1.  Regular applicants:  You’re a big boy or girl and you pay full freight.  Enough said.

2.  Small Entity applicants:  you qualify for a 50% reduction in fees, same as before.

3.  Micro-Entity applicants (new):  you qualify for a 75% reduction in fees, a wholly new class.

Applicants will need to determine — for each and every application — if they qualify for micro-entity status or small entity status, as defined below.  The status of applications needs to be determined on a case-by-case basis — and on a continuing basis — since some applications may be licensed or otherwise encumbered such that it is not entitled to micro- or small-entity status.

So, here’s the starting point in the new law:

SEC. 10. FEE SETTING AUTHORITY.

(a) Fee Setting-

(b) Small and Micro Entities- The fees set or adjusted under subsection (a) for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be reduced by 50 percent with respect to the application of such fees to any small entity that qualifies for reduced fees under section 41(h)(1) of title 35, United States Code, and shall be reduced by 75 percent with respect to the application of such fees to any micro entity as defined in section 123 of that title (as added by subsection (g) of this section).

Now, to claim the correct status for any particular application, applicants will need to skim all over the U.S. Code to piece together all the necessary definitions.

In general, you need to see if your application falls into one of the two, reduced fee classes of micro- and small-entities.

Micro Entity Status

   Sec. 123. Micro entity defined

‘(a) In General- For purposes of this title, the term ‘micro entity’ means an applicant who makes a certification that the applicant–

‘(1) qualifies as a small entity, as defined in regulations issued by the Director;

‘(2) has not been named as an inventor on more than 4 previously filed patent applications, other than applications filed in another country, provisional applications under section 111(b), or international applications filed under the treaty defined in section 351(a) for which the basic national fee under section 41(a) was not paid;

‘(3) did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and

‘(4) has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.

…

‘(d) Institutions of Higher Education- For purposes of this section, a micro entity shall include an applicant who certifies that–

‘(1) the applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965; or

‘(2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education.

Alas, you ask, what constitutes said Institutions of Higher Education?  For that, we have to turn to (20 U.S.C. 1001(a)):

   Institution of higher education

For purposes of this chapter, other than subchapter IV, the term “institution of higher education” means an educational institution in any State that -

(1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate;

(2) is legally authorized within such State to provide a program of education beyond secondary education;

(3) provides an educational program for which the institution awards a bachelor’s degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree;

(4) is a public or other nonprofit institution; and

(5) is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted pre-accreditation status by such an agency or association that has been recognized by the Secretary for the granting of pre-accreditation status, and the Secretary has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.

(b) Additional institutions included

For purposes of this chapter, other than subchapter IV, the term “institution of higher education” also includes –

(1) any school that provides not less than a 1-year program of training to prepare students for gainful employment in a recognized occupation and that meets the provision of paragraphs (1), (2), (4), and (5) of subsection (a) of this section; and

(2) a public or nonprofit private educational institution in any State that, in lieu of the requirement in subsection (a)(1) of this section, admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located.

This last section (b) leaves a lot of questions.  Looking at paragraph (b)(1), it say “any school that provides not less than a 1-year program of training to prepare students for gainful employment in a recognized occupation.”

Seriously, if you include paragraph (b)(1), why have paragraph (a)(3)?  It’s like saying you have to be four feet tall but the definition also includes people that are three feet tall.

What institution is deemed a “school“?  I can’t find a legal definition although it usually refers to lower levels of study and not universities, colleges, or other institutions of higher education but it must meet the requirements of paragraphs (1), (2), (4), and (5) of subsection (a).  It must mean something different than “educational institution” used in paragraph (a) and paragraph (b)(2).

Would this include a hospital with a nursing program?  But the hospital itself is not a school.  What about a research institute that functions to provide part of a course curriculum for a college or university?

A karate school could be said to be legally authorized within such State to provide a program of education beyond secondary education and could by accredited by a nationally recognized accrediting agency or association (see Tsuki Bu-Do Kai Martial Arts Society International)

I can think of a lot of different kinds of schools:

• vocational school
• bible school
• painting school
• finishing school
• home school
• old school
• school of hard knocks

You get the idea.

What are your thoughts?

Related posts:

1. More Reaction to Passage of the America Invents Act (H.R. 1249)
2. H.R. 1249, the America Invents Act, Passes in the House
3. Have questions on the America Invents Act? Tweet the White House

Well, it looks like it’s all over but for the crying.  The Senate voted 89 to 9 to pass the Patent Reform Act bill yesterday.

