Patent Law Reform Act of 2010: Interview with Congressman Lee
What is happening with regard to the Patent Reform Act of 2010?
Recently I asked this and other questions to first term Congressman Chris Lee, who represents New York’s 26th Congressional District.
I think it’s important to note that Chris Lee, true to his pro-entrepreneurial stance, has taken the initiative to advocate for Research and Development by introducing legislation in Congress. As evidence of his commitment to inventors and the need to continue to develop new products and technologies, he introduced legislation that would make the R&D tax credit permanent (H.R. 1545).
Here are a few questions and answers from the interview with Congressman Lee:
1. What will it take to get the patent reform bill through both the House and the Senate?
Versions of the bill have been introduced in both the House and Senate (H.R. 1260 in the House, S.515 in the Senate). The Senate Judiciary Committee has passed the bill and the House Judiciary Committee has held hearings on it. It will need to pass both committees and both chambers of Congress for it to be sent to the president.
2. Do you think it can be accomplished anytime soon?
It looks like the bill is moving forward. On March 4, 2010, Senators Patrick Leahy (D-VT), Jeff Sessions (R-AL), Orrin Hatch (R-UT), Chuck Schumer (D-NY), Jon Kyl (R-AZ), and Ted Kaufman (D-DE) released a statement saying that they’re moving forward on an agreement that, according to the release, “makes changes to first-window post-grant review, inter partes review, willfulness, interlocutory appeals, Patent and Trademark Office funding, and supplemental examinations.” According to the Senators, the proposed “agreement retains several critical improvements in the Committee-reported bill, including the transition to a first-inventor-to-file system, the gatekeeper compromise on damages, the new district court pilot program, and more.”
3. Does the entire bill have to pass or can parts of it be pushed through?
The Chairmen of the House and Judiciary Committees can choose to move forward the entire bill or split it into parts, however an identical version of the bill must be passed by both the House and the Senate. According to the March 4 statement, it appears as though the Senate Manager’s Amendment makes changes to makes changes to first-window post-grant review, inter partes review, willfulness, interlocutory appeals, Patent and Trademark Office funding, and supplemental examinations as they are stated in the Senate-introduced version of the bill.
4. What do you think about patent reform and its importance in protecting and advancing technology in the United States and the world?
Having run a manufacturing business before coming to Congress, I understand how much time, money, and resources are required to develop new products and technologies. I fully understand the need to protect the ownership rights for the development of these items. Without an adequate time frame to recoup your investment the development of Intellectual property could be dramatically curtailed.
It remains to be seen what the final version of the bill will be, should it be brought before the House for a vote. In the United States, we need to continue to develop new products and technologies, and I’ve introduced legislation that would make the R&D tax credit permanent (H.R. 1545). If individuals and companies invest in these technologies they must be able to realize the benefits of their investments. Therefore, I believe it’s critical that any patent reform legislation must effectively protect the ownership of patents.
April 26, 2010 @ 10:57 pm
Even with the R&D Tax Credit becoming permanent, there are two significant issues with the existing R&D Credit regs:
First, the regs are difficult to follow without a thorough understanding of the tax law. This often requires qualified US manufacturers to hire outside consultants to guide them through the details. Unfortunately, the cost of consultant support has made it prohibitive for many small to mid-sized manufacturers to benefit from these federal incentives. Today, tens of thousands of these manufacturers have historically bypassed this valuable tax credit.
Second, in 2008, the IRS elevated the R&D Credit to a Tier 1 Issue, which has put more emphasis on the need for contemporaneous documentation. To defend the R&D Credit in an audit, a taxpayer needs to qualify every R&D project under the regulations, AND identify costs associated with the project while the costs are being incurred (known as nexus). This documentation requirement is burdensome on engineers and production management staff, which makes capturing and defending the Credit a challenge for most manufacturers.
To address both these issues, we built Titan Armor – a low-cost software solution that helps manufacturers meet the current regulatory requirements for the R&D Tax Credit. You can get more information at http://www.titanarmor.com.