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Patent system's biggest overhaul in 60 years is due for House vote

The House on Wednesday took up the most far-reaching overhaul of the patent system in 60 years, a bill that leaders in both parties said would make it easier for inventors to get their innovations to market and help put people back to work.

The legislation, supported by the Obama administration and a broad range of business groups and high-tech companies, aims to ease the lengthy backlog in patent applications, clean up some of the procedures that can lead to costly litigation and put the United States under the same filing system as the rest of the industrialized world.

The Senate passed a similar bill last March in a 95-5 vote. If the bill makes it to the White House for the president's signature, it could be one of the first congressional actions this year to have a concrete effect on business after months of the Republican-led House voting on bills that head straight for the political graveyard of the Democratic-controlled and slow-moving Senate. A final vote is expected this week.

The first overhaul of the patent system since 1952 has faced resistance. A planned vote last week was put off after the GOP chairmen of the Budget and Appropriations committees objected to a critical element that would allow the U.S. Patent and Trademark Office to keep all the user fees that it collects.

Currently those fees go to the general Treasury fund, and Congress appropriates money for the Patent and Trademark Office, or PTO. But since 1992, that office has lost nearly $1 billion because the sums it gets from Congress are less than the fees. This fiscal year, the agency had authority to spend $2.1 billion, about $85 million less than it expects to receive in fees.

That's a major reason that the agency can't hire enough examiners, that it takes an average of three years to get a patent approved and that the agency has a backlog of 1.2 million pending patents, including more than 700,000 that haven't reached an examiner's desk.

A compromise reached this week sets up a reserve fund for any fees collected in excess of the money the PTO receives from Congress. The agency would thus get more money while Congress would still control the purse strings and get more oversight authority.

The second pillar of the legislation is a provision that would switch the United States from the "first-to-invent" system now in effect to the "first-inventor-to-file" system for patent applications used by all other industrialized countries.

Former House Judiciary Committee Chairmen F. James Sensenbrenner, R-Wis., and John Conyers Jr., D-Mich., question the constitutionality of the change, and some colleges and small-scale inventors say the change would favor large corporations and stifle academic cooperation.

Alexander I. Poltorak, head of the American Innovators for Patent Reform, representing independent inventors, university researchers and small companies, said the bill gives big corporations an advantage by weakening the one-year grace period under which an inventor can develop his product before filing for a patent and giving corporations more post-grant challenging rights.

But supporters say the current system, in addition to being out of sync with the rest of the world, invites costly litigation over patent ownership that deters the raising of capital. The PTO says that it costs $400,000 to $500,000 to pursue an interference proceeding, claiming the right to a patent based on an earlier invention.

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