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Friday, February 18, 2011

Patent Reform in the 111th Congress: Innovation Issues

Wendy H. Schacht
Specialist in Science and Technology Policy

John R. Thomas
Visiting Scholar

Congressional interest in patent policy and possible patent reform has expanded as the importance of intellectual property to innovation has increased. Patent ownership is perceived as an incentive to the technological advancement that leads to economic growth. However, growing interest in patents has been accompanied by persistent concerns about the fairness and effectiveness of the current system. Several recent studies, including those by the National Academy of Sciences and the Federal Trade Commission, recommended patent reform to address perceived deficiencies in the operation of the patent regime. Other experts maintain that major alterations in existing law are unnecessary and that the patent process can adapt, and is adapting, to technological progress.

Patent reform proposals introduced in the 111
th Congress would have worked significant legal changes to the patent system. Among the more notable of these proposed changes was a shift to a first-inventor-to-file priority system; substantive and procedural modifications to the patent law doctrine of willful infringement; and adoption of post-grant review proceedings, prior user rights, and pre-issuance publication of all pending applications. Several of these proposals have been the subject of discussion for many years, but others are more novel propositions.

Although the 111
th Congress did not enact this broadly oriented legislation, it did enact P.L. 111- 349 (H.R. 628). This law established a pilot program in certain U.S. district courts under which (1) the chief judge of the court designates district judges who request to hear cases involving patent or plant variety protection issues; (2) such cases are randomly assigned to district court judges, whether designated or not; (3) a non-designated judge may decline the case; and (4) a declined case is then randomly reassigned to a designated judge.

Additional legislative reform efforts in the previous Congress (H.R. 1260, S. 515, and S. 610) would have addressed several issues of concern, including the quality of issued patents, the expense and complexity of patent litigation, harmonization of U.S. patent law with the laws of our leading trading partners, potential abuses committed by patent speculators, and the special needs of individual inventors, universities, and small firms with respect to the patent system.

The provisions of the proposed legislation would arguably work the most sweeping reforms to the U.S. patent system since the 19
th century. However, many of these proposals, such as pre-issuance publication and prior user rights, have already been implemented in U.S. law to a more limited extent. These and other reforms, such as the first-inventor-to-file priority system and post-grant review proceedings, also reflect the decades-old patent practices of Europe, Japan, and our other leading trading partners.

Some observers are nonetheless concerned that certain of these proposals would weaken patent rights, thereby diminishing incentives for innovation. Others believe that changes of this magnitude, occurring at the same time, do not present the most prudent course for the patent system. Patent reform therefore confronts Congress with difficult legal, practical, and policy issues, but also with apparent possibilities for altering and possibly improving the legal regime that has long been recognized as an engine of innovation within the U.S. economy.

Should patent reform legislation be subject to consideration in the 112
th Congress, a separate report or reports will be issued.

Date of Report: January 20, 2011
Number of Pages: 48
Order Number: R40481
Price: $29.95

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