By Donald Zuhn —

After six years of committee debate, all indications are that the Senate will finally take up patent reform legislation by mid-March (see "Patent Reform Legislation Moves to Senate Floor").  Earlier this month, we reported on the reaction of several groups to the passage of the Senate bill (S. 23) out of committee (see "Reaction to Senate Patent Reform Bill (S. 23)").  Since then, other groups have joined the discussion.

On Wednesday, nine organizations representing the small business, startup, independent inventor, and technical employee segments of the innovation community sent a letter to each member of the Senate stating that "this sector of the innovation community does NOT support S. 23, the Patent Reform Act, in its current form" (emphasis in original).  The organizations signing onto the letter included the American Innovators for Patent Reform, CONNECT, IEEE-USA, IP Advocate, National Association of Patent Practitioners, National Congress of Inventor Organizations, National Small Business Association, Professional Inventors Alliance USA, and U.S. Business and Industry Council.  In their letter, the groups contend that "[t]he 'first inventor to file' section of the bill has unique adverse effects on small business, startup entrepreneurs, independent inventors, and U.S.-based technical professionals," as it "disrupts the unique American start-up ecosystem that has led to America's standing as the global innovation leader."  The letter argues that "[b]ecause S. 23 removes the option to delay patent expenses, the bill advantages established companies, and disadvantages start-ups that must seek and carefully shepherd their capital," adding that "S. 23 changes the rules to favor global companies, against the start-up business model that utilizes the American grace period."  The groups also have "serious concerns" with other provisions, asserting that "[i]ncreased filings driven by S. 23's 'use it or lose it' grace period rules and by post-grant review will further burden PTO at a time when PTO's backlogs are unacceptable."  The letter would prefer that Congress "instead pass a streamlined, targeted bill that focuses only on long-term PTO funding."  The groups conclude that "[c]hanging U.S. patent law to be like the less-successful patent systems of Europe and Asia cannot be regarded as positive 'reform.'"

Last week, the Coalition for Patent Fairness issued a short press release on Congressional patent reform efforts, "applaud[ing] Senate Majority Leader [Harry] Reid [D-NV], Assistant Majority Leader [Richard] Durbin [D-IL], Senator [Charles] Schumer [D-NY] and Senator [Patty] Murray [D-WA] for laying out an aggressive agenda to keep the United States competitive in the global market."  The group noted that while it was "encouraged by the changes made to the bill reported out of the Senate Judiciary Committee from earlier versions, we continue to have concerns with the current Senate bill," stating that it "believes that additional changes need to be made to the bill to reflect the concerns of America's leading technology innovators and job creators as they continue to driving the economic recovery."  Coalition for Patent Fairness members include Adobe, Apple, Autodesk, Cisco, Dell, Google, Intel, Intuit, Micron, Oracle, RIM, SAP, Symantec, and Verizon.

On February 15, the President of the National Small Business Association (NSBA), Todd McCracken, sent a letter to Senate Majority Leader Harry Reid, "to express the objection of America's entrepreneurs and small-business innovators to key provisions of S. 23, the Patent Reform Act of 2011."  Noting that "[s]mall patenting companies produce five times as many patents per revenue dollar as large patenting companies and 20 times as many as universities," Mr. McCracken argues that "[i]t is imperative that any effort to modernize and improve America's patent system carefully consider the effect on the nation’s small businesses."  The letter contends that "the bill's provisions on post-grant patent challenges, and its effective elimination of the American grace period, would put small-business patentees at greater risk than the current system and would result in a U.S. patent system strongly titled in favor of large incumbent firms at the expense of America's small-business innovators," noting that "[t]he small-business innovators of NSBA continue to be extremely troubled by the complete lack of consideration of how the radical transformation to a first-to-file invention priority system — which effectively guts the American grace period — would affect small, innovative firms and independent inventors."  Contrary to the bill's supporters, Mr. McCracken argues that "S. 23 does not promote harmonization," but rather would produce "a one-sided 'harmonization' that will only benefit foreign firms and penalize small, innovative American firms."  He states that "[i]t is clear that the weak or (entirely absent) grace periods used in the rest of the world's first-to-file patent system throttles small-business innovation and job creation."  If a first-to-file system is implemented in the U.S., the letter predicts that "the pressure to establish filing date priority will require applicants to file more frequently, at every stage of development, without perfecting their inventions," and "[t]he costs of increased filings — more frequent invention reviews, earlier and more frequent hiring of outside patent attorneys, and new patenting costs — will be felt most strongly by small businesses."

Earlier this month, a coalition of 23 conservatives sent a letter to House Speaker John Boehner (R-OH), Senate Majority Leader Reid, Senate Minority Leader Mitch McConnell (R-NY), and House Minority Leader Nancy Pelosi (D-CA), asking them to "prevent the passage in this Congress of patent legislation that hampers U.S. competitiveness and threatens American jobs by undermining property rights."  Among the letter's signatories are Phyllis Schlafly of the Eagle Forum and former U.S. Attorney General Edwin Meese.  The group contends that "so-called 'patent reform' legislation . . . would cripple most of America's smaller inventors, research consortia and universities, and even the larger industrial firms that depend on patents."  The letter contends that "some in Congress — again following the lead of several large multinational companies — want to make it easier to infringe patents, easier to challenge patent rights in administrative proceedings and in the courts, and more expensive for inventors to defend their patents."  As for harmonization, the group explains that:

[S]ome of these so-called reforms have been proposed in the name of "harmonization" with foreign law.  Frankly, this notion is misguided.  Our competitors should have to “harmonize up” to our superior intellectual property regime, rather than our having to weaken our patent system and “harmonize down” to their levels.  Does the United States really need to be "harmonized" with a calcified European system or the impossibly unfair Japanese system, not to mention the Chinese system, where intellectual property theft is a way of life?  Such "patent reform" will lead to the plundering of American intellectual property and the loss of American factories and jobs to overseas competitors.

The letter concludes that "[t]his phony, market-distorting 'patent reform' is bad for America," and asks the Congressional leaders to "stop any such legislation from reaching the floor and protect the property rights enshrined in the Constitution."  While it appears that the Senate bill will reach the floor sometime in the next two weeks, the House continues to debate such legislation in committee.

For additional information on this topic, please see:

• "Patent Reform Legislation Moves to Senate Floor," February 22, 2011
• "Reaction to Senate Patent Reform Bill (S. 23)," February 9, 2011
• "Judiciary Committee Votes on Patent Reform Bill," February 3, 2011
• "Here We Go Again," January 30, 2011