The Senate rejected proposed amendments to the house bill H.R. 1249, approved by the House last June, including:

• An amendment by Sen. Tom Coburn, R-OK, to go back to the Senate financing version;
• An amendment to strip out a provision from the bill that clarifies a method of calculating the deadline for applications to extend a patent. Cheers, MDCO!
• An amendment by Sen. Maria Cantwell, D-WA, that would have created a transitional program for consideration of business method patents.

The bill, known as the America Invents Act, changes the method for determining the priority of patent applications to a “first to file” system from the long-standing “first to invent” method.  Hold on to your butts, folks.

Partyin’, partyin’ (Yeah)
Partyin’, partyin’ (Yeah)
Fun, fun, fun, fun
Lookin’ forward to the weekend…

Related posts:

1. Patent Reform Bill Inches Ahead (As Amended)
2. Patent Reform Bill Shopped
3. House Passes Amended Version of Patent Reform Act of 2007

clo·ture.  noun /ˈklōCHər/  (in a legislative assembly) A procedure for ending a debate and taking a vote; a cloture motion.

(*update: The Senate voted 93-5 to end debate on a motion to proceed with the bill, limiting debate to 30 hours.) 

The Leahy-Smith America Invents Act, H.R. 1249 passed the House in June by 304-117, in June.  Now, Senate Majority Leader Harry Reid (D-Nev.) has filed for cloture on the patent reform bill, setting up a vote today.

The Senate is scheduled to vote on the motion to end debate on the America Invents Act of 2011 and then vote on the bill itself. The bill to be voted on by the Senate is word for word from HR 1249, the patent reform measure passed by the House of Representatives on June 23.

By adopting the House version of patent reform, the Senate loses on some provisions of the bill.

Funding

The patent bill passed by the Senate in March ended the practice of fee diversion — diverting USPTO revenues to other parts of the government, and allowed the USPTO to keep the fees collected. It is estimated that Congress has diverted about $1 billion in fees since 1992.

The House version creates a sequestered account for USPTO revenue in excess of appropriated funds, for use exclusively by the USPTO.  As pointed out by Patrick Anderson of Gametime IP, the excess funds may be used by the USPTO if, and only if, provided in appropriations Acts by Congress.  That meaning there is no guarantee how much in excess funds will be available, if any amount at all.  To access that money, the USPTO must submit requests to the House Appropriations Committee. However, the fund give the USPTO a 15% fee surcharge and the authority to set rates going forward.

Clarification:

Earlier this year, the Senate voted 95-5 to approve legislation guaranteeing funds collected by the US Patent and Trademark Office (USPTO) would be used to pay for patent examination and related expenses (S.23 Section 20).  That is, providing that “amounts deposited into the Fund under paragraph (2) shall be available, without fiscal year limitation.” (emphasis added)

In contrast, the House of Representatives amended this such that any user fees that exceed the USPTO’s allocated funding would be placed into a special account, Congress could then appropriate to the USPTO. (H.R. 1249 Section 22), if it felt moved to do so.  It remains to be seen if the Senate decides to press for the end to fee diversion.

Supporters of the bill point out that there has been no significant fee diversion in the past decade.

Post-grant Review

A petition for a post-grant review must be filed no later than 9 months after the grant of the patent or issuance of a reissue patent  (correction via Prof. John Villasenor, UCLA).  Post-grant proceedings would be conducted by a new Patent Trial and Appeal Board, with the current Board of Patent Appeals and Interferences abolished.

The House bill also creates a new inter partes review allowing third-party challenges to patents after they have been granted, limited to prior art consisting of patents and printed publications. Inter partes review may only be sought after a post-grant review, or after the one-year time period expires for requesting third-party review.

Money, Money, Money

According to the Congressional Budget Office, the House bill is projected to cost $446 million between FY 2011–2016, but will ultimately cut $717 million from future budget deficits, mostly since USPTO fees will be reclassified from offsets to discretionary spending to offsetting receipts.

At 5:00 PM, the Senate will proceed to an Executive Session to consider Cal. #109 (Bernice Bouie Donald to be United States Circuit Judge for the 6th Circuit).  There will be 30 minutes of debate followed by a vote on the nomination.  Immediately following the judicial nomination vote, the Senate will proceed to a cloture vote on the Motion to Proceed to H.R. 1249 (Patent Reform Bill).

I’m sure you’ll be glued to C-SPAN.

Related posts:

1. Patent Reform Bill Vote Reactions Show Cooler Heads Can Prevail
2. Patent Reform Act Stumbles Over Control of Money
3. H.R. 1249, the America Invents Act, Passes in the House

There’s more reaction to the passage of The Leahy-Smith America Invents Act, H.R. 1249, by the House of Representatives.

