Senate Passes S. 23

By Kevin E. Noonan --

The Senate voted today in favor of S. 23, the "America Invents Act," aka the Patent Reform Act of 2011.  The vote was 95-5, with Senators Barbara Boxer (D-CA), Maria Cantwell (D-WA), Mike Crapo (R-ID), John Ensign (R-NV), and James Risch (R-ID) voting against.

The version of the bill that passed the Senate is a far cry from the many earlier versions of the bill, from this and previous Congresses, and contains provisions that may affect the following aspects of patent law:

• First inventor to file (Sec. 2)
• Inventor's oath and declaration (Sec. 3)
• Defenses; evidentiary requirements (Sec. 4)
• Post-grant review (Sec. 5)
• Establishment of Patent Trial and Appeal Board (Sec. 6)
• Pre-issue third party submissions (Sec. 7)
• Venue (Sec. 8)
• PTO fee-setting authority (Sec. 9)
• Supplemental examination (Sec. 10)
• Residency of Federal Circuit Judges (Sec. 11)
• Creation of Micro-entities (Sec. 12)
• Changes in funding agreement percentages (Sec. 13)
• Tax strategies deemed to be in the prior art (Sec. 14)
• Best mode requirement (Sec. 15)
• Transitional program for Covered Business Method Patents (Sec. 18)

(We say "may affect" as the Library of Congress THOMAS website has not yet posted the text of the bill that the Senate passed today.)

The business method patents provisions, sponsored by Senator Schumer (D-NY), provide an administrative procedure for challenging business method patents:

SEC. 18. TRANSITIONAL PROGRAM FOR COVERED BUSINESS-METHOD PATENTS.

(a) References.--Except as otherwise expressly provided, wherever in this section language is expressed in terms of a section or chapter, the reference shall be considered to be made to that section or chapter in title 35, United States Code.

(b) Transitional Program.--

(1) ESTABLISHMENT.--Not later than 1 year after the date of enactment of this Act, the Director shall issue regulations establishing and implementing a transitional post-grant review proceeding for review of the validity of covered business-method patents. The transitional proceeding implemented pursuant to this subsection shall be regarded as, and shall employ the standards and procedures of, a post-grant review under chapter 32, subject to the following exceptions and qualifications:

(A) Section 321(c) and subsections (e)(2), (f), and (g) of section 325 shall not apply to a transitional proceeding.

(B) A person may not file a petition for a transitional proceeding with respect to a covered business-method patent unless the person or his real party in interest has been sued for infringement of the patent or has been charged with infringement under that patent.

(C) A petitioner in a transitional proceeding who challenges the validity of 1 or more claims in a covered business-method patent on a ground raised under section 102 or 103 as in effect on the day prior to the date of enactment of this Act may support such ground only on the basis of--

(i) prior art that is described by section 102(a) (as in effect on the day prior to the date of enactment of this Act); or

(ii) prior art that--

(I) discloses the invention more than 1 year prior to the date of the application for patent in the United States; and

(II) would be described by section 102(a) (as in effect on the day prior to the date of enactment of this Act) if the disclosure had been made by another before the invention thereof by the applicant for patent.

(D) The petitioner in a transitional proceeding, or his real party in interest, may not assert either in a civil action arising in whole or in part under section 1338 of title 28, United States Code, or in a proceeding before the International Trade Commission that a claim in a patent is invalid on any ground that the petitioner raised during a transitional proceeding that resulted in a final written decision.

(E) The Director may institute a transitional proceeding only for a patent that is a covered business-method patent.

(2) EFFECTIVE DATE.--The regulations issued pursuant to paragraph (1) shall take effect on the date that is 1 year after the date of enactment of this Act and shall apply to all covered business-method patents issued before, on, or after such date of enactment, except that the regulations shall not apply to a patent described in the first sentence of section 5(f)(2) of this Act during the period that a petition for post-grant review of that patent would satisfy the requirements of section 321(c).

(3) SUNSET.--

(A) IN GENERAL.--This subsection, and the regulations issued pursuant to this subsection, are repealed effective on the date that is 4 years after the date that the regulations issued pursuant to paragraph (1) take effect.

(B) APPLICABILITY.--Notwithstanding subparagraph (A), this subsection and the regulations implemented pursuant to this subsection shall continue to apply to any petition for a transitional proceeding that is filed prior to the date that this subsection is repealed pursuant to subparagraph (A).

(c) Request for Stay.--

(1) IN GENERAL.--If a party seeks a stay of a civil action alleging infringement of a patent under section 281 in relation to a transitional proceeding for that patent, the court shall decide whether to enter a stay based on--

(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;

(B) whether discovery is complete and whether a trial date has been set;

(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and

(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

(2) REVIEW.--A party may take an immediate interlocutory appeal from a district court's decision under paragraph (1). The United States Court of Appeals for the Federal Circuit shall review the district court's decision to ensure consistent application of established precedent.

(d) Definition.--For purposes of this section, the term ``covered business method patent'' means a patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except that the term shall not include patents for technological inventions. Solely for the purpose of implementing the transitional proceeding authorized by this subsection, the Director shall prescribe regulations for determining whether a patent is for a technological invention.

(e) Rule of Construction.--Nothing in this section shall be construed as amending or interpreting categories of patent-eligible subject matter set forth under section 101.

Subsection (e) is reportedly intended to preclude courts from ascribing to Congress any intention to put its imprimatur on business method patents as patent-eligible subject matter (without deciding that such patents do not encompass patent-ineligible subject matter).

The House of Representatives must next consider patent reform, either by adopting (in whole or in part) S. 23 or by proposing its own version of patent reform.  Readers are reminded that the bill passed by the House in September 2007 looked quite different from the bill the Senate passed today (see "Patent 'Reform' Bill Passes House of Representatives").

Comments

[Patrick P. Zaretski]

Yet another example of the socialist Europeanization of American law, all in the name of "international comity." I am grievously disappointed in the Senate -- but then again, that's not for the first time.

[anonymousAgent]

This is NOT Europeanization.
Europe has no "on sale" bar even based on secret offers for sale.
Europe has no "public use" bar for cases of public use of a 'black box' that cannot be reverse engineered.
Europe has no inequitable conduct and draconian 'duty to disclose.'
This is 'pick and choose the parts big business likes" and then selectively 'harmonize' those parts.

[Stan E. Delo]

Kevin-

Point well said about the H.R.1908 bill of 2007, as it was Much more draconian than this S. 23 bill. I am thinking that the TEA party and Republicans in the House will try to steal the Senate's thunder in passing their bill so quickly, by refusing to negotiate very much, if anything at all. After seeing some of the intense bickering over the Fed budget lately, things seem to be getting polarized pretty quickly lately so an impasse on patent reform seems likely to me.

Stan~