UPDATE 2-Patent overhaul bill clears U.S. House

Thu Jun 23, 2011 6:50pm EDT

* Senate has already passed similar version* Lets patent office set fees, aims to reduce litigation
* Critics say harder for inventors to defend patents
* House version still keeps a leash on funds (Adds comment from companies, lawmakers)

WASHINGTON, June 23 (Reuters) - Patent legislation that aims to clear a years-long backlog of applications and allows the patent office set its own fees was approved by the U.S. House of Representatives on Thursday.
Supporters say the bill will help the patent office hire more examiners and clear out more than 700,000 applications that are awaiting approval or rejection.
Critics say the measure will make it harder for inventors to defend their patents against infringement.
The House voted 304 to 117 to approve the bill. The Senate passed a very similar bill by an overwhelming margin in March. Differences between the two versions must now be ironed out.
The Business Software Alliance, Eli Lilly and Co (LLY.N) and International Business Machines Corp (IBM.N) all praised the bill as good for their companies.
"The average wait time for patent approval in the U.S. is three years," said Representative Lamar Smith, who shepherded the bill through the House.
He said unwarranted lawsuits typically cost $5 million dollars to defend and prevent legitimate inventors and companies from creating products and generating jobs.
"I look forward to working with the Senate to get a bill to the president's desk and finally seeing these important reforms enacted into law," he added.
The legislation would change the U.S. patent application system to a "first inventor to file" procedure, instead of requiring inventors to prove that they were the first to come up with the innovation they are requesting a patent on.
Other provisions in the bill aim to prevent bad patents from being issued, by allowing third parties to provide information on why an application should be rejected.
The bill also amends rules for challenging patents after they are granted, which proponents say is cheaper than litigation.
One of the last stumbling blocks to House passage had been a dispute between the House Judiciary and Appropriations Committees over how to fund the U.S. Patent and Trademark Office.
Under a compromise reached this week, the PTO would set its own fees but any surplus money would go into a fund overseen by congressional appropriations panels.
But some lawmakers remain critical of the House version because of the continued meddling with PTO finances.
"What the House passed today is not the comprehensive reform that our country needs," said Representative John Conyers. "(The bill) fails to include the most important reform we could have enacted -- ending the diversion of fees from the Patent and Trademark Office." (Reporting by Diane Bartz; Editing by Tim Dobbyn)

http://www.reuters.com/article/2011/06/23/patent-congress-idUSN1E75M1XH20110623?feedType=RSS&feedName=governmentFilingsNews&rpc=43