Patent Reform Act of 2009
Encyclopedia
The Patent Reform Act of 2009 (S. 515/S. 610/H.R. 1260) was a set of proposals introduced in the 111th United States Congress
for changes in United States
patent
law. Senators Orrin Hatch
and Patrick Leahy
introduced a Senate bill on March 3, 2009. Representative John Conyers
introduced the House version, H.R. 1260, the same day. Senator Jon Kyl
introduced another bill, S. 610, on March 17, 2009. The bill
s closely resemble previously proposed legislation
including the Patent Reform Act of 2007
and the Patent Reform Act of 2005
. On April 2, 2009, the Senate Judiciary Committee voted 15-4 to bring S.515 before the full Senate. The Patent Reform Act of 2009 represents the third consecutive congressional session to attempt the first overhaul of the U.S. patent system since 1952. The bill was succeeded in the following Congress by the America Invents Act
, which passed in the Senate on March 9, 2011.
allegations and limit damages. Specifically the bill:
procedures. In the bill, any party could challenge a patent's validity within 12 months of issuance. If a party - most likely the owner of a pre-existing patent - contested the patent within that time frame, the USPTO would have had to execute discovery procedures and arrive at a decision prior to the end of that 12 months. If the USPTO found in favor of the new patent holder, the petitioner would have been estopped from seeking reexamination or asserting invalidity as a defense in subsequent litigation.
" system to a "first-to-file
" system. The proposed legislation modified the prior art definitions of the patent law. Prior art that barred a patent would have included all public uses, sales, offers for sale, publications, and other disclosures available to the public as of the filing date, other than publications by the inventor within one year of filing (inventor's "grace period"), whether or not a third party also filed a patent application. Applicants that did not publish their inventions prior to filing would have received no grace period. The proceedings at the U.S. Patent Office for resolving priority contests among near-simultaneous inventors who both filed applications ("interference proceeding
s") would have been repealed, because priority would have been determined based on filing date. The legislation proposed creating a new administrative proceeding—called a "derivation" proceeding—that would ensure that the first person to file the application was actually a true inventor and that the application was not derived from another inventor.
Proponents of the bill suggested that technology companies were subject to an unprecedented wave of patent lawsuits, stifling innovation and creating an overburdened and lethargic patent system. Advocates for the legislation argued that it would create jobs, bolster innovation, streamline the patent system, reduce patent litigation, and keep the U.S. competitive globally.
Supporters also credited the bill with creating more specific criteria for calculating damages in royalty cases, while the opposition believed that criteria would reduce the award payments of patent violators, reducing the incentive for investors to fund new innovations in the U.S.
The Federal Judicial Statistics documented that the number of U.S. patent lawsuits as a percentage of total patents had not changed significantly over the past two decades and remained at approximately 1.5 percent of all patents issued with 93 trial patent cases annually in a system with 1.8 million active patents.
Opponents contend that a "first-to-file" system favors larger firms with well-established internal patenting procedures, patent committees and in-house attorneys over small business inventors. Opponents also submit that it will (i) cause loss of patent rights due to new prior art published after the invention date but before the filing date, (ii) weaken the one-year grace period so it cannot be relied on, compelling inventors to behave as if there were no grace period, (iii) replace "interferences" with costly derivation proceedings, (iv) create a “race to the Patent Office” with every new idea, increasing the number of patent applications filed, with the attendant costs in attorney fees and diversion of company personnel to patent application preparation, (v) increase examination backlogs at the USPTO, (vi) do nothing to reduce U.S. applicants’ costs of acquiring patents outside of the U.S., and (vii) decrease average patent quality.
Opponents also note that the partial harmonization that would be effected by the Patent Reform Act has very little economic value. First, the key issue in any patent validity or infringement inquiry is "claim construction," the procecess of determining what a patent covers. The process of claim construction is rather different under U.S. law than in any other jurisdiction, and as long as this difference remains, any benefit of harmonization is likely very small. Second, note opponents, unless the law is identical (for example, as it is among the 50 United States states), any inquiry must be resolved on a country-by-country basis. Opponents note that in Europe, where the European Patent Convention narrowly confines the differences between European national patent laws, it is still the case that one must get a separate opinion from an attorney in each European member state. Even small differences in law are sufficient to defeat any benefit of harmonization, and the Act merely proposes to go "halfway" toward harmonization, rather than adopting the law of another jurisdiction in its entirety.
The United States Government is currently negotiating with other nations at the World Intellectual Property Organization to gain a one-year grace period for disclosure of patentable materials equal to that in the U.S. As a trade-off to gain this benefit, the U.S. proposes to shift to a first-to-file system. If Congress unilaterally makes this concession, the U.S. is unlikely to secure the grace period provision from other countries.
