Posts Tagged ‘America Invents Act’
The America Invents Act (AIA) has changed the rules for marking products with patents. The law allows you to “mark” you product by providing a website that explains which patents cover which products. This is a positive step to move the patent system into the 21st century.
The reason for marking you product with a patent number is that it provides “constructive notice” to infringers of your patent. Damages for patent infringement accrue from the date of actual or constructive notice to the infringer. As a result, the damages you may recover will be larger the sooner an infringer is deemed to have notice of your patent.
From a practical point of view, having a website explaining which patents cover which products is significantly easier and less expensive than marking the actual product or the product’s packaging. If it is not too expensive to also mark your product or its packaging I would suggest that inventor’s do both.
Here is how Section 16 of the AIA reads:
(a) VIRTUAL MARKING.—
(1) IN GENERAL.—Section 287(a) of title 35, United States Code, is amended by striking ‘‘or when,’’ and inserting ‘‘or by fixing thereon the word ‘patent’ or the abbreviation ‘pat.’ together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when,’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to any case that is pending on, or commenced on or after, the date of the enactment of this Act.
The Heritage Foundation has just released its Index of Economic Freedom. The US has fallen to 10th place in the rankings. It appears the President Obama’s idea of fundamentally remaking the US is to no longer have the US the LAND OF THE FREE.
Fixing our economy and our unemployment problem is a straight forward case of increasing our ranking of economic freedom. The Heritage Foundation put out an excellent video explaining the results of a declining level of economic freedom.
The passage of the America Invents Act is part and parcel of losing our economic freedom. It had a number of special provisions for Wall Street and big Pharmaceutical companies. It weakened the rights of startups and individuals in their inventions. This has made it more difficult for inventors and startups to raise capital. Technology startups are the driving force behind new jobs and high quality jobs.
According to a Fox News story, President Obama: U.S. Gotten a Bit “Lazy” on Attracting Businesses, “President Obama said that the United States has gotten a “little bit lazy” when it comes to bringing in new businesses in to the states”. He said some of the advantages of the US are its stability, and its innovative free market culture.
I guess I am just a little confused how a 2300 page health care law provides stability or how the government taking over 1/7th of the economy is free market? How is a patent law (AIA) written by large companies to entrench their position furthering our innovation? How does Dodd Frank also over 2300 pages further the free market? Or contribute to stability? How does interfering with Boeing’s decision to move to South Carolina result in stability? How is that a free market?
Of course Obama is such a narcissist that he would never look at his own idiotic policies and how they are causing the slowdown in American business. It is doubtful that Obama really wants the US to be successful. So, his speech was really an exercise in DOUBLESPEAK. 1984 predicted the future it just took twenty five years longer than Orwell thought.
This excellent article shows that when Canada changed from a first-to-invent system to a first-to-file system, it was bad for individual inventors, technology start-ups, and Canadian venture capital. The article then quotes a UK study showing how the European system is not encouraging innovation. The article notes that the America Invents Act will effectively eliminate the one year grace period for inventors, which is particularly important for startups. The new post 
grant review will allow large companies to tie up entrepreneurial companies in expensive litigation for years. The post grant procedure has been used effectively in Europe to stifle startup competitors by large companies. Unfortunately, one of the supposed benefits of the Act was to stop fee diversion. The Patent Office is completely funded by user fees and Congress has taken (stolen) these fees to support other Congressional pet projects. The result of fee diversion is that it now takes four or more years on average for a patent to issue. This pendency time results in the patent often issuing long after the commercial opportunity has passed the company by. If it took 3 to 4 years to obtain title to your car or house after you bought it, you would think you were living in a third world country. However, this is what happens in the patent world everyday and the America Invents Act does not solve this problem. The author concludes that Congress should be careful that the America Invents Act not become the equivalent of Sarbanes Oxley.
This article was written by Gary Lauder is Managing Director of Lauder Partners, a Silicon Valley-based venture capitalist and co-inventor of a dozen patents. More info on this issue can be found on his Web site.
It is strange to see how Americans’ attitudes have changed toward the patent system. Mark Twain, who was probably representative of what intelligent Americans’ felt about their country at the time, writes extensively about the patent system. In the book, Innocents Abroad, he explains the virtues of our country and moral decay of Europe by contrasting the patent system to the preservers of art. Remember Twain was first and foremost an artist and he held this opinion. He states:
The Popes have long been the patrons and preservers of art, just as our new, practical Republic is the encourager and upholder of mechanics. In their Vatican is stored up all that is curious and beautiful in art; in our Patent Office is hoarded all that is curious or useful in mechanics. When a man invents a new style of horse-collar or discovers a new and superior method of telegraphing, our government issues a patent to him that is worth a fortune; when a man digs up an ancient statue in the Campagna, the Pope gives him a fortune in gold coin. We can make something of a guess at a man’s character by the style of nose he carries on his face. The Vatican and the Patent Office are governmental noses, and they bear a deal of character about them. (Emphasis added)
In the last fifteen years we have extended the copyright term to be almost infinite, we have criminalize willful copyright infringement and we have had numerous government programs to protect intellectual property, which always means copyrights and perhaps trademarks, but not patents. Alternatively, we have spent the last fifteen years stealing the fees inventors pay to the patent office, we have forced the publication of U.S. inventors’ patent applications for the world to see and steal, we have vilified the actions of our greatest inventors such as Edison, calling them trolls and some have even suggested that Edison really made incremental improvements on other people’s inventions, and called inventor’s monopolists. Twain would be horrified by our capitulation to Europe enshrined in the America Invents Act. It says something about our character that we are following in the Popes footsteps.
The Solyndra scandal demonstrates the Federal Government’s complete contempt for the Patent Office and the Constitution. The bankruptcy of Solyndra means that the federal government will have to pay out $535 million in loan guarantees. This means a single, politically connected company is going to absorb over half the shortfall in the Patent Office funding over the last two decades. If that money had been spent on the Patent Office it would have benefited thousands of companies and creating millions of jobs. Instead, this $535 million resulted in the employment of about 500 employees over a couple of years.
The right of inventors to their inventions, patents, is guaranteed in Article 1, Section 8, Clause 8 of the Constitution. The only rights mentioned in the original Constitution are the rights of inventors and authors. Congress has stolen over $1 billion in user fees from the patent office in the last two decades. The Patent Office is the only self funded agency in the federal government. This theft represents a tax on innovation and jobs. It now takes 3 years on average to obtain a patent and in areas of more complex technology it is not unusual for it to take 5-10 years to obtain a patent. If it took that long to obtain title to your house or car or stock you would think you were living in a third world country. Justice delayed is Justice denied.
The federal government thought it was a lot more fun to play venture capitalist for a green energy company than fulfill its Constitutional duties. Nowhere in the Constitution is the Federal Government given the power to play venture capitalist and this company is in no way is related to our national defense. This is a stark case of how far our government has strayed from the Constitution. They are funding companies without legal authority to do so and stealing user fees from the Patent Office which is their Constitutional responsibility.
The only way to increase our real per capita income is to increase our level of technology. In the United States that means we have to invent. Without a patent most technology startup companies cannot obtain funding. Without funