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Lawmakers Question Patent Reform Bill

New legislation in the U.S. House of Representatives to overhaul the nation's patent system could face an uphill battle, with some lawmakers questioning whether the bill would hurt U.S. innovation.

The House version of the America Invents Act, introduced by Representative Lamar Smith Wednesday, would allow outside parties to submit evidence of prior inventions as the U.S. Patent and Trademark Office considers a patent application.

The bill, similar to legislation that passed in the Senate in March, would also create a new post-grant review process, and it would give USPTO more funding in an effort to improve patent quality and cut the current backlog of 700,000 patent applications.

Congress' last major patent-system overhaul was nearly 60 years ago, and it has been working for eight years to pass patent reform legislation, said Smith, a Texas Republican and chairman of the House Judiciary Committee.

The patent bill would discourage frivolous patent lawsuits and improve patent examinations at the USPTO, Smith said at a subcommittee hearing Wednesday.

"We cannot protect the technologies of today with the tools of the past," he said. "Patent quality will improve on the front end, which will reduce litigation on the back end."

Several large technology vendors, including Intel, Microsoft and Apple, have been pushing for patent reform for years, spurred by several multimillion-dollar patent infringement awards from U.S. courts in recent years. Several large tech companies have argued that it's too easy for companies holding questionable patents to collect large damage awards.

But some committee members questioned provisions in the bill. Lawmakers will have to compromise to pass legislation, but there are "legitimate, substantive differences" about several provisions, said Representative Mel Watt, a North Carolina Democrat.

Watt questioned whether the bill's proposed change, which would award a patent to the first person to file an application instead of the first person to create the invention, would hurt small inventors.

The bill would also expand so-called prior user rights, the right of an inventor or company that's been using an invention without patenting it to continue using it after another company patents it.

An expansion of prior user rights would discourage inventors from sharing their knowledge and reward those who "don't contribute to the progress of science," said Representative Jim Sensenbrenner, a Wisconsin Republican.

The expansion of prior user rights would apply to companies outside the U.S. and would reward the theft of U.S. intellectual property, Sensenbrenner added. "How does that help America compete?" he said. "The prior user rights expansion is going to end up giving China a get-out-of-jail-free card."

USPTO Director David Kappos disagreed, saying the lack of prior user rights in the U.S. hurts manufacturers that set up plants inside the country. Many other countries have prior user rights, giving U.S. manufacturers incentives to open plants in those countries, he said.

"The message that we're sending to our manufacturers ... is that, 'you are in jeopardy, even if you set up a manufacturing plant in this country and have it running for several years, of being attacked with a patent filed much later,'" he said.

Mark Chandler, senior vice president and general counsel at Cisco Systems, also called on the committee to expand prior user rights if it moves to a first-to-file patent system, like most other nations have. Several industry groups support prior user rights, he said.

It's not practical to file a patent application for every change a company makes to a product, but in a first-to-file system, competitors may try to beat the inventing company to the patent office, he said.

"The alternative for us is to rush to massively increase our patent filings, not to exclude competitors from copying our products, but to protect ourselves against those who would use our own inventions against us in court," Chandler said. "That would be a totally unproductive distraction."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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