The Biotechnology Industry Organization (BIO) came out in support of the bill.  President and CEO Jim Greenwood said:

“The Leahy-Smith America Invents Act will bring our patent system into the 21st century.  The improvements made by the bill will benefit all sectors of the national economy by enhancing patent quality and the efficiency, objectivity, predictability and transparency of the U.S. patent system.”

But, Greenwood indicated that the issue isn’t final just yet saying:

“BIO will continue to work with House and Senate leaders to ensure that final patent reform legislation addresses any remaining concerns and is enacted into law this year.”

The U.S. Chamber of Commerce applauded passage of H.R. 1249 as  an important piece of legislation that would help ensure the U.S. Patent and Trademark Office (USPTO) has the necessary resources to revitalize America’s patent system:

“Businesses’ ability to innovate and create quality jobs should not be hindered by stalled patent applications,” said Bruce Josten, Chamber’s executive vice president for Government Affairs.  “This bill, which makes long over-due and needed reforms, is a critical tool to ensure that the PTO is adequately staffed, efficiently operated, and fully funded to process patent and trademark applications in a high-quality and expeditious fashion.”

The  American Innovators for Patent Reform (AIPR), an  advocacy group for inventors, opposed the legislation saying:

“We are very concerned that the change to a first-to-file regime and post-grant opposition will stifle innovation in the U.S., and because the House version of the bill fails to provide full funding for the U.S. Patent and Trademark Office (USPTO),” says Alexander Poltorak, AIPR’s founder and president. “This legislation was bought and paid for by large corporations which see being forced to pay royalties for technology invented by others as an unfair business practice. Faced with the escalating costs of defending their patent validity when challenged by post-grant oppositions, I fear that many inventors and small businesses will keep their inventions as trade secrets instead of patenting them, contrary to the intent of the Founding Fathers who envisioned the patent system as a mechanism to encourage disclosure of inventions to stimulate the progress of science and technology as they enshrined it in the Constitution.”

Others were also disappointed that the Act still contains the controversial Section 18 of the bill, which many argue was designed solely to make it easier for financial institutions to challenge business method patents:

Note:  The House approved several amendments to the bill, and because it differs from the version passed by the Senate on March 8, it now must go back to the Senate for reconsideration.

Related posts:

1. H.R. 1249, the America Invents Act, Passes in the House
2. Rep. Conyers Speaks Out Against H.R. 1249
3. Patent Reform Act Stumbles Over Control of Money

Representative Mike Michaud (D-ME) voted in favor of the bill saying:

“We need to make it easier for companies to innovate and make things here at home, and this bill does that,” said Michaud. “Although I was disappointed that the bill did not improve the funding structure for the Patent and Trademark Office, I am pleased that provisions were added to make it better for U.S. manufacturing. This bill shows how effective Congress can be when both sides of the aisle work together. I look forward to working in a bipartisan fashion with my colleagues to further advance U.S. manufacturing and see this bill through the conference process with the Senate.”

Rep. Don Manzullo (R-IL) voted against the bill after proposing two amendments to a) totally transform the bill by simplifying it with a plan focused solely on reducing the huge backlog in patent applications, and b) eliminate one section of the bill that gives the Patent & Trademark Office the ability to set its own fees.  Both amendments failed.

“This bill would weaken our strong patent system that has protected American entrepreneurs for centuries from overseas companies trying to pirate their inventions,” Manzullo said. “Any patent reform we undertake should focus on reducing the backlog in patent applications, not dramatically altering the system and giving multinational corporations advantages over American innovators. The last thing we should be doing right now is giving foreign companies an even greater opportunity to take our ideas and our jobs.”

Manzullo also believes the bill is unconstitutional (earlier this month, the Supreme Court reaffirmed that patent rights belong to the inventor) and unnecessarily adds a new post-grant review provision that will further delay and add further litigation to the patent approval process.

The Innovation Alliance voiced its disappointment that the House of Representatives approved legislation that will not end permanently the diversion of user fees from the U.S. Patent and Trademark Office (USPTO):

“Along with many other patent stakeholders across a range of sectors and business models, we believe that the anti-fee diversion provisions approved by an overwhelming vote of 95-5 in the U.S. Senate and a 32-3 vote in the House Judiciary Committee offer the USPTO the reliability and structure it needs to reduce today’s significant backlog of 700,000 patent applications.  Reducing the patent backlog and strengthening the USPTO is essential for driving innovation, job creation, and economic growth.”

Related posts:

1. House Passes Amended Version of Patent Reform Act of 2007
2. House of Representatives to Consider Patent Reform Act
3. Biodefense and Pandemic Vaccine and Drug Development Act Passes Committee