Obama signs patent overhaul legislation

US President Barack Obama has signed the America Invents Act, the first major overhaul of the US patent system in about 50 years.

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US President Barack Obama has signed the America Invents Act, the first major overhaul of the US patent system in about 50 years.

The America Invents Act, passed 89-9 by the US Senate last week, would allow new challenges to patents granted by the US Patent and Trademark Office. It allows third parties to file a challenge to a patent within nine months of it being awarded.

The new law also creates a new challenge for finance-related business-method patents by companies that have been sued or accused of infringing them. The new mechanism for challenging business-method patents will apply retroactively to those patents, and the law opens an eight-year window for the USPTO to review business-method patents.

"Reforming the US patent system will enable businesses of all sizes to obtain clearer and more reliable intellectual property rights in a more expedient fashion, so they can attract investments, develop their products, and hire employees sooner," US government CTO Aneesh Chopra explained in the White House blog. "By transitioning to a simpler, more objective, and more inventor-friendly system of issuing patents, the new act helps ensure that independent inventors and small entities have greater clarity and certainty over their property rights and will be able to navigate the patent system on a more equitable footing with large enterprises."

Backlog of patents

The America Invents Act allows the USPTO to set fees for patents, and it will allow the agency to keep all of its patent fees, instead of having some money to back to the US treasury. Congress has diverted about $900 million from the patent office over the past two decades.

Those provisions will generate money the USPTO needs to address a backlog of about one million patent applications, said supporters, including sponsors Senator Patrick Leahy, a Vermont Democrat, and Representative Lamar Smith, a Texas Republican.

Several large tech companies, including Intel, Apple and Microsoft, have called for patent reform in recent years, and lawmakers have been trying to pass a bill for nearly six years. Earlier this year, the Senate stripped out limits on patent lawsuit damages that some large tech companies had supported.

Punishes small inventors, say critics

The law streamlines the patent review process at the USPTO and it would change American patent rules by giving a patent to the first person to file for it, not the first person to create a new invention. Changing to a first-to-file system puts the US in step with most other countries.

Some opponents of the bill have said it favours large patent holders over small inventors. The first-to-file provision will create a race to the USPTO and disadvantage small inventors who may not have the money to immediately file a patent application, said opponents, including Senator Maria Cantwell, a Washington Democrat.

The new law modernises the US patent system, said Mark Elliot, executive vice president at the US Chamber of Commerce's Global Intellectual Property Center.

"The legislation will help ensure that the USPTO is adequately staffed, efficiently operated, fully funded to reduce backlog, and process patent and trademark applications in a high-quality and expeditious fashion," he said in a statement. Reducing the backlog of patents at the USPTO "is essential to encouraging innovation and bolstering the US economy."

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