Patent reform: All aboard, the train has left the station

June 21, 2011 – 8:53 AM | By Mark McCarty | No comments yet

The U.S. House of Representatives is expecting a vote this week on its patent reform bill, but unlike passage of the Senate bill, the House bill has to deal with a potentially crippling conflict. This conflict was set up by the provision dealing with fees collected by the Patent and Trademark Office, which is on a collision course with the budget-cutting mood in the House. Another difference between the two bills is the inclusion of the prior user defense in the House bill, but I’m going to propose that the real question here is not whether the House and Senate can pave over those differences. The real question is whether Congress spent too much time playing with this set of issues and in the process made itself almost entirely irrelevant where patent law is concerned.

The two bills differ somewhat on inter partes re-examinations, but it ranks as a small difference compared to some of the things that are typically settled during House-Senate conferences. I understand that the difference between nine and 12 months to conduct such a review is important (not to mention the difference in the threshold for conducting such a review), but there’s a saying often heard in this town when House-Senate negotiations are stuck. That saying is: “I’m not impressed with your logic, but I am impressed with your votes.” If inventors end up dismayed with the outcome on the inter partes review discussion, they won’t be the first to have a reason to gripe about the goings-on on Capitol Hill.

Allowing PTO to keep the fees it collects looks like the no-brainer of the century, but I’ll point out that the brainiacs in the Senate didn’t see fit to put that in their bill despite six years of thrashing about on damages, inequitable conduct and a host of other features that have since been addressed by the courts. Fee diversion could kill patent reform in the House this year because the federal budget deficit is at astronomical levels, and the tidy little sum of $50 million the Treasury siphons off from PTO each year now looks like Senator Everett Dirksen’s serious money. Device makers might not like the continued abuse of patent (and trademark and copyright) fees, but deficit hawks would say if FDA is getting a haircut, why not PTO?

Just as an aside, I’ll point out that the Supreme Court has opted to hear Prometheus v. Mayo, a case that will go a long way to determine how much life science companies are willing to plow into molecular diagnostics, presumed to be the sine qua non of personalized medicine. No point in going into the details of that case here, especially since the case has bounced back and forth twice between the Supreme Court and the Court of Appeals for the Federal Circuit, but a win for the Mayo Clinic (Rochester, Minnesota) could have a profound impact on private-sector investment in diagnostics. Yet Congress is mum.

To add another record to the file labeled “Department of Redundancy Department,” the Senate bill declares a standard for patent obviousness in language aping the Supreme Court decision in KSR v. Teleflex. Really, was anyone not paying attention? I’m pretty sure PTO gets it, but if you’re not sure Senator Leahy, give Mr. Kappos a ring. Why clutter things up with this sort of superfluous junk?

So we have fee diversion as a situation Congress legitimately needs to deal with, along with first-to-file and the prior user defense. A lot of stakeholders (not all) are sympathetic to first-to-file, but the field is perhaps more evenly split on a prior user defense, which is seen as essential to offset the ills inherent to first-to-file. Some see the prior user defense as an abomination, but PTO director David Kappos seems supportive. I’m not going to take a position because I honestly have no idea, but in one of the House hearings earlier this year, the witnesses testified to a one that fee diversion was the most important thing for Congress to address. So if first-to-file needs the prior user defense as a corrective, how important is either or both compared to fee diversion?

If the House bill tanks this week, it may come across as an object lesson in the importance of getting the job done now while you still can rather than waiting long enough for events to take away your options and leave you empty-handed. That’s not a bad way to live if you like the taste of bitter pills, but it’s not what we pay these 535 people more than $100,000 each to do.

On the other hand, the judges seem to have most of this under control, and who’s to say it’s a bad thing if not everyone gets to the train station on time? After all, most of us don’t want a lot of pointless flailing about by noisy, ill-mannered people on the train ride to work.

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