Opponents note that the bill would replace about 100 interference disputes under today's law with some unknown number of "derivation" proceedings when two inventors file applications at about the same time, and an unknown number of derivation showings that an applicant would have to make to remove prior art. Opponents note that the bill's proponents have not even acknowledged these costs, let alone estimated them.
111th United States Congress
The One Hundred Eleventh United States Congress was the meeting of the legislative branch of the United States federal government from January 3, 2009 until January 3, 2011. It began during the last two weeks of the George W. Bush administration, with the remainder spanning the first two years of...
for changes in United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
law. Senators Orrin Hatch
Orrin Hatch
Orrin Grant Hatch is the senior United States Senator for Utah and is a member of the Republican Party. Hatch served as the chairman or ranking member of the Senate Judiciary Committee from 1993 to 2005...
and Patrick Leahy
Patrick Leahy
Patrick Joseph Leahy is the senior United States Senator from Vermont and member of the Democratic Party. He is the first and only elected Democratic United States Senator in Vermont's history. He is the chairman of the Senate Judiciary Committee. Leahy is the second most senior U.S. Senator,...
introduced a Senate bill on March 3, 2009. Representative John Conyers
John Conyers
John Conyers, Jr. is the U.S. Representative for , serving since 1965 . He is a member of the Democratic Party...
introduced the House version, H.R. 1260, the same day. Senator Jon Kyl
Jon Kyl
Jon Llewellyn Kyl is the junior U.S. Senator from Arizona and the Senate Minority Whip, the second-highest position in the Republican Senate leadership. In 2010 he was recognized by Time magazine as one of the 100 most influential people in the world for his persuasive role in the Senate.The son...
introduced another bill, S. 610, on March 17, 2009. The bill
Bill (proposed law)
A bill is a proposed law under consideration by a legislature. A bill does not become law until it is passed by the legislature and, in most cases, approved by the executive. Once a bill has been enacted into law, it is called an act or a statute....
s closely resemble previously proposed legislation
Legislation
Legislation is law which has been promulgated by a legislature or other governing body, or the process of making it...
including the Patent Reform Act of 2007
Patent Reform Act of 2007
The Patent Reform Act of 2007 is a proposal introduced in the 110th United States Congress for changes in United States patent law. Democratic Congressman Howard Berman introduced the House of Representatives bill on April 18, 2007. Democratic Party Senator Patrick Leahy introduced the Senate bill...
and the Patent Reform Act of 2005
Patent Reform Act of 2005
The Patent Reform Act of 2005 was United States patent legislation proposed in the 109th United States Congress. Texas Republican Congressman Lamar S. Smith introduced the Act on 8 June 2005. Smith called the Act "the most comprehensive change to U.S...
. On April 2, 2009, the Senate Judiciary Committee voted 15-4 to bring S.515 before the full Senate. The Patent Reform Act of 2009 represents the third consecutive congressional session to attempt the first overhaul of the U.S. patent system since 1952. The bill was succeeded in the following Congress by the America Invents Act
America Invents Act
The Leahy-Smith America Invents Act is a United States federal statute that was passed by Congress and was signed into law by President Barack Obama on September 16, 2011. The law represents the most significant change to the U.S...
, which passed in the Senate on March 9, 2011.
Proposed changes
The Patent Reform Act of 2009 was similar to the acts of 2005 and 2007, but controversial sections were removed, such as:- Applicant Quality Submissions: Proposed that patent applicants must find out for themselves if a patent already exists prior to filing.
- Inequitable Conduct: Would eliminate the need for patent filers to act in "good faith" in order to enforce their patents.
- USPTO Authority: Granted the United States Patent & Trademark Office substantial rule-making authority.
Patent infringement litigation
The Patent Reform Act of 2009 proposed to give defendants additional ways to combat infringementInfringement
Infringement, when used alone, has several possible meanings in the English language.In a legal context, an infringement refers to the violation of a law or a right. This includes intellectual property infringements such as:*Copyright infringement...
allegations and limit damages. Specifically the bill:
- Requires infringement suits be brought only in states where the defendant has a physical place of business that constitutes a "substantial portion" of its operations.
- Broadens the use and expediency of appeals.
- Creates stricter rules and criteria for "willful infringement". The patent owner would be required to present compelling evidence that the infringer acted with "objective recklessness", intentionally copied a patented invention with knowledge it was patented, and that the patentee gave the infringer written notice of their violations in a manner that gives "objectively reasonable apprehension of a suit."
- Proposes stricter rules about the criteria for "reasonable royaltyRoyaltiesRoyalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...
" and creates a set criteria for measuring damages - Allows defendants to win with a "good faithGood faithIn philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...
" defense to willful infringement, if they believed in good faith that the patentPatentA patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
was invalidInvalidInvalid may refer to:* Patient, a sick person* A person with a disability* .invalid, a top-level Internet domain not intended for real useAs the opposite of valid:* Validity, in logic, true premises cannot lead to a false conclusion...
