After rejecting proposed amendments to a bill approved by the House last June, the Senate voted 89 to 9 to pass the bill, completing an effort of at least six years to overhaul the patent office’s operations and the procedures by which patents can be challenged.  President Obama, who has made his support for the bill a central piece of his focus on promoting jobs, is expected to sign it into law soon.  “Improved patent quality will benefit businesses across the economic spectrum,” said Senator Patrick J. Leahy, a Vermont Democrat who was a primary sponsor of the bill. “For years, low-quality patents have been a drain on our patent system, and in turn our economy, by undermining the value of what it means to hold a patent. Higher-quality patents will infuse greater certainty into the patent system, which will better incentivize investment in American businesses, create jobs and grow our economy.”  The bill, known as the America Invents Act, has not received universal acclaim. The bill changes the method for determining the priority of patent applications to a “first to file” system from the long-standing “first to invent” method.  Several groups representing small businesses, entrepreneurs and early-stage investors have said that change puts small companies, which usually account for the bulk of new jobs, and individuals at a disadvantage to large companies that employ fleets of patent lawyers.  “This bill is unequivocally a job killer,” said Valerie S. Gaydos, a Baltimore-based investor in early-stage companies. “It will create a rush to the patent office, with innovators seeking to file anything and everything. The applications will be less complete, less well written and it will create more of a backlog.”  David S. Kappos, the patent office director and under secretary of commerce for intellectual property, disagreed, saying that the first-to-invent system was flawed because it essentially granted an inventor the right to legally defend his contention that he came up with an idea first. By changing to a first-to-file system, which is used in nearly every other country around the world, priority is clearly established, he said.  Many large corporations — like General Electric, Caterpillar and I.B.M. — supported the bill, which opponents suggested was evidence that the bill favors behemoths at the expense of the little guy. They point out that Mr. Kappos worked at I.B.M. for 27 years before taking the patent office job.  One of the bill’s main goals is to relieve the patent office’s backlog of applications, which has grown considerably in recent years. It now takes, on average, two years to get a preliminary ruling on an application, and an additional year for final grant, the patent office says.  The Internet age has created a surge in applications: in 1997, 2.25 patents were pending for every one issued, but by 2008 the rate had nearly tripled, to 6.6 patents pending for every one issued, according to patent office statistics. A backlog of about 700,000 applications is made worse by computer systems that are out of date, Gary F. Locke, the secretary of commerce, has said.  Lawmakers are betting that the backlog will be helped by giving the patent office access to more money. The agency already pays its own way, generating revenue from fees for applications and maintenance of patents. Revenue has usually exceeded the amount appropriated to the patent office by Congress, and legislators have often used the excess money for unrelated projects.  The bill addresses that by setting up a reserve fund for the collection of any fees in excess of the annual appropriation. But the patent office has to return to Congress for specific authority when it wants to tap the reserve.  That provision was put in place by the House, which feared losing budgetary authority over the patent office. The Senate in March passed a bill that would have given the patent agency direct access to all of the money it raised through fees.  When the House bill was returned to the Senate, Senator Tom Coburn, an Oklahoma Republican, tried to amend the bill to go back to the Senate financing version, but the amendment was killed Thursday.  Also defeated was an amendment that would have stripped a provision from the bill that clarifies a method of calculating the deadline for applications to extend a patent. Senator Jeff Sessions, an Alabama Republican who sponsored the amendment, said that the change was actually meant to benefit a single company and its law firm, which might have missed such a deadline in 2001.  A third amendment, by Senator Maria Cantwell, a Washington Democrat, also was defeated. The amendment would have created a transitional program for consideration of business method patents.  The bill also contains a provision for an eight-year period of postgrant review of patents already issued. The measure was specifically aimed at so-called business method patents, which provide protection for a unique method of performing a task. The measure was heavily favored by the banking industry, which has been beset by patent infringement suits over things like electronic imaging of paper checks. The bill also provides a new method for challenges to be made to patent applications before a patent is granted.
The Senate sent to President Obama a bill that changes the system for determining priority at the patent office for inventions and provides additional financing for an agency.