SAN FRANCISCO—The U.S. Senate voted overwhelmingly Tuesday (March 8) in favor of a bill that would fundamentally change the U.S. patent system.
The Senate approved the America Invents Act, S. 23, by a vote of 95 to five. The U.S. House of Representatives must now pass a similar bill for the legislation to move forward. The Wall Street Journal reported Tuesday that the U.S. House Judiciary Committee plans to unveil and vote on its own bill in coming weeks.
Patent reform has been debated in Congress for six years. In 2007, the House passed a bill, but the Senate could not get agreement on legislation and the House bill died in 2008.
Sources said the House wanted the Senate to take the lead after that failure. The Senate failed to pass a bill in its last session. The House Judiciary committee conducted a public debate on patent reform earlier this year.
The electronics industry is divided over its support for the draft bill with all groups finding something they do not like in it. The Innovation Alliance, a lobbying group that includes Qualcomm and Tessera, opposed a last-minute change in S.23 that struck down a provision about how juries should be instructed in patent infringement cases.
"In particular, we oppose the removal of the 'gatekeeper' compromise on damages achieved in the last Congress, as well as the creation of the new 'transitional post-grant review proceeding' for business method patents," said Brian Pomper, executive director of the group.
"Although we remain neutral on S. 23 as passed, we recognize that great strides have been made, and we will continue to be a constructive voice in the ongoing debate, which we hope will result in the enactment of a bill the Innovation Alliance can support.”
Pomper and others praised another last minute change allowing the U.S. patent office to keep all the fees it generates. It must currently return to the general fund any fees raised above its set annual budget.
The Coalition for Patent Fairness, a group representing Silicon Valley giants including Cisco Systems Inc., Google Inc., Hewlett-Packard Co., Intel Corp., Apple Inc. and others, liked the changes about damages but disagreed with other issues in S.23 it would not mention.
"The Senate process improved S.23 by removing the damages, venue, and willfulness provisions before the final vote; however, we continue to have concerns about the bill and could not support its passage at this time," the group said in a statement.
The Patent Fairness group takes issues with provisions in the Senate bill about the so-called inter partes re-exam, a process for challenging a new patent at the patent office. The big companies frequently employ the process, but fear it would become useless under new time limits set in the draft bill.
Some opponents are vehemently against any patent reform despite the fact the U.S. has not updated its patent laws for about 60 years.
"I have been trying to preserve a patent system accessible, fair and enforceable for all since 1992," said Ronald J. Riley who leads a handful of anti-reform groups including the Professional Inventors Alliance.
"It has been clear for a long time that Obama is in the pockets of large transnational business interests whose profits are built on systematic and intentional theft of independent and small business inventions," said Riley
Some opponents of the bill are expected to continue work to strike a shift in the draft legislation from a first-to-file to a first-to-invent system.
S. 23 would move the U.S. patent system from a "first-to-invent" system to a "first-to-file" system used by other nations, meaning that the first to file a patent application on an invention would be awarded the patent, regardless of who first came with the system. The bill is opposed by many in technology, particular advocates of small businesses and entrepreneurs, who critics say would be put at a disadvantage under the first-to-file system.
"Every large entity got something they wanted in the bill, and small entities were completely ignored," said Steve Perlman, a serial entrepreneur who waited eight years to get a patent fundamental to his latest startup, the online gaming service OnLive.
Perlman praised the provision, added just last week, to end patent fee diversion as a way to help clean up a backlog of nearly 800,000 applications, but otherwise took issue with the bill.
The first-inventor-to-file provision will "crush small inventor and startups," said Perlman, who has 100 patents. "We're obliterating the U.S. startup economy," he said.
"No surprise that this bill made it through without a single inventor being allowed to testify to the Senate," he added.
Advocates of the bill say it will streamline a U.S. patent system that many believe is fundamentally broken.
Last week, S. 23 survived a vote on an amendment that would have removed the change to a first-to-file system, something advocates of the bill say would have fundamentally killed the reform. The Senate voted to table that amendment, sponsored by Diane Feinstein (D., Calif.), by a vote of 87-13.
"After six years of debate and discussion, the Senate has finally acted to make the first meaningful, comprehensive reforms to the nation's patent system in nearly 60 years," said Patrick Leahy (D., Vt.), sponsor of S. 23, in a statement circulated Tuesday. Leahy said the legislation would promote American innovation, create American jobs and grow America’s economy without costing taxpayers money.
"Having coordinated with the leaders in the House through this process, I hope that the House will look favorably on our work and adopt this measure so that it can be sent it to the President without delay and its improvements can take effect in order to encourage American innovation and promote American invention," Leahy said.