3309 has been repackaged by dropping these controversial CBM provisions (existing mark-up here).
With additional mark-up expected in the coming days (although likely very minor), look for a companion bill to be introduced on the Senate side by Senator Leahy. As was the case for the AIA, conference can be avoided if the Senate follows the Goodlatte lead, which appears to be the plan.
Patent Reform for Christmas is looking like a distinct possibility.
Caution Urged by Members of House Judiciary Committee
With two previous working drafts circulated in the House of Representatives, the proposals of the Goodlatte Bill were thought to be thoroughly “baked in” from a legislative perspective. However recent commentary from the judiciary on the proposed district court pleading/procedural changes, taken together with the very limited history of the America Invents Act changes, has led some to urge caution on further reforms. Although the House Judiciary Committee has already conducted a hearing on the Bill to determine the need for mark-up, a number of committee members are now urging a second hearing to address growing concerns.
The Hill reports that a bipartisan group of committee members, including ranking member John Conyers (D-Mich.) and Reps. Doug Collins (R-Ga.) and Hank Johnson (D-Ga.) sent a letter to Chairman Goodlatte seeking a second hearing on the Bill. The letter is reported to explain that:
“The impact of the proposed legislation will be profound. . . . .many Americans who will be affected by it — from individual inventors to federal judges to investors in the nation’s largest corporations to small businesses — continue to express strong opinions about its merits” . . . . .the committee should “schedule another hearing in order to consider additional viewpoints before voting on legislation that will affect this vital part of the American economy”
With a sizable contingent of the House Judiciary committee throwing up a procedural road block this late in the game, there would seem to be little time left in 2013 to advance the effort further. Indeed, as it appears that the Senate is poised to follow the Goodlatte mark-up with a companion bill (to avoid conference), it would seem that delaying the mark-up will stall further progress for the remainder of 2013.
Hearing to Consider Issues for Mark-up
Although the Innovation Act (H.R.. 3309) was only introduced last week, as expected, Congress is wasting no time pushing the “patent reform” issue forward. Today at 10AM the House Judiciary Committee will hold a hearing on the content of the Bill entitled: Improving the Patent System to Promote American Innovation and Competitiveness. The hearing will alert the committee of specific concerns prior to mark-up. One notable topic is the Bill’s proposed shift from the broadest reasonable interpretation (BRI) at the USPTO’s Patent Trial & Appeal Board (PTAB) to a district court style claim construction. The initial draft of the Goodlatte Bill referenced the entirety of 35 U.S.C. § 282, and along with it, a presumption that patent claims are valid (§ 282 (a)). This would have been an absolute boon to patent trolls. Fortunately, and as I predicted, the claim construction proposal no longer requires the application of the presumption of validity.
In the second draft, and now H.R. 3309, the general reference to § 282 has been changed to a contextual reference to § 282(b). In essence, the proposal would change little at the USPTO (plain and ordinary meaning is a component of BRI) other than perhaps an increased emphasis on prosecution history consistent with Philipps v. AWH. That said, the proposal still lacks consistency and leaves a possible opening for patent troll mischief.
Read the rest of this entry »
Patent Reform for the Holidays?
Now that Congress has kicked the budgetary can down the road for another 3 months they may actually squeeze in some lawmaking before the end of 2013. Given the public image problems created by the shutdown of the last few weeks, lawmakers will be eager to find an issue to address via legislation; especially an issue with bipartisan support that will not be too hotly debated— You see where this is going.
Given the the entrenched positions on both sides of the immigration debate (a stated priority of the White House), patent reform remains the lowest hanging fruit. For this reason it seems likely that the next act of political theater will be to sell patent reform as key to America’s competitive future. As a reminder, here are the issues to shape the debate in the week’s ahead: Read the rest of this entry »
USPTO Adjusts Examiner Count System to Address Growing RCE Backlog
Some notable pre-grant news this week. A Request for Continued Examination (RCE) is largely a procedural creature of pre-grant, patent application prosecution (patent reissue being the lone exception on the post grant side). Recently, the backlog of RCE filings has increased significantly. This is largely the result of the Office switching the priority of such filings on examiner dockets while reducing examiner credit for processing RCEs. This priority switch was designed to reduce the backlog of unexamined patent applications. Not surprisingly, as the unexamined application inventory went down, RCE inventory went up as illustrated in the above chart.
Starting on October 1st, the USPTO will recalibrate the Count System Initiative (CSI) to incentivize work on the RCE backlog. (Under the previous version of CSI, 1.75 credits were available for the first RCE, and 1.5 for the second and subsequent)
On October 1, 2013 examiners will receive a total of 2.0 counts for the 4th and all subsequent RCEs in which a first office action is done in the first quarter of the fiscal year, and 2.o counts for the 5th and all subsequent RCEs in which a first office action is done in each of the second, third, and fourth quarters of the fiscal year.
Also, examiners with higher RCE inventories will have more limited inventories of regular new applications available for action until their RCE inventories are reduced below predetermined thresholds.
Second Round of Patent Reform Efforts to Hit Congress
As expected, the second Goodlatte discussion draft has been circulated. (here) The second draft appears to include additional technical fixs and refinements, including the necessary CBM fix I mentioned being involved with yesterday. The draft also includes many of the concepts introduced in the first draft circulated this past May. I have not had time to review them all in detail, but will in the coming days at the Midwest IP Institute.
Legislative efforts from Senator Leahy and others are expected to follow shortly.
Planned Silicon Valley Office in Limbo
Seems Congress is currently winning the never ending fee diversion battle with the USPTO. As a result, efforts to expand USPTO satellite office to Dallas, Denver and Silicon Valley have been significantly slowed. While permanenet office locations in Dallas and Denver have been identified, the search for a permanent Silicon Valley office was recently halted as a result of the sequestration of USPTO funds (you know, the ones they collect from the public in self supporting fees).
The Detroit office remains open.
It seems unlikely that the planned satellite office will be anything but ceremonial outposts in the near term. Indeed, absent consistent funding, one or more satellite offices could be shelved indefinitely.