Update: The House voted 220-175 to approve the Patent Reform Act today.The Senate should vote on its version quite soon.
The Patent Reform Act looks on schedule for a vote in both the House and the Senate within the next couple of weeks, and companies are lining up to make their opinions heard. Google, for example, spelled out its position on Tuesday: it supports the legislation as a way to "defend against frivolous patent claims from parties gaming the system to forestall competition or reap windfall profits."
The problems are clear enough: patent infringement lawsuits have tripled in the last decade, patent applications are increasing faster than the number of patent examiners available to handle them, and the triple damages that can come with "willful" infringement scare many companies away from even examining the patents filed by competitors. Stir in the problem of "venue shopping" (*cough* Eastern District of Texas *cough*) and you have a recipe for some really bad patent borscht.
The Patent Reform Act has been in the works for years, and the bill is intended to fix many of these problems with the current system, which has not been substantially updated in almost 50 years. Over the last few months, the legislation has been substantially amended to address concerns from stakeholders and other members of Congress, and it now appears to be close to its final form. With votes expected soon, let's take a look at the major changes to the Act since introduction.
The Act will still switch the US from its current first-to-invent system to a first-to-file system like that used in the rest of the world. New in the bill now is a provision that will prevent this switch from taking place until Europe and Japan adopt a one-year grace period intended to prevent academics, small companies, and individual researchers from losing out on their inventions by being beaten to file by a large corporation.
Publication of all patents
"Submarine patents" could surface in the US long after they were first filed so long as inventors only applied for domestic patents. The Patent Reform Act will change this so that all patents will now need to be published, most within 18 months of first filing. An expected amendment could provide a bit more time for some filers to keep their work hidden from view, but the law should go a long way toward depth-charging submarine patents.
This was one area that concerned Google greatly. Under the current system, winners in some patent infringement suits could collect damages based on the entire value of the infringing invention, no matter how small a part the patent in question played. As Google puts it, "a windshield wiper found to infringe a patent should not spur a damage award based on the value of the entire car." The Patent Reform Act will allow judges to assign damages based on an "apportionment." Patent holders could collect damages only on the partial value of the infringing product.
It used to be that there were two main ways to challenge a patent: litigation or a USPTO reexamination. Both were time-consuming and costly. The new bill provides for "post-grant review" during which companies can file petitions and present evidence in order to have newly-granted patents struck down. Such petitions must be filed within one year of the patent issue date (a "second window" for doing this has been eliminated from the Act).
Tax planning patents
Believe it or not, some tax preparers are currently trying to claim business methods patents on their proprietary strategies for reducing a client's tax bill. The Act would eliminate all such patents.
Venue shopping would be curtailed under the Act by requiring most cases to be brought in the district where the plaintiff "resides" (or where a business is headquartered). This should help curtail the "Texas flood" of patent cases that have flowed into places like… well, Texas. Currently, patent holders can bring a suit against a company like Amazon or Google in any district where that company does business. For Internet companies, this can be any district in the US, and plaintiffs routinely seek out the most patent-friendly districts in which to file their cases.
We should know within a few weeks if these changes will find their way into US patent law, or whether the bill will be reworked once again to address concerns from patent-holding companies that the bill will lower the value of their IP.