The U.S. House recently passed their version of patent reform (H.R. 1249, the Leahy-Smith America Invents Act) on June 23, 2011. The U.S. Senate previously passed a similar bill (S. 23) on March 5, 2011. The only remaining hurdle is to address the differences in the two bills and obtain a final version that is acceptable to both Chambers for a final vote and passage into law. President Obama has already indicated that he will sign a bill once it is passed by the two Chambers.
The two bills are substantially similar. Each includes major new aspects for U.S. patent practice including: changing from a first-to-invent system to a first-to-file system; implementing a new post grant review process; creating a pilot program for the reexamination of business method patents to uncover invalidating prior art; and a revised inter parties review process. There are differences in these aspects between the two bills. For example, the House bill provides for the business-methods pilot program to run for eight years while the Senate bills calls for four years. It appears that these differences are minor and can be worked out between the Chambers.
One major difference between the bills is the distribution of fees collected by the Patent and Trademark Office (PTO). Both bills give the PTO power to set patent fees as they deem necessary. The Senate bill provides for the PTO to keep all the fees. The House bill differs drastically by keeping more oversight over the PTO. The House bill appropriates a predetermined amount of the collected fees to the PTO. Any additional fees over this amount would be placed into an account intended for the PTO. However, the fees in the account do not automatically go to the PTO, but rather require the PTO to petition for these fees which may then be allocated at the discretion of Congress.
Under the current system, the PTO receives an annual budget that is set by Congress. Additional fees over this amount are distributed into the general fund, with Congress having the authority to pass an exception to allow additional funds to reach the PTO. Although Congress has allowed some of these excess fees to be used by the PTO over the last couple of years, Congress has taken over $800 million for use outside of the PTO. Most people argue that this has caused the PTO to be overloaded which has resulted in a backlog of over 700,000 patent applications.
There is currently no specific timeline for the House and Senate to meet to agree on a compromise. It appears more likely the two Chambers will not meet to resolve the differences. Rather, the Senate will attempt to draft changes to a bill that would be acceptable to both Chambers. Although there is an outcry to finalize and pass a bill, the current political climate in Washington may have more pressing demands (i.e., the debt ceiling) that could cause delay in the final resolution of patent reform.