, unenforceable or not infringed when violating the patent.
Post-grant review
The Patent Reform Act of 2009 suggested revisions to reexaminationReexamination
In United States patent law, a reexamination is a process whereby a third party or inventor can have a patent reexamined by a patent examiner to verify that the subject matter it claims is patentable...
procedures. In the bill, any party could challenge a patent's validity within 12 months of issuance. If a party - most likely the owner of a pre-existing patent - contested the patent within that time frame, the USPTO would have had to execute discovery procedures and arrive at a decision prior to the end of that 12 months. If the USPTO found in favor of the new patent holder, the petitioner would have been estopped from seeking reexamination or asserting invalidity as a defense in subsequent litigation.
First-to-file
All versions of the Patent Reform Act of 2009 that were proposed would have switched U.S. patent priority from the existing "first-to-inventFirst to file and first to invent
First to file and first to invent are legal concepts that define who has the right to the grant of a patent for an invention. The first-to-file system is used in all countries except for the United States, which will switch to a first-to-file system on March 16, 2013 after the enactment of the...
" system to a "first-to-file
First to file and first to invent
First to file and first to invent are legal concepts that define who has the right to the grant of a patent for an invention. The first-to-file system is used in all countries except for the United States, which will switch to a first-to-file system on March 16, 2013 after the enactment of the...
" system. The proposed legislation modified the prior art definitions of the patent law. Prior art that barred a patent would have included all public uses, sales, offers for sale, publications, and other disclosures available to the public as of the filing date, other than publications by the inventor within one year of filing (inventor's "grace period"), whether or not a third party also filed a patent application. Applicants that did not publish their inventions prior to filing would have received no grace period. The proceedings at the U.S. Patent Office for resolving priority contests among near-simultaneous inventors who both filed applications ("interference proceeding
Interference proceeding
An interference proceeding, also known as priority contest, is an inter partes proceeding to determine the priority issues of multiple patent applications. It is a unique procedure in the patent law of the United States. Unlike in most other countries which have adopted the first-to-file system,...
s") would have been repealed, because priority would have been determined based on filing date. The legislation proposed creating a new administrative proceeding—called a "derivation" proceeding—that would ensure that the first person to file the application was actually a true inventor and that the application was not derived from another inventor.
Additional proposed changes
The Patent Reform Act of 2009 proposed additional changes to patent law, including:- Revision to prior art definition to include inventions that were "otherwise available to the public."
- Procedures to allow third parties to submit prior art while applications are pending.
- Permission to allow a company to file an application on behalf of an inventor when there is an obligation to assign-easing the requirement of having a signed declaration.
- Permission to use evidence of non-exclusive licenses to set royalties.
- Elimination of interferences (with the provision that derivation proceedings would be available to assess whether the invention was derived from another inventor).
- Expanded inter partes reexamination.
- Codification of the 2007 In re Seagate Technology, LLC decision's standard for willful infringement.
- Permission to use evidence of prior public use or sale as permissible grounds for reexamination.
- Limitation of venue selection for a patent plaintiff to that related to the defendant's principal place of business, place of incorporation, or where the defendant has committed substantial acts of infringement and has a regular and established physical facility that the defendant controls and that constitutes a substantial portion of the operations of the defendant.
- Assignment of jurisdiction over interlocutory claim construction appeals to the Federal Circuit.
Advocacy for and against
Those who opposed the bill argued that the proposed revisions favored patent violators over inventors. SEC public records indicate that the seven corporations who lead the Coalition for Patent Fairness, which supported the bill from 1996-2006, paid about half of all patent related awards during the same period. The opposition claims that narrowing the definition of patent infringement based on location and administration, while reducing the consequences of violations, will hinder U.S. innovation, a patent owner's ability to enforce rights, and global competitiveness. Also argued is that patent reform should remain in the hands of the court system.Proponents of the bill suggested that technology companies were subject to an unprecedented wave of patent lawsuits, stifling innovation and creating an overburdened and lethargic patent system. Advocates for the legislation argued that it would create jobs, bolster innovation, streamline the patent system, reduce patent litigation, and keep the U.S. competitive globally.
Supporters also credited the bill with creating more specific criteria for calculating damages in royalty cases, while the opposition believed that criteria would reduce the award payments of patent violators, reducing the incentive for investors to fund new innovations in the U.S.
Number of patent disputes
Organizations supporting the bill claimed that the number of patent lawsuits increased dramatically in the years leading up to the legislation's proposal.The Federal Judicial Statistics documented that the number of U.S. patent lawsuits as a percentage of total patents had not changed significantly over the past two decades and remained at approximately 1.5 percent of all patents issued with 93 trial patent cases annually in a system with 1.8 million active patents.
