Senate Approves Major Changes to Patent Reform Act

California – After years of debates over patent reform, the U.S. Senate finally passed the America Invents Act Thursday, making major changes to America’s patent laws. The 89-9 vote will be signed by President Obama just days after the United States Patent and Trademark Office (USPTO) issued its 8 millionth patent.

There are five key changes taking place in the new patent reform that will affect entrepreneurs, inventors, tech companies, and the USPTO. The five key pieces include:

First to File: The current patent system operates under the first to invent rule, which means that whoever can prove to a court of law that they invented something first can force another party into a legal battle over the patent. With the new first to file system under the America Invents Act, whoever files the patent first will get protection. Although much more clear-cut, some small businesses and entrepreneurs argue that it gives an advantage to large businesses that have the money to quickly file for patents.

Post-Grant Review: Currently, the USPTO has a procedure to re-examine patents after they have been issued, but it is very limited in its scope. Under the new process, inventors will have the ability to challenge a patent within nine months of its issuance by presenting the USPTO with evidence against the patent’s validity. The upside is that this could potentially reduce some of the expensive patent litigation lawsuits, but opponents say that it is just another responsibility that will be placed on an already over-burdened Patent Office.

Fee collection Overhaul: Under the existing system, Congress establishes the fees that are collected by the Patent Office and also controls its budget. With the America Invents Act, the USPTO will be able to determine its own fees. Congress will continue to have budgetary power but the collected fees exceeding the budget will be placed into escrow and the USPTO can petition for their release. The reformed patent laws will stop Congress from siphoning money out of the USPTO budget, and allow the entity to keep all of the fees it collects.

Lack of Patent Lawsuit Reform: Although it was suggested and included in some earlier versions of the new patent bill, there is no new process in the America Invents act for determining damages in a patent infringement case. For the foreseeable future, juries may continue to award large sums of money for patent violations.

Software and Business Method Changes: There are a few minor provisions in the America Invents Act that clear up the debate over the propriety of software patents. One provision, for example, specifically excludes tax preparation software from a rule prohibiting the patenting of tax strategies, and another provision creates a way to defeat patents related to financial products, with the goal of eliminating a certain group of patents for check-imaging software.