CQ WEEKLY – IN FOCUS
Sept. 10, 2011 – 11:43 a.m.
Jobs Issue Spurs Patent Law Overhaul
By Keith Perine, CQ Staff
For years, a broad revamp of the patent system languished in that special legislative purgatory reserved for hugely complex and politically fraught subjects such as the tax code or immigration policy — problems that lawmakers talk about addressing but seldom do.
That changed last week when Congress passed a bill that makes the broadest changes since the Truman administration to the laws and methods designed to protect the rights of inventors and spur innovation.
The Senate voted overwhelmingly to clear a House-passed measure, on the same day President Obama spoke to a joint session about ways to put more people back to work.
It helped that Obama, Senate Democrats and House Republicans who supported the patent bill were able to tout it as part of their respective job creation strategies. That gave it a bipartisan utility and momentum that’s hard to muster these days on Capitol Hill.
Proponents had tried and failed for three successive Congresses to pass the bill. This time, they emphasized the idea that it would create jobs by streamlining patent office procedures and spurring private-sector investment.
“We have before us a consensus bill that will facilitate invention, innovation and job creation today,” said Senate Judiciary Chairman
That’s arguable. But in the current economic climate, with a persistently high unemployment rate, that was enough for substantial majorities in the House and Senate to swallow whatever misgivings they might have about the substance of the bill. The final 89-9 vote on Sept. 8 also allowed Congress to project a degree of harmony to a public that has seen nothing but discord in recent years.
No Direct Funding
The patent overhaul is the product of large and small compromises struck between Democrats and Republicans in the House and Senate. Ironically, the biggest compromise is the one that could end up blunting its economic impact.
Every year, the patent office generates millions more dollars in fees from patent applicants than it gets back in congressional appropriations. The authors of the patent bill wanted to change that, to help the overwhelmed agency wade through hundreds of thousands of backlogged applications, upgrade computer systems and cut down on staff turnover.
Leahy and his House counterpart, Texas Republican
Under an agreement Smith reached with his fellow chairmen, the patent office revenue would be put into a reserve fund, which Rogers pledged to allocate to the patent office. Senate appropriators have not made the same promise, however, and such pledges don’t have the force of law.
Jobs Issue Spurs Patent Law Overhaul
Critics say that appropriators have siphoned off money from the patent office’s revenues in the past, even after pledging not to do so.
If the patent office ends up without the much-needed boost in its budget, it won’t be able to solve its current problems, much less implement its new duties smoothly.
“There is nothing that will make sure that the money is there,” said Oklahoma Republican Sen.
Indeed, the new law will saddle the already overburdened patent office with several new responsibilities. The legislation creates new procedures for reviewing and challenging the validity of existing patents, in addition to existing procedures, that are intended to cut down on litigation.
A Concerted Effort
The jobs messaging was only part of the reason for the rare legislative success. Leahy and Smith joined hands at the start of the 112th Congress this year and decided to work together closely to finish the bill.
One of the main reasons the measure had stalled in the past was disagreement over how to calculate damage awards in patent infringement lawsuits. That sank the bill in the 111th Congress; after Leahy rewrote the provisions to satisfy a bevy of private-sector stakeholders, he lost support from big technology companies that had spurred the legislation in the first place by demanding that lawmakers do something about runaway awards.
This year, Leahy and Smith simply dropped the damages language from the legislation. They fashioned compromises on other parts, such as provisions creating a new process for reviewing patents. Many of the technology, pharmaceutical and manufacturing companies lobbying on the bill then decided either to support it or stay neutral.
Leahy moved first; his bill sailed through the Senate in March. Smith then introduced a similar measure in the House, but had a rougher time in that chamber. The revenue issue and lawmakers’ concerns with other provisions nearly derailed his measure. But GOP leaders rallied to push the bill through as part of their overall jobs plan.
After that, Senate Democrats and the White House started backing the House bill, even though it didn’t guarantee patent office funding and contained contentious language on the filing deadline for some patent extensions.
Down to the Wire
Leahy’s message to his fellow senators last week was simple: The bill was necessary for job growth, and amending the House version rather than simply clearing it would mean killing the whole thing. Leahy said Boehner assured him that the House would not accept the Senate approach on patent office funding. If the Senate changed the bill at all, Leahy pessimistically predicted, the House would be unlikely to take it up again this year.
Not all senators bought into that narrative. Leahy and his allies, including Arizona Republican
Jobs Issue Spurs Patent Law Overhaul
Besides changing review processes within the patent office, which proponents are hoping will weed out bad patents and cut down on litigation, the legislation shifts the basis for awarding patents from first-to-invent to first-to-file.
The change harmonizes the U.S. patent system with those of other industrialized countries, but is likely to spark new litigation. Critics argue that first-to-file runs counter to the constitutional guarantee of protecting inventors’ rights.
Big tech companies, pharmaceutical firms and manufacturers applauded the passage of the legislation. But the bill has its critics, including independent inventors, who are worried that the change to first-to-file will disadvantage them against big corporations that can flood the patent office with applications.
Under the old system, the patent office resolved disputes between applicants who wanted to patent the same invention by trying to figure out which one of them was the first to invent it. Now, the agency will base its decision on which contestant was the first to file an application.
The authors of the bill included safeguards aimed at making sure that the applications are authentic — that the applicant actually did the inventing.
Still, one thing was indisputable: The legislation represented what might be the only time the deeply partisan 112th Congress joined together to pass a major piece of legislation other than budget and appropriations bills. In his speech last week, Obama praised lawmakers for taking “the kind of action we need” to create jobs.
If the Senate had failed to clear the bill, lawmakers would only have accentuated their inability to get anything done.
So regardless of whether the patent legislation helps to create jobs, it might help lawmakers hang on to theirs.
Joanna Anderson contributed to this story.
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