Patent Reform Legislation Passes House by 304 to 117 Vote

Senate and House will now have to reconcile the differences in their respective versions of the America Invents Act.

The U.S. House of Representatives yesterday passed its version of patent reform legislation, a measure that changes how patents are awarded and how they can be challenged but doesn’t go as far as earlier versions in setting aside fees collected from inventors with the goal of reducing its backlog of applications.

By a somewhat bipartisan margin of 304 to 117, the House passed a version of the America Invents Act that differs from the version that sailed through the Senate on March 8. Both chambers will need to reconcile their versions of the measure before they can send a bill to President Obama, who has supported the Senate bill (S.23) and qualified support for the House bill (HR 1249). It has yet to be determined whether that reconciliation will be done through a traditional conference committee or less formally by House and Senate leaders hammering out compromise language amenable to both chambers.

As passed by the House, America Invents shifts the basis on which the U.S. issues patents from first-to-invent to first-inventor-to-file. Supporters have said the change will better align the U.S. patent system with those of Europe and Asia as well as cut down on lawsuits challenging first-to-invent claims. Opponents, though, have complained the change will hurt small start-up entrepreneurs and favor corporate giants, who are likelier to have staffers focused solely on ensuring that filings are carried out quickly.

One key provision in the House bill creates a fund for fees collected by the USPTO in excess of budgeted amounts and gives Congress authority to appropriate that money to the agency. That differs from the version of America Invents that passed the Senate, which blocked diversion of money budgeted for the patent office and allowed USPTO to generate its own fees and hold on to any excess.

Some $1 billion is estimated to have been diverted from USPTO for unrelated purposes. Supporters of fee diversion have said that a ban on diversion would give the agency the funds it needed to hire more patent examiners and reduce both its backlog of patents (703,175 as of May) and number of months needed to process applications (33.9 months as of May).