Posted by Horacio Gutierrez
Corporate Vice President & Deputy General Counsel

Reform of the U.S. patent system continues to make significant strides, with the introduction of the “America Invents Act of 2011” (HR 1249) by House Judiciary Committee Chairman  Lamar Smith (R-TX).

Microsoft supports the bill, which would:

• Establish a system to ensure needed funding for the U.S. Patent and Trademark Office (USPTO) to continue to improve patent quality and reduce pendency;

• Move the U.S. to adopt a “first inventor to file system,” enabling greater harmonization of patent processes with other countries that already follow this approach, and adopting the international norm of a "prior user rights" system to protect those who invented and implemented earlier but chose not to file patent applications; and

• Provide the USPTO with additional administrative tools, including a new post-grant review procedure, to help eliminate questionable patents, and provide more reasonable timelines to invoke that procedure and the inter partes review system.

The House bill, like its Senate counterpart, focuses on key elements of patent reform around which  all interested parties can find common ground, while moving beyond controversial issues that have held up passage in prior years. With the Senate having already passed similar legislation, the prospect for enactment of these needed reforms looks brighter than ever.

We are pleased to see this momentum and continued progress towards strengthening the U.S. patent system. We remain concerned, however, about two little-considered provisions in the House bill (both of which are also present in the Senate bill) that would establish special rules applicable to so-called tax strategy and business method patents. While we understand the concerns that motivate these provisions, we believe that they are out of step with international practice and will lead to unintended consequences.

The U.S. has been a strong proponent of robust IP protection worldwide, including patent protection for inventions in all fields of technology, including cutting-edge technologies. If our country begins to adopt special rules based on the subject matter of the patent, it could encourage other countries to do the same, potentially weakening essential IP protections for American innovators around the globe. And within the U.S., the ambiguous definitions of what patents relate to tax strategies or business methods could lead to confusion in the marketplace and to increased litigation.

As many Members pointed out during the March 30 hearing on HR 1249 before the Subcommittee on Intellectual Property, Competition and the Internet, now is the time for stakeholders of all perspectives to come together toward consensus on this important legislation, and to avoid inserting new or controversial provisions that could threaten progress toward enactment. We look forward to working with Congress and other stakeholders toward enactment of consensus reform that fosters U.S. innovation and promotes the health of the U.S. and global patent systems.