Congress Introduces Patent Reform

Smith called his Patent Reform Act of 2005 “without question, the most comprehensive change to U.S. patent law since Congress passed the 1952 Patent Act.

“The bill would eliminate legal gamesmanship from the current system that rewards lawsuit abuses over creativity. It will enhance the quality of patents and increase public confidence in their legal integrity,” he said.

The patent system has come under heavy criticism over the last decade from analysts and businesses who complain it hasn’t kept up with technology and leaves the door wide open for frivolous lawsuits.

“It’s a step in the right direction, but it doesn’t fix the deeper problems in the patent system,” Electronic Freedom Foundation staff attorney Jason Schultz told XBiz.

“Currently, it’s easy to game the system. There are some ridiculous patents coming out of the patent office. People want to claim patents for things like streaming media, hyperlinking and sending instant messages with smiley faces to their buddies.”

In order to get patent, Schultz explained, the applicant is supposed to be required to prove that the technology is novel, meaning it’s something that has never been done before, and that it is not obvious, meaning it represents a substantial leap forward in technology.

“The problem is that judges have lowered the bar on getting a patent and virtually eliminated the obviousness test,” Schultz said, “and that has made it easier for people to get for and sue over something that was readily available.”

Most substantial among the changes, the bill includes a “first-to-file” provision that would award intellectual property rights to the first person or group that files a patent and eliminates the one-year grace period during which others can dispute the application.

First-to-file is the prevailing standard in most European countries, and backers say it will help cut down on lawsuits by eliminating the need to determine who invented something first.

But Mike Masnick, CEO of analysis site TechDirt, said he thinks it’s a bad idea. While he admitted there is a valid logistical reason for a first-to-file standard — namely that is easier to determine who filed first than who invented first — he argued the new system will discourage innovation.

“All this really does is give everyone the incentive to file for any idea as quickly as possible,” Masnick said. “That overloads the patent system.”

Masnick also questioned the policy shift that allows for challenges after a patent is awarded. “Why isn’t there a system to dispute a patent before it’s granted?” he asked. “That would clear up the issue before it becomes a problem and let examiners focus on the real inventions, rather than the things with prior art or that should be considered obvious.”

The bill would have to pass muster in both houses of Congress and get a presidential signature before it becoming law. In the meantime, it is expected to cause heated debate.