Following the early March announcement from Sen. Patrick Leahy (D-Vt.), chair of the U.S. Senate Committee on the Judiciary, that he had reached a “tentative agreement in principle” on a compromise patent reform bill with Sen. Jeff Sessions, the committee’s ranking Republican member, NSBA has been sounding the alarm on potential pitfalls of this compromise legislation.

NSBA chiefly objected to two key elements of the original patent reform bill (S. 515): its provisions pertaining to post-grant patent challenges and its conversion of the U.S. patent system from a first-to-invent to a first-to-file system.

Although NSBA believes that many of the most egregious aspects of the original bill’s post-grant patent challenge provisions were addressed by the compromise language, it still is of the opinion that its changes to post-grant patent challenges would put small-business patentees at greater risk than the current system. The complete lack of consideration of how the radical transformation to a first-to-file invention priority system would affect small, innovative firms and independent inventors remains unaddressed and highly problematic.

As NSBA communicated to Senate leadership in early 2009, “It is imperative that any effort to modernize and improve America’s patent system carefully consider the effect on the nation’s small businesses.” This analysis has never been performed, let alone considered.

NSBA, therefore, is pleased that Sen. Mary Landrieu (D-La.), chair of the U.S. Senate Committee on Small Business and Entrepreneurship, introduced late last week a bill that would address the alarming lack of consideration of how innovative small firms and independent inventors would be affected by the conversion from a first-to-invent to a first-to-file system.

The Small Business Patent Data Collection Act (S. 3089) directs the Office of Advocacy at the U.S. Small Business Administration to conduct a study in consultation with the U.S. Patent and Trademark Office (PTO), analyzing if the conversion to a first-to-file system would harm small firms’ ability to obtain patents and if so how and what the overall potential costs and benefits of the transfiguration would be for small businesses.

While highly appreciative of Landrieu’s efforts, NSBA will continue to push for a final bill that delays the implementation of the first-to-file conversion until a complete analysis of how the transformation will affect small firms and what the benefits of such a conversion would be has been completed.

NSBA continues to assert that the proponents of this wholesale transformation bear the burden of proof on its purported benefits, which must be clearly identified, quantified, and balanced against any potential harm to the most innovative segment of the U.S. economy.

NSBA urges the Congress to study and find the likely economic effects on small U.S. innovative businesses before enacting sweeping changes to the patent priority laws that have served America well for over 200 years.