Patent Reform News Briefs

By Donald Zuhn --

H.R. 1249 Could Reach House Floor This Week

In today's IPO Daily News, the Intellectual Property Owners Association (IPO) reported that House members are preparing for possible debate and a vote on H.R. 1249 "as early as this week."  According to the IPO report, the House has scheduled H.R. 1249 for possible consideration on Wednesday or Thursday, and the House Rules Committee will be meeting on Tuesday to determine how the floor debate on the bill will be conducted.  The IPO also reported that any amendments to the bill had to be offered by 7:00 pm today, and that possible amendments included amendments to remove the first-to-file provision from the bill, delete or modify the special procedure for challenging business method patents, and delete everything except the USPTO funding provision.

IPO Sends Letter to House Leadership in Support of USPTO Funding Provision

Last week, the Intellectual Property Owners Association (IPO) sent a letter to Speaker of the House John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA) noting that the group "strongly supports Section 22 of H.R. 1249, the America Invents Act, which would fully fund the U.S. Patent and Trademark Office (USPTO)."  The letter, which was signed by IPO Executive Director Herbert Wamsley (at right), argues that "[f]unding the USPTO at a level equal to fee collections, as would be required by Section 22 of H.R. 1249, is critically important to innovation, job creation, and the health of the U.S. economy."  The letter notes that the IPO has "carefully documented" the amount of user fees that the USPTO has collected over the past 20 years, but has not been allowed to use, and has determined that "[s]ince 1991, taking into account the latest estimated revenues for FY 2011, the USPTO will have collected but not been able to use nearly $900 million in user fees."  The IPO letter argues that the diverted user fees are "a tax on innovation," and concludes that "retention of Section 22 is essential."  The group notes, in fact, that it "would support a new amendment to increase user fees by 15 percent."

House Judiciary Chair Responds to Rogers-Ryan Letter

In a letter sent on June 6 to Rep. Lamar Smith (R-TX), the Chairman of the House Committee on the Judiciary, Rep. Harold Rogers (R-KY), the Chairman of the House Committee on Appropriations, and Rep. Paul Ryan (R-WI), the Chairman of the House Committee on the Budget, raised concerns regarding the USPTO funding provision of the legislation (see "Patent Reform News Briefs," June 7, 2011).  Rep. Smith (at right) wasted little time in responding to the letter from his fellow Republicans, sending a response the next day.  In that response, Rep. Smith asserted that "[s]ection 22 of H.R. 1249 is an important component of the bill and should be preserved," and provided several reasons for retaining the provision.

First, he notes that the user fees collected by the USPTO do not constitute "true tax revenues derived from the General Treasury."  Instead, "[t]he USPTO is completely funded by user fees imposed on inventors and trademark filers -- not the taxpayers," and "[i]t's entirely reasonable for these men and women to expect that the fees they pay should remain within the agency to recover the costs of its operations."  Rep. Smith also notes that "an estimated $874 million [has been] 'diverted' from agency coffers since 1991."

The letter next indicates that the USPTO funding provision "will not put the USPTO on auto-pilot," but rather, "would actually promote accountability and transparency, creating more channels for oversight than currently exist."  Rep. Smith explains that the funding provision requires the Office to submit an annual "look-back" report to Congress and a "forward-looking annual spending plan" to the House and Senate Committees on Appropriations.

Rep. Smith concludes the letter by declaring that "[a]t a time of economic stress and high unemployment, the USPTO is an untapped resource for job creation," adding that "a well-functioning and -resourced USPTO that reviews applications in a timely manner and issues quality patents can only lead to greater innovation and higher-paying jobs."

Senator Coburn Responds to Rogers-Ryan Letter

Senator Tom Coburn (R-OK) (at right) also sent a letter to Representatives Rogers and Ryan, urging them to reconsider their position on Section 22, which Sen. Coburn contends "does not conflict with the ability to remain committed to restraining spending, improving accountability, and reducing the debt."  Sen. Coburn explains that under this provision of the bill "Congress would not have the ability to divert user fees to other general revenue purposes, and the PTO would remain accountable to Congress."  The letter argues that "[s]ection 22 would not hand the 'power of the purse' to the Obama Administration, put the PTO on 'auto-pilot,' or eliminate the ability of Congress to perform oversight of the PTO," as Rep. Rogers and Ryan contended in their own letter (see "Patent Reform News Briefs," June 7, 2011).  Sen. Coburn concludes by stating that "[w]e cannot have true patent reform without ending fee diversion and providing the PTO with a permanent, consistent source of funding."

Letter from Four Representatives Seeks "No" Vote on H.R. 1249

In a letter sent out earlier today, Representatives John Conyers, Jr. (D-MI), Donald Manzullo (R-IL), F. James Sensenbrenner, Jr. (R-WI), and Marcy Kaptur (D-OH) asked other members of the House to join them "in opposing H.R. 1249, patent legislation that would favor large multinational corporations over U.S. inventors."  Although the four legislators indicated that they had "different concerns with the legislation," they "agree[d] that this special interest bill will cost jobs and harm small start-up inventors."

The letter discusses five issues that have been raised by various groups about the bill, including that: (1) "it provides large banks a special, new bailout at the expense of inventors and the American taxpayer, and even worse, does so on a retroactive basis" by establishing "an unprecedented review procedure which would provide a 'third bite at the apple' to attack a targeted group of financially-related business method patents that previously have been upheld through multiple examination, re-examination, and trial proceedings"; (2) it contains a first-to-file provision that several groups view as "a dangerous and unconstitutional effort to overturn over 220 years of patent practice"; (3) it "undermines the false marking statute by retroactively changing the law applicable to pending enforcement actions"; (4) it "would allow patent owners to provide corrected or new information to the Patent Office that was not presented or not accurately presented during the application process"; and (5) it expands the "prior user rights" defense, thereby "creat[ing] more uncertainty for small innovators and university-related start-up ventures which would have no way of knowing whether an invention might be subject to a manufacturer's prior user rights."

The letter concludes by listing 55 groups that "have serious concerns about H.R. 1249 or specific sections of the reported bill."

Comments

[patent litigation]

In this week's blog posts, patent expert Gene Quinn makes a convincing case for first-to-file. As every first-year law student should know, courts have consistently ruled that IP protection is intended mainly to be not a provision granting rights to innovators, but rather part of a social contract in which innovators receive certain benefits as long as they contribute their work to the public.
http://www.aminn.org/patent-reform-act-2011-s23