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House To Vote On Patent System Overhaul

Thu, 06/23/2011 - 7:48am
Jim Abrams, Associated Press

WASHINGTON (AP) -- After years of effort to modernize the patent system and assure the competitive edge of American inventors, a proposed overhaul neared a close vote in the House on Thursday.

The most significant update in 60 years sailed through the Senate in March on a 95-5 vote, but has run into resistance in the House.

The House's top Democrat, Rep. Nancy Pelosi of California, urged her party to vote against the bill because she said it favors large international companies.

The legislation is intended to reduce the backlog of patent applications that has inventors waiting years for a decision, make the system more efficient and less susceptible to lawsuits, and put the United States under the same filing system as the one used by the rest of the industrialized world.

Since the last overhaul in 1952, the world has gone "from computers the size of a closet to the use of wireless technology in the palm of your hand. But we cannot protect the technologies of today with the tools of the past," said Rep. Lamar Smith, R-Texas, chairman of the House Judiciary Committee.

But the plan has aroused bipartisan opposition on a number of fronts.

Some argue that a main feature, changing from a first-to-invent application system to a first-inventor-to-file system used by Europe and Japan, takes away property rights and thus violates the Constitution.

Others say a provision allowing financial institutions to challenge patents issued on business methods, such as ways to electronically process checks, amounts to a bank bailout.

There are lawmakers, mainly Democrats, upset because the House changed the Senate version to ensure that congressional budget-writers still will have a say in how much money the U.S. Patent Office is allotted every year. The House bill establishes a reserve fund for fees collected above what the office is budgeted.

The Senate bill allows the office to keep all the money it receives in user fees.

Since 1992, the office has lost nearly $1 billion because it gets less from Congress than the fees it collects, which go to the general Treasury. This loss in revenue is a reason that the agency is understaffed and it now takes an average of three years to get a patent approved. There's now a backlog of 1.2 million pending patents, including 700,000 that haven't reached an examiner's desk.

The chief Senate sponsor of the bill, Judiciary Committee chairman Patrick Leahy, D-Vt., and the White House said they continued to support the bill despite the House change in the office's revenue stream.

IBM said in a statement that the House approach was a reasonable compromise. "As the leading recipient of U.S. patents for 18 consecutive years, IBM strongly supports the legislation and urges speed passage," said IBM vice president Christopher A. Padilla.

But Rep. Mel Watt, D-N.C., top Democrat on the House Judiciary intellectual property subcommittee, said the House's version "will undermine that unifying thing that has held the groups together and allowed people to support the bill."

Associations that represent the major high-tech companies and those consisting of the big manufacturing, pharmaceutical, biotechnology and financial industries have indicated support for the legislation.

Opposition has mainly come from smaller-scale inventor groups, small businesses and academics who say the first-inventor-to-file system and new provisions on challenging patents will put them at a disadvantage against corporations.

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