Patent Reform Is Getting Closer

The U.S. patent system has been mired in problems for years, ranging from a huge backlog of unexamined applications (more than 700,000, according to ) and a three-year wait to get approved (or denied) for a patent. With more people inventing things or processes (including intellectual property and technological inventions), the examination process has become more complex and the U.S. Patent and Trademark Office (USPTO) is struggling to keep up.

But now real change to the system is finally in the wings. In March, reports, the Senate passed a bill to revamp U.S. patent law; in late June, the House of Representatives passed a similar bill. The America Invents Act and the Senate bill have several key aspects in common:

They would change U.S. patent law from a “first to invent” to a “first to file” system, meaning the first person to apply for a patent—rather than the first person to come up with the idea—would receive the patent. While this may sound odd to us, it’s actually the system used by most other nations, and it helps prevent conflicting claims by individuals who contest patents after they are granted.
They include provisions that would help keep patent battles from going to court.
They enable the U.S. Patent and Trademark Office to set fees and possibly keep them. (Right now, Congress sets fees, keeps the money and then gives a budget to the USPTO.) The change would enable the USPTO to charge higher fees for more complex patent reviews and lower fees for simpler ones, helping alleviate the underfunding that has contributed to the current backlog.

Next step: The two bodies just need to reconcile the differences between the bills—which should be fairly simple, since the only major difference in the two bills is how the Patent Office collects fees. Although no timetable has been set for reconciliation, President Obama has said he would sign a patent reform bill; once signed, this would be the first major change to the U.S. patent system since the 1950s.

How will the proposed changes help—or hurt—small business? There’s good news and bad news for inventors, depending on how you look at it. First, the good. According to David Kappos, director of the USPTO, being able to set and keep its own fees would allow the office to hire staff and update its IT infrastructure. Kappos has estimated the changes would allow the office to cut its backlog in half, ensuring that most patents are processed within one year of application.

Now, the bad: Many small business advocates are concerned the bill will hurt independent inventors by forcing them to compete with huge corporations for who can file first. With big companies having financial resources, R&D teams and legal armies on their side, will small businesses win?

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