US Needs Patent Revisions, Experts Tell Lawmakers Crafting Bill

Congress needs to amend patent law, which is outdated, overcomplicated and causing the U.S. to fall behind competitors in China and Europe, experts told the Senate Intellectual Property Subcommittee Tuesday.

Chairman Thom Tillis, R-N.C., and ranking member Chris Coons, D-Del., released draft legislation to revise Section 101 of the Patent Act. House Judiciary Committee Chairman Doug Collins, R-Ga.; Rep. Hank Johnson, D-Ga.; and Rep. Steve Stivers, R-Ohio, are leading efforts in the lower chamber. Tillis’ subcommittee will hear from some 45 witnesses over three days, including a second hearing Wednesday. Section 101 hasn't been updated since 1952, and much of the language hasn't been altered since 1793. Patent eligibility uncertainty means less investment in innovation and technology, Coons said Tuesday.

Draft legislation would alter 101 to require “whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent." It would mean eligibility is “determined only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation.”

It’s easier to secure IT patents in China and Europe, said PTO Director David Kappos. He cited identical applications being accepted in China and Europe but rejected in the U.S. Section 101 is undermining investment in artificial intelligence, quantum computing and 5G -- all matters of national security, Kappos said.

Uncertainty about eligibility is the No. 1 patent issue that deters investment and means many inventions are excluded even when every test is passed, said retired U.S. Court of Appeals for the Federal Circuit Chief Judge Paul Michel. Courts have created issues, and Congress needs to come to the rescue, he said. The law needs to be changed, and PTO can’t do that, Kappos said.

The office doesn’t have substantive rulemaking authority, and it should, said former Director Todd Dickinson, noting he might be in the minority there. Supreme Court interpretations of Section 101 have created problems, he said, leading to a hindsight-informed, analytical system that encourages the picking of winners and losers in technology and incentivizes hiding of technology to keep locked away as trade secrets.

The committee should study the European patent office’s approach under Article 52 of the European Patent Convention, said University of California College of Law Associate Academic Dean Jeffrey Lefstin. Article 52 dealt with similar issues for the past 45 years or so, he said.

Southern Methodist University associate law professor David Taylor called it a “crisis” of widespread confusion producing incorrect results. It’s “exceedingly difficult to understand” whether a patent examiner or a court should find subject matter eligibility for patenting given the Supreme Court’s current test, he said. The confusion reduces incentives to invent and invest in research and development of technology, he said.

The top court is essentially saying to Congress, “We’re going to continue with our inconsistent interpretations until you stop us,” said Knowles Intellectual Property Strategies Principal Sherry Knowles. The high court refers back to its own cases, rather than federal law, she said.

The committee needs to ensure it doesn’t worsen the situation, said Stanford School of Law professor Mark Lemley. Most of the concern has focused on Supreme Court cases in the past 10 years, but Congress shouldn’t sweep away 200 years of court decisions that have created benefits, he said. Policymakers shouldn’t focus on weeding out bad patent challenges at the end of long, costly patent cases, but instead find a way to help small businesses reach quick resolutions over disputes.