Wednesday, July 18, 2018

Making America's Patent System Great Again

The Restoring American Leadership in Innovation Act of 2018 was recently introduced by a bipartisan group of members of the House. 

The Act reverses a lot of the damage that has been done to the US patent system in recent years as a result of restrictions on the value, scope, and enforceability of patents put in place nearly simultaneously on a judicial, legislative, and executive level.

The Act would:

(1) Undo the Supreme Court's decision in Oil States, a case that determined that patents are not private property (despite literally centuries of jurisprudence treating them as private property and a statutory provision stating that "patents shall have the attributes of private property."). 

(2) Restore the United States patent system to a "First to Invent" system.  With passage of the America Invents Act, the United States changed its patent system from one where the first person to invent something got the patent to one where the first person to file for a patent got the patent, regardless of whether they were the first person to invent.  The Act would reverse this change.

(3) Restore a one year grace period that lets an inventor test and improve their invention in full public view for a year before the clock runs out on filing for a patent.  This grace period allows inventors to improve the invention through experience, to gauge whether a market exists for the invention, and to find investors.

(4) Abolishes the post-grant review ("PGR") and inter-parties review ("IPR") processes.  The IPR system has been called a patent death squad by the former chief judge of the Federal Circuit Court of Appeals, and it is very likely that this change alone restores predictability and fairness to the US Patent system, again rendering it the preeminent IP system in the world.

(5) Without the PGR and IPR workload, the need for a Patent Trial and Appeal Board ("PTAB") goes away, and the bill would replace the PTAB by restoring the Board of Patent Appeals and Interferences (this is really a technical fix).

(6) Critically, the bill would eliminate fee diversion.  This issue seems like a nerdy, "inside baseball" kind of issue, but is actually crucial.  Currently, the USPTO is self-funded.  That means that users are charged hefty fees for almost every interaction with the USPTO, and those fees are used to pay for the USPTO.  In theory, the USPTO sets fees in order to minimize the cost of protection invention while making sure that the office is funded in a way that allows for timely, complete, and accurate review of patent applications.  In reality, every year Congress takes the opportunity to raid the USPTO's coffers, diverting to other government departments the USPTO user fees intended to pay for additional patent examiners.  Ending fee diversion will dramatically improve patent quality and the speed of patent issuance (or rejection).

(7) Clarifies that when Congress said "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title," it actually meant it.  Supreme Court decisions in recent years have carved out so many judicial exceptions that even federal judges and the head of the patent office are no longer sure what is patentable.  The statute lays out patentability in a very clear way by replacing wandering, inconsistent jurisprudence with a simple statement that an invention is ineligible only if it exists in nature independently of and prior to any human activity, or exists solely in the human mind.  I have long taken the position as an inventor that a clear rule -- even a bad clear rule -- would substantially improve on the existing state of confusion.  By abrogating the various Supreme Court decisions that created a confusing maze of eligibility issues, inventors will finally know whether to keep something a trade secret (because it isn't patentable) or to file for a patent.

(8) The standards for a patent rejection on the grounds that the invention isn't novel are clarified.

(9) Clarifies that patents may only be invalidated by a judicial proceeding unless the patent owner consents to an administrative procedure.

(10) Reverses the rule that (absent an express request for non-publication) patent applications are automatically published 18 months after the priority date.  The concern here is apparently that (1) publication rules can prevent an inventor from filing for an improvement on their own invention that didn't issue as a patent because the prior invention was published before the improvements were filed for after the publication of the earlier patent application, and (2) Publication at 18 months and a delay in patent issuance that can last years after publication allow foreign competitors to steal inventions.

(11) Restores the rule that patents are presumed to be valid.

(12) Prevents infringers from effectively running out the patent term by filing multiple validity challenges that effectively prevent the patent from being enforced before it expires.  This is accomplished by "tolling", or pausing, the running of a patent term during the pendency of a validity challenge.

(13) Reverses the Supreme Court's holding that patent owners are almost never able to obtain an injunction against infringers.

(14) Restores the "Best Mode" requirement -- a requirement that an inventor discloses the best mode to implement an invention.  This avoids the shady practice of describing hundreds of ways to do a thing in order to keep competitors from figuring out the best way to do it (presumably after the patent term ends).

The bill would likely restore the status of the United States patent system as the envy of the world.  As of now, the United States patent system may well be the most confusing and expensive in the world.

Unfortunately, the infringer lobby is likely to derail or massively amend the bill. If the bill makes it into law largely unscathed, however, it will keep the Trump Administration's promise to Make America Great Again -- at least with regard to a patent system that has suffered mightily over the past decade.

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