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Wednesday, March 9, 2011

Patent Reform in the 112th Congress: Innovation Issues

Wendy H. Schacht
Specialist in Science and Technology Policy

John R. Thomas
Visiting Scholar

Congressional interest in patent reform has increased as the patent system becomes more significant to U.S. industry. Patent ownership is perceived as an incentive to the technological advancement that leads to economic growth. Yet, this augmented attention to patents has been accompanied by persistent concerns about the fairness and effectiveness of the current system. Several studies, including those by the National Academy of Sciences and the Federal Trade Commission, recommended reform of the patent system 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.

The patent reform proposal introduced in the 112
th Congress, S. 23, originally titled the Patent Reform Act of 2011, amended to the America Invents Act, would make significant changes to the patent system. As originally introduced, S. 23 would have adopted a first-inventor-to-file priority system, made substantive and procedural modifications to the doctrine of willful infringement, introduced procedural and evidentiary reforms to patent damage calculations, allowed for assignee filing, altered venue principles in patent cases, and provided for post-grant review proceedings.

Following several amendments, S. 23 no longer addresses damages for patent infringement or willful infringement, and its provisions regarding venue in patent infringement cases were removed. Amendments to S. 23 also introduced several additional reforms, including a transitional post-grant review proceeding for the review of the validity of certain business method patents, the possibility of USPTO satellite offices, priority examination for technologies important to American competitiveness, and the establishment of a USPTO Public Enterprise Fund. Several of these proposals have been the subject of discussion within the patent community for many years, but others present more novel propositions.

While the provisions of the proposed legislation would arguably institute the most sweeping reforms to the U.S. patent system since the nineteenth century, 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 provisions would weaken patent rights, thereby diminishing incentives for innovation. Other experts 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.

Date of Report: March 4, 2011
Number of Pages: 36
Order Number: R41638
Price: $29.95

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