Patent Reform Is Upon Us

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The Senate voted today to adopt the House of Representatives' version of the Leahy-Smith America Invents Act, advancing it to the president’s desk. President Obama has indicated his willingness to sign the bill into law in a timely fashion. Passage of the Act represents the culmination of more than six years of effort. Upon being signed into law, the Leahy-Smith America Invents Act will be the first major overhaul to the patent system in almost 60 years.

The Leahy-Smith America Invents Act can trace its birth to a debate initially sparked by a 2004 National Academy of Science report that recommended overhauling the patent system to address what it identified as weaknesses in questionable patent quality, rising transaction costs, and international inconsistencies in patent coverage. The report recommended the introduction of a mechanism for post-grant challenges of newly issued patents, amendments to simplify and reduce the cost of patent litigation, and harmonization of the U.S. patent law with European and Japanese patent law. The Act passed today addresses many of the themes first raised in the National Academy’s report. Only time will tell how effective these changes will be in decreasing pendency, increasing patent quality, and reducing transaction costs.

Inadequate funding for the Patent Office has consistently been identified as a factor contributing to the dual problems of growing pendency times and a perceived decrease in patent quality. The current backlog of patent applications has been estimated at more than 700,000 and insufficient funding, leading to fewer patent examiners, is frequently identified as a causative factor for the backlog. Ironically, the Patent Office actually takes in more money than it receives in its annual appropriation and it has been estimated that Congress has diverted nearly $1 billion from the PTO’s coffers over the last ten years.

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