House Approves Patent-Reform Bill

June 29, 2011

The U.S. House of Representatives last week approved the NSBA-opposed America Invents Act (H.R. 1249). Specifically, the House approved a manager’s amendment and 14 additional non-controversial amendments in a 304-117 vote.

The manager’s amendment includes an attempt to reach a compromise on the U.S. Patent and Trademark Office (USPTO) fee-diversion issue. H.R. 1249 would allow the agency to keep the fees it collects in a “Reserve Fund” that would be released to it only “[t]o the extent and in the amounts provided in appropriations Acts.”

Previously, Reps. Paul Ryan (R-Wis.), chair of the House Committee on the Budget, and Harold Rogers (R-Ky.), chair of the House Committee on Appropriations, had expressed their objection to the provisions in the original bill that would have allowed the USPTO to collect and spend the fees it collects without going through the appropriations process.

They wrote:We strongly oppose this proposed shift of billions in discretionary funding and fee collections to mandatory spending. Putting USPTO funding on auto-pilot is a move in exactly the wrong direction, given the new Republican majority’s commitment to restraining spending, improving accountability and transparency, and reducing the nation’s unparalleled deficits and debt.”

The Senate version of the America Invents Act (S. 23) would create a “USPTO Revolving Fund” to ensure that all the fees collected by the agency remained under the agency’s control until they were expended. NSBA supports the Senate method. USPTO fee diversion has resulted in an underfunded and overworked agency. The USPTO must be guaranteed the funds it collects so it can adequately address its unacceptable backlog of 700,000 patent applications and condense the current three-year application process.

It is unclear how the divergence on fee-diversion between the House and Senate bills will be resolved in conference, as the issue has generated widespread concern. The alterations to the House bill contained in the manager’s amendment forced some groups to alter their stance on the underlying legislation, as many organizations view ending fee diversion as the single most important aspect of patent reform.

While greatly preferring the Senate fee-diversion provisions, NSBA will remain opposed to the underlying legislation regardless of which approach ultimately is adopted.

NSBA is firmly opposed to the provisions in America Invents Acton post-grant patent challenges and its effective elimination of the American grace period. NSBA is highly disappointed that Congress failed to adequately consider theeffect the legislation would have on America’s entrepreneurs and ignored the needs of the small-business community.