First-to-file
Proponents of this change submitted that it would have simplified the application process and bring U.S. patent law into better harmony with the patent law of other countries, most of which operate on the "first-to-file" system. Proponents also claimed that it would eliminate costly Interference proceedings at the USPTO and reduce U.S. applicants’ costs in seeking patent rights outside of the United States.Opponents contend that a "first-to-file" system favors larger firms with well-established internal patenting procedures, patent committees and in-house attorneys over small business inventors. Opponents also submit that it will (i) cause loss of patent rights due to new prior art published after the invention date but before the filing date, (ii) weaken the one-year grace period so it cannot be relied on, compelling inventors to behave as if there were no grace period, (iii) replace "interferences" with costly derivation proceedings, (iv) create a “race to the Patent Office” with every new idea, increasing the number of patent applications filed, with the attendant costs in attorney fees and diversion of company personnel to patent application preparation, (v) increase examination backlogs at the USPTO, (vi) do nothing to reduce U.S. applicants’ costs of acquiring patents outside of the U.S., and (vii) decrease average patent quality.
Opponents also note that the partial harmonization that would be effected by the Patent Reform Act has very little economic value. First, the key issue in any patent validity or infringement inquiry is "claim construction," the procecess of determining what a patent covers. The process of claim construction is rather different under U.S. law than in any other jurisdiction, and as long as this difference remains, any benefit of harmonization is likely very small. Second, note opponents, unless the law is identical (for example, as it is among the 50 United States states), any inquiry must be resolved on a country-by-country basis. Opponents note that in Europe, where the European Patent Convention narrowly confines the differences between European national patent laws, it is still the case that one must get a separate opinion from an attorney in each European member state. Even small differences in law are sufficient to defeat any benefit of harmonization, and the Act merely proposes to go "halfway" toward harmonization, rather than adopting the law of another jurisdiction in its entirety.
The United States Government is currently negotiating with other nations at the World Intellectual Property Organization to gain a one-year grace period for disclosure of patentable materials equal to that in the U.S. As a trade-off to gain this benefit, the U.S. proposes to shift to a first-to-file system. If Congress unilaterally makes this concession, the U.S. is unlikely to secure the grace period provision from other countries.
Opponents note that the bill would replace about 100 interference disputes under today's law with some unknown number of "derivation" proceedings when two inventors file applications at about the same time, and an unknown number of derivation showings that an applicant would have to make to remove prior art. Opponents note that the bill's proponents have not even acknowledged these costs, let alone estimated them.
Damages
Generally, big technology companies like HP, Cisco, and Microsoft are pushing to cut the number of infringement lawsuits against them and the amount of damages they pay, while many other industries and smaller inventors are more interested in protecting their patents through greater compensation for infringement.Post grant procedures
Advocates argue that allowing a challenge of a patent in the first year after the issuance or reissuance of a patent will improve patent quality by allowing third party inputs. Opponents note that the existing inter partes process now takes an average of 5 years and that the legislation does not extend the lost life of a patent that is proven valid, thereby reducing the incentive to invent.Organizations against
- The Union of U.S. Patent Examiners
- Institute of Electrical and Electronics EngineersInstitute of Electrical and Electronics EngineersThe Institute of Electrical and Electronics Engineers is a non-profit professional association headquartered in New York City that is dedicated to advancing technological innovation and excellence...
- The National Small Business Association
- The Small Business Coalition on Patent Legislation
- Patent Office Professional AssociationPatent Office Professional AssociationThe Patent Office Professional Association is a professional union of United States patent examiners. It was formed in 1964....
- The Innovation Alliance
- The Professional Inventors Alliance
- The TPL Group
- The American Bar Association's, Intellectual Property Committee
- The National Venture Capital Association
- The AFL-CIO
- General Electric
- Procter & Gamble
- Johnson & Johnson
- Texas Instruments
- American Innovators for Patent ReformAmerican Innovators for Patent ReformAmerican Innovators for Patent Reform , a non-profit organization based in New York City, NY, is a coalition of inventors, patent owners, researchers, engineers, entrepreneurs, corporate executives, patent agents and attorneys, and others involved in creating or protecting innovation and advocating...
Organizations for
- Coalition for Patent FairnessCoalition for Patent FairnessThe Coalition for Patent Fairness is an ad hoc organization of companies who are lobbying for reforms to the US patent system. In general they believe that the United States Patent and Trademark Office is too prone to grant overly broad patents...
(CPF) - Business Software AllianceBusiness Software AllianceThe Business Software Alliance is a trade group established in 1988 and representing a number of the world's largest software makers and is a member of the International Intellectual Property Alliance...
- The Software & Information Industry Association (SIIA)
- The Coalition for 21st Century Patent Reform