"America Invents Act of 2011" is an interesting
work of legislation. While the bill -- which seeks to reform the U.S. Patent and Trademark Office (USPTO) -- passed the
House by a 304-117 margin and the Senate by a resounding 89-9 margin, it's
provoked surprisingly fierce political commentary between the majority and the
vocal minority. Sen. Maria Cantwell (D-WA) complains, "This is not a
patent reform bill. This is a big corporation patent giveaway that tramples on
the right of small inventors."
But Sen. Patrick Leahy (D-VT) claims that the legislation will be a boon
-- the most significant patent reform in decades.
So what kind of bill causes party bedfellows to turn on each other in such a
fashion? Well, the thing everyone seems to agree that patent reform is
needed, the system is broken (to some extent), etc. But no one can seem
to agree on how to fix it.
I. What's Not Inside
First, what does the bill not do?
The bill does not invalidate software or business methods patents [e.g.
International Business Machines, Inc.'s (IBM) "outsourcing" patent] -- two classes of patents
that are viewed as overly obvious and a damaging factor to innovation,
according to many industry experts.
The bill does outlaw a specific class of patents -- patents on "a
financial product or service". This will effectively kill
DataTreasury, a patent troll who makes much of its income off suing banks for
infringement of check clearing patents. Banks fought (and donated) hard
to get this provision included. But more general prohibition on software
and business patents, lacking equivalent financial backing in Washington, D.C.
was not included.
Likewise, the bill does not prevent companies like Apple, Inc. (AAPL) from using patents as a
competitive barrier. Furthermore, the measure
provides no new limitations on how much damages companies can seek in
Lastly, the bill does not prohibit "forum shopping". As
chronicled in a recent NPR special, the Eastern District of
Texas is teeming with thousands of lawyers, thanks to it being viewed as a
"plaintiff friendly" patent court. "Patent trolls" --
companies like Intellectual Ventures, NTP, and Platus IP -- flock to this
court as they've discovered they're likely to win big cash payouts from the
companies they're bringing suits against, regardless of the merits of those
II. What is Inside
So what does the bill do?
As mentioned, it invalidates a select class of business methods/software
patents that are crucial to the bill's special interest backers. In more
general provisions, it does create a special new "post-grant review"
process that offers companies to offer an expedited avenue to challenge
It also changes the USPTO's modus operandi from "first to
invent" to "first to patent". In other words a company can
now patent inventions even if a small inventor can prove that they came up with
it first. The inventor can gain control of the IP, but only if they can
prove that the company took their idea. This burden of proof may be very
high in many cases, so this provision may allow big companies to trample small
inventors as Sen. Cantwell complains.
Lastly, it changes the way the USPTO is financed. The fees the office
collects are now placed in a special account. While Congress must still
authorize disbursement from this account, the USPTO is now the exclusive
beneficiary of this money. Further, the USPTO now can set its own fees.
These provisions are viewed as steps towards a self-sufficient USPTO.
In summary, the new bill does little to stop patent trolls, and actually makes
it easier for companies to exploit small inventors. And it doesn't stop
the use and/or abuse of software patents. But it does offer a way of
invalidate some bad patents. And it does make the USPTO more autonomous,
which will perhaps improve the quality of the patent granting process, reducing
stamping" syndrome that has plagued the USPTO in recent