Coalition Opposes Expansion of AIA § 18

Washington - Capitol #3Last week, a coalition of more than 100 companies and organizations including the Biotechnology Industry Organization (BIO), the California Healthcare Institute (CHI), and Eli Lilly & Company, sent a letter to Congressional leaders to express their "opposition to recent legislative proposals expanding the America Invents Act's 'covered business method patent' program."  The letter contends that "[t]hese proposals could harm U.S. innovators -- a driving force of economic growth and job creation in this country -- by unnecessarily undermining the rights of patent holders."  The make-up of the coalition was interesting in that it included industry groups, organizations, and companies in the medical devices, pharmaceuticals, and biotechnology industries, as well as expected representatives from the technology, communications, manufacturing, financial services, and software industries.

The Transitional Program for Covered Business Method Patents, which was established by § 18 of the Leahy-Smith America Invents Act, provides a transitional post-grant review proceeding for reviewing the validity of covered business method patents, which the section defines as "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions."  To date, bills "to make improvements to the transitional program for covered business method patents" have been introduced in both the House (H.R. 2766) and Senate (S. 866). The Senate bill, entitled the Patent Quality Improvement Act of 2013, was introduced in May by Sen. Charles Schumer (D-NY), and the House bill, entitled the Stopping the Offensive Use of Patents (STOP) Act, was introduced in July by Rep. Darrell Issa (R-CA).  Both bills would change the definition of a covered business method patent to "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of an enterprise, product, or service, except that the term does not include patents for technological inventions" (change in bold and italics).  H.R. 2766 would also eliminate the sunset provision of the transitional program (as well as establish a pro bono program at the USPTO "to assist financially under-resourced resellers, users, implementers, distributors, or customers of an allegedly infringing product or process").  H.R. 2766 has been referred to the House Committee on the Judiciary, and S. 866 has been referred to the Senate Subcommittee on Courts, Intellectual Property, and the Internet.

The coalition letter, which was sent to Sen. Patrick Leahy (D-VT), Chairman of the Senate Committee on the Judiciary; Sen. Chuck Grassley (R-IA), Ranking Member of the Senate Committee on the Judiciary; Rep. Bob Goodlatte (R-VA), Chairman of the House Committee on the Judiciary; and Rep. John Conyers, Jr. (D-MI), Ranking Member of the House Committee on the Judiciary, argues that the above legislation proposes to make the transitional proceedings of § 18 permanent and expand the definition of 'covered business method patent' such that "any party sued for or charged with infringement can always challenge an extremely broad range of patents at the USPTO" (emphasis in original).  The letter suggests that the proposed change to the program "would have far-reaching implications, because data processing is integral to everything from cutting-edge cancer therapies to safety systems that allow cars to respond to road conditions in real time to prevent crashes," and contends that "[s]ubjecting data processing patents to the CBM program would thus create uncertainty and risk that discourage investment in any number of fields where we should be trying to spur continued innovation."  The coalition letter also notes that the change could also impact the relationship of the United States with its trading partners, because "it is clear that if this discriminatory treatment of a select category of patents opposed by special interests in the United States were to be made a permanent feature of U.S. law, it would create a harmful precedent for our trading partners to enact exceptions in their laws to protect special interests in their countries."


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