Congress

By Marla Grossman, Partner, American Continental Group

Last week, the Congress passed the most comprehensive patent reform in the U.S. in over 50 years. Just hours before President Obama gave his jobs speech, the U.S. Senate passed H.R. 1249 by a vote of 89 to 9, clearing the bill for the president’s signature. The bill’s title is the Leahy-Smith America Invents Act, and it will help promote American innovation, thereby creating additional jobs in this country and, hopefully, enhance the economy. 

Passage of the America Invents Act is the culmination of more than a decade of efforts of innovators and public policy makers. Several of the provisions implement recommendations made by the Federal Trade Commission in 2003 and the National Academy of Sciences in 2004. Congress worked on this bill from the 108th – 112th congressional sessions, holding dozens of hearings and engaging in extensive debate.

Some of the key features of the final legislation include:

• Transitioning to a first-inventor-to-file system, harmonizing the U.S. patent system with the rest of the world;
• Replacing the costly interference proceedings with derivation proceedings to determine the right to a patent;
• Updating and improving the inventor’s oath/declaration;
• Authorizing pre-issuance submissions by third parties prior to the grant of a patent to aid patent examiners and improve patent quality;
• Creation of a new, first-window post-grant review process to improve patent quality;
• Improving the current inter partes system by heightening the threshold for instituting a review, making it more difficult to use the process to harass a patent owner;
• Creation of a new supplemental examination proceeding to incentivize patent owners to commercialize their inventions despite potential flaws in the application process;
• Making failure to disclose the best mode no longer a basis for invalidity;
• Eliminating harassing false marking lawsuits, and addressing recent holdings that the current statute is unconstitutional; and
• Providing for a 15 percent increase in Patent and Trademark Office (PTO) fees that will take effect 10 days after enactment of the bill so the agency can have a quick infusion of desperately needed resources.

It is not a perfect bill. Most notably, it does not guarantee the PTO stable, future funding and does not require that the agency be able to utilize all of its user fee collections. By definition, however, a “perfect” bill is one that has no chance of ever becoming law in this country of diverse opinion and representational government.

Senators Tom Udall, Jeff Merkley and Tom Harkin have been extraordinary leaders of a hard-fought effort to reform the Senate rules. ACS, while not taking a position on specific proposals, worked to educate Senators about the constitutional history and the extent of current filibuster abuse. More than sixty organizations involved in an informal Fix the Senate Now coalition joined in supporting their proposals. It is therefore unsurprising that, with the defeat of the Udall, Merkley, and Harkin resolutions yesterday, the initial takeaway is that "reformers lost."

My take: Yesterday was a day of considerable progress in the latest round of a multi-round fight to make the Senate work.

Reformers won modest changes in the rules themselves by way of a deal negotiated between the leadership of both parties. They showed that they had nearly majority support for more substantial reforms. And they won an assurance that instead of Democrats playing by one rulebook when they are in the majority, only to have the Republicans subjugate them with different rules later, both parties will play by the same rules.

Reformers did not prevail on a key procedural issue. They knew that, as in past rules reform battles, those opposed to reform would filibuster the proposed changes. Reformers relied on judicial and Senate precedents affirming that, because a previous Senate can't constitutionally limit the powers of today's Senate, a majority is sufficient to break a filibuster - if it does so before the Senate implicitly ratifies the old rules by operating under them. This procedure, the "Constitutional Option," differed from the 2005 "Nuclear Option," in which the Republicans attempted to throw out the rules in the middle of a session, after the new Congress had already ratified them.

Senators Udall, Merkley and Harkin had put forward a proposal fair to both parties, one that they knew was unlikely to garner unanimous Democratic support. They had hoped to win the support of some Republicans for both the substantive proposals and the Constitutional Option, especially since so many Republicans had supported the far more radical Nuclear Option. In the end, even Republicans who had publicly called for reform refused to back their reform proposals.