“House lawmakers passed legislation to overhaul the U.S. patent system for the first time in nearly 60 years”

Depending on who you follow, Congress has either delivered a great gift to entrepreneurs and inventors, or shackled them with a terrible handicap: the House last week passed legislation to overhaul the U.S. patent system for the first time in 60 years, making the effort one step away from being put before President Obama’s executive pen.

As reported by The Wall Street Journal, the House managed a bipartisan maneuver with more than two-thirds of lawmakers from each party supporting the “America Invents Act,” passing it on a 304-117 vote. The overhaul essentially breaks down into two big changes. Firstly, it revises the way that the patent office handles its funding and fees. Under the new law, since the office supports itself on the basis of its fees, it therefore gets to keep all of its fees as budget, rather than have them siphoned off by Congress (note here that as much as $800 million has been diverted to other programs over the past 20 years.) The hope is that the money will help clean up the staggering backlog of some 700,000 applications.

The second change, of greater importance to the small business owner and entrepreneur, is the move from a “first-to-invent” system to “first-to-file.” Here is the blessing and the curse. If your patent is challenged, proving that you were the first to invent can involve drawn-out and expensive legal battles. For the up-and-coming inventor whose very business might rely on that patent, the legal squabble is often too much for them, where a conglomerate can absorb the drain with ease in a battle of attrition. Of course, on the other side of things that legal battle is often the only tool the entrepreneur/inventor has; it is his sling to wield against Goliath.  What happens when big business can simply move quicker with an entrepreneur’s ideas?

The Senate has passed a similar bill and so the final matter at hand is to reconcile the two before passing it up to the Executive branch. President Obama has already pledged his support for overhaul.

Reference:  The Wall Street Journal Online (June 24, 2011) “Patent-Overhaul Bill Clears House


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