Patent Reform Act of 2007
On September 7th, the House passed the Patent Reform Act of 2007, H.R. 1908, the most significant patent legislation in 50 years. This legislation will strengthen the patent system and improve patent quality by deterring abusive practices and by creating a more effective system for considering challenges to the validity of patents.
When it functions properly, the patent system should encourage and enable inventors to push the boundaries of knowledge and possibility. If the patent system allows questionable patents to issue and does not provide adequate safeguards against patent abuses, the system ends up stifling innovation and interfering with competitive market forces. This bill reforms the patent system so that patents continue to encourage innovation, and is part of the Democratic-led Congress’ broader Innovation Agenda to ensure our nation’s global economic competitiveness and support math, science, and innovation.
Specifically, this legislation includes:
Comprehensive Result of Bipartisan, Bicameral Efforts. The Patent Reform Act is the first comprehensive modernization and revision of the patent law in 55 years. The bill judiciously and prudently addresses those elements of current law which have been identified as needing reform to ensure that in the 21st Century our patent law continues to promote the progress of science and the useful arts.
Right of the First Inventor to File. The Act converts the U.S. patent system from a first-to-invent system to a first-inventor-to file system. The U.S. is the only country in the world granting priority to the first inventor as opposed to the first inventor to file a patent. The Act will inject needed clarity and certainty into the system. While cognizant of the enormity of the change that a “first inventor to file” system may have on many small inventors and universities, a grace period is maintained to substantially reduce the negative impact to these inventors.
Calculating Fair and Equitable Remedies. The bill provides much needed guidance to courts and juries to ensure inventors are compensated fairly, while not discouraging innovation with excessive damage awards. While preserving the right of patent owners to receive appropriate damages, the bill provides optional methods to ensure that the patent owner is rewarded for the actual value of the patented invention.
Willful Infringement. The Patent Reform Act contains certain limitations on willful infringement requiring the patent owner to show by clear and convincing evidence, that (1) the infringer, after receiving detailed written notice from the patentee, performed the acts of infringement, (2) the infringer intentionally copied the patented invention with knowledge that it was patented, or (3) after having been found by a court to have infringed a patent, the infringer engaged in conduct that again infringed on the same patent. An allegation of willfulness is subject to a “good faith” defense.
Post-Grant Procedures and Other Quality Enhancements. The Patent Reform Act cures the principal deficiencies of re-examination procedures and creates a new, post-grant review that provides an effective and efficient system for considering challenges to the validity of patents. Addressing concerns that a post-grant review procedure could be abused, the bill establishes a single opportunity for challenge, which must be initiated within 12 months of the patent being granted. It also requires the Director of the Patent and Trademark Office to prescribe rules for abuse of discovery or improper use of the proceeding, limits the types of prior art which may be considered, and prohibits a party from reasserting claims in court that it raised in post-grant review.
Submissions by Third Parties to Enhance Quality of Patents. The Patent Reform Act will improve patent quality by creating a mechanism for third parties with knowledge of the subject matter of a claimed invention to submit relevant information about prior art to the Patent and Trademark Office. The availability of this information to the examiner will substantially enhance patent quality.
Venue and Jurisdiction. The bill also addresses changes to venue, to address extensive forum shopping and provides for interlocutory appeals to help clarify the claims of the inventions early in the litigation process. This legislation would restore balance to this statute by allowing cases to be brought in a variety of locales – including where the defendant is incorporated or has its principal place of business or where the plaintiff resides in certain instances. The bill makes patent reform litigation more efficient by providing the Federal Circuit jurisdiction over interlocutory orders on claim construction by the district court.
Inequitable Conduct as Defense to Infringement. One costly part of patent litigation is the battle over “inequitable conduct” – whether the patent holder made misrepresentations while obtaining the patent which should make the patent unenforceable. This legislation establishes stringent standards both in pleading and proof for inequitable conduct as a defense to the infringement of a patent.
Regulatory Authority. The bill clarifies the authority of the Patent and Trademark Office to make procedural rules to limit abuses by applicants, including rules that ensure the quality and timeliness of the application process.