Senate Passes Patent Reform

The U.S. Senate voted overwhelmingly to overhaul U.S. patent laws, backing a measure aimed at chipping away at a huge backlog of patent applications and offering cheaper alternatives to litigation.

In a 95-5 vote, the Senate approved on Tuesday the bill that would boost funding for the U.S. Patent and Trademark Office and sets up mechanisms for objecting to patent applications and for challenging patents before they reach the courts

There is no companion bill in the House at present, but Republican Representative Lamar Smith, chairman of the House Judiciary Committee, has said he is close to completing a draft.

Under the Senate bill, the United States would grant precedence to the first inventor to file a patent application, rather than requiring patent office examiners to decide who was first to produce an invention.

Supporters of the bill have said the first-to-file measure would make the patent application process easier for companies that apply for patents in multiple countries.

President Barack Obama said he was pleased that the bill passed. In a statement he called it “the most significant patent reform in over half a century.”

Before approving the bill, the Senate stripped out controversial provisions aimed at containing infringement damages and restricting forum shopping. Court decisions have already gone a long way toward accomplishing those goals.

Democratic Senator Patrick Leahy, who has been shepherding the bill through the Senate, said patent reform would help the patent office work through a backlog of more than 700,000 patent applications.

Leahy said the last major patent reform was in 1952 and touted the bill as a way to create jobs and offer alternatives to expensive litigation. “It is nice to finally have this bill through the Senate,” he said after the vote.

The Coalition for Patent Fairness, made up of tech companies like Adobe, Cisco and Intel , said it would continue to oppose the bill.

The coalition had initially pushed for patent reform but then withdrew its support.

The bill ends the practice of diverting fees collected by the patent office to general government revenue and gives it fee-setting authority so it can hire badly needed examiners and upgrade its technology.

Other provisions in the bill aim to prevent bad patents from being issued by allowing third parties to provide information on why an application should be rejected. The bill also set rules for allowing patents to be challenged after they are granted, which supporters say is cheaper than litigation

Strategies to minimize taxes would no longer be patentable under the bill, although tax preparation software would be patentable.

The bill would create a pilot program at the patent office to challenge business-method patents. Perhaps the most familiar example is Amazon.com’s one-click purchase patent.

The Supreme Court last year rejected a way to hedge energy costs, but did not shut the door on business method patents.

(Reporting by Thomas Ferraro and Diane Bartz; Editing by Tim Dobbyn)