House Passes Patent Reform Bill

Posted on June 27, 2011 04:14 by Stephen J. Lieb

On June 23, the House passed patent reform legislation that may significantly change the patent system in the United States.  By a vote of 304-117, the House passed the America Invents Act (H.R. 2149).  In March, the Senate passed its version of the bill. (S. 23)  Differences between the House and the Senate versions now need to be worked out before a final version can be sent to the White House.  President Obama has expressed support for the bill. 

Assuming the legislation is ultimately enacted close to its present form, it will change the patent system in the United States from “first to invent” to “first inventor to file.”  Currently, an inventor that can prove he or she was the first person to conceive of an invention and reduce it to practice is entitled to a patent, even if another person files an application for a patent to that invention first.  Disputes about priority of invention are now typically resolved by an interference proceeding in the Patent Office.  The legislation would do away with interference proceeding.  Instead, the first party to get its application on file is the one entitled to the invention regardless who was the first to invent.  This change harmonizes patent practice in the U.S. with most other countries.

Among other things the legislation also adds a post-grant review procedure, modifies judicial review of inter partes reexaminations, and adds a derivation proceeding where a party can challenge an earlier-filed patent application on the basis that the earlier-filed invention was derived from the party’s own work.

The House and Senate versions of the bill are very similar.  Perhaps the most significant issue to be worked out in conference is how fees collected by the PTO will be distributed.  Right now PTO fees go to the public fisc and the PTO’s budget is separately appropriated by Congress. By allowing the PTO to use the fees it collects, the Office will have more money available to hire examiners and speed the examination process.  Both versions of the bill provide a fund to hold the fees collected by the PTO for use in paying PTO operations expenses.  In the House version, in language added by a Manager’s Amendment, Congress must appropriate moneys from this fund to the PTO.  Under the Senate version, the PTO can use collected fees without prior appropriation but subject to congressional reporting and budgeting requirements.

 

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Long-time digital recorder rivals EchoStar and TiVo are set to resume their patent infringement suit.  EchoStar accused TiVo of infringing four patents including EchoStar’s U.S. Patent No. 6,208,804 (“the ‘804 Patent”).  The case was filed in 2005 but was stayed in 2006 when the U.S. Patent and Trademark Office granted TiVo's request to reexamine EchoStar’s asserted patents.  The reexamination of the ‘804 patent concluded in September 2010 and a reexamination certificate confirming the validity of all claims issued on January 18, 2011.  On February 8, 2011 the court let the case go forward after EchoStar agreed to drop its other allegations and assert infringement only of the ‘804 patent.

The ‘804 patent covers storage of multimedia programs on a disk storage device.  EchoStar alleges that TiVo's digital video recorders infringe one or more claims of the ‘804 patent.  The case is captioned EchoStar Technologies Corp. v. TiVo Inc., 5:05-CV-00081-DF-CMC (E.D. Tex.).

In another suit, filed in 2004 by TiVo against EchoStar, the Texas District Court awarded TiVo $200 million in damages and enjoined EchoStar from continued infringement.  That injunction instructed EchoStar to disable all of its existing set-top box recorders, which were found to use software that infringed TiVo's patent.  EchoStar instead installed new software that EchoStar alleged did not infringe.  The court did not agree and held EchoStar in contempt.  EchoStar appealed the contempt charge. The Federal Circuit heard the case en banc in November 2010.  An opinion from the Federal Circuit is expected soon.  This appeal is captioned TiVo Inc. v. EchoStar, 2009-1374 (Fed. Cir.).

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Tomorrow, February 3, the Senate Judiciary Committee is set to consider bill S. 23, the Patent Reform Act of 2011. The bill was recently (re)introduced by committee chairman Patrick Leahy (D-Vermont), along with Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa), Amy Klobuchar (D-Minn.), Jeff Sessions (R-Ala.), Jon Kyl (R-Ariz.), and Joe Lieberman (I-Conn.). It addresses a host of issues important to patent owners, practitioners, and potential accused infringers. Among other things, the bill would recognize the "first to file" a patent application as the inventor, abandoning current U.S. law that considers the "first to invent.". This would harmonize U.S. practice with other nations. The bill would also implement a new post-grant review process before the PTO's Board of Patent Appeals and Interferences. It would expand the scope of what can be considered prior art by limiting the one-year grace period now afforded under 35 U.S.C. 102(b). It would also clarify standards for awarding enhanced damages for willful infringement. A number of other significant changes are also included. Significant amendments to the bill are likely. And passage of patent reform this year is by no means certain. Congress has considered these same kinds of reforms in the past without effect. Indeed, this bill is almost identical to the Patent Reform Act of 2010, which was not taken up by the Senate in the last session. The hearing tomorrow begins at 10 a.m. EST and will be available by Webcast.

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