In March, the U.S. Senate voted overwhelmingly to approve legislation to make the first reforms to the U.S. patent system in nearly six decades. The America Invents Act (S. 23) is the product of nearly six years of debate in Congress. The bill was sponsored by Senators Patrick Leahy (D-VT), Orrin Hatch (R-UT), and Chuck Grassley (R-IA), and was cosponsored by a dozen other Senators.

“Innovation has always been a catalyzing force in Minnesota and across the United States,” Senator Amy Klobuchar (D-MN) said. “But our outdated patent system is stifling innovation. This legislation will provide entrepreneurs and businesses the tools they need to continue to focus on innovation. It’s time to modernize our patent system, cut red tape, and make it easier for our businesses to compete in the global economy.”
The America Invents Act will improve patent quality and help to reduce patent application backlogs at the U.S. Patent and Trademark Office (USPTO). It will transition the U.S. patent system to a first-inventor-to-file system, and ensure that USPTO has the funds necessary to process the backlog of more than 700,000 pending patent applications. Importantly, the reforms included in the legislation will not cost any U.S. taxpayer dollars.
The legislation incorporates the core provisions included in the original Patent Reform Act that was first introduced in the House of Representatives in 2005 by Congressmen Lamar Smith of Texas and Howard Berman of California. The America Invents Act is supported by the Obama administration and a cross-section of industries (including the IVD industry) and stakeholders.
At the end of March, Congressman Smith (R-TX), who is chairman of the House Judiciary Committee, introduced in the House of Representatives a version of this legislation to modernize and reform the patent system. Similar to the legislation that passed in the Senate, the House version of the America Invents Act (H.R. 1249) implements a first-inventor-to-file standard for patent approval, creates a post-grant review system to weed out bad patents, and helps USPTO address the backlog of patent applications.
“We cannot protect the technologies of today with the tools of the past,” said Smith. “We need reforms that discourage frivolous suits, enhance patent quality, and streamline international principles.”
The main components in the House patent reform bill include the following:

• First inventor to file. Creates more certainty about patent ownership by adopting a first-inventor-to-file standard for awarding patents.
• Post-grant review. Establishes a new administrative construct called post-grant opposition that allows disputes involving patent quality and scope to be settled.
• Business method patents. Authorizes a special ex parte reexamination of business method patents. This process allows business method patents to be re-examined using the best prior art as an alternative to expensive litigation and helps invalidate poor quality patents.
• Third-party submission of prior art. Prevents bad patents from being awarded by permitting third parties to submit information regarding a patent application that may be relevant for the patent examiner to review.
• USPTO fee-setting authority and revenue retention. Authorizes the USPTO director to establish patent and trademark fees to recover the costs of services rendered to inventors and trademark filers. Allows USPTO to retain revenue generated by these fees in order to hire new examiners and address the patent backlog.
• Best mode. Retains the best mode requirement for purposes of submitting an application, but prevents a defendant from claiming that a plaintiff failed to comply with the best mode requirement when filing for a patent.

“Depending on the typical practices of an IVD company, changing to a first-to-file system may require major changes in the expenditure of resources,” said Janet S. Hendrickson, PhD, a patent attorney at Senniger Powers (St. Louis). “While the statistics show that relying on first-to-invent provisions is rare, the psychological and cultural changes that are needed to adjust to the new patent-law regime may be a difficult adjustment for some companies.”
Hendrickson added that many IVD startup companies have encountered long delays in the patent office before a patent is issued. Such a delay in patent issue may cause investments to go to those companies that already have issued patents and not to companies that have pending applications. Since USPTO has long-term plans to decrease the pendency time for patents by hiring more examiners and improving training to better the quality of examination, the fee setting and no fee diversion provisions of the new bill would allow USPTO to have a sustainable source of revenue to devote to these improvement efforts. Thus, startup IVD companies could be helped if the pendency of patent applications was shortened.
“Finally, the post-issue challenge provisions would allow competitors to challenge issued patents on any invalidity ground and not just based on printed publications as long as the challenge was filed within nine months of patent issue,” said Hendrickson. “This would be a mechanism for an interested competitor to get a patent invalidated before the patentee could sue for infringement. While this process may take considerable resources, it is likely that it would be less costly than litigation. This may be a mechanism that would provide IVD companies a less costly mechanism for challenging a patent.”
—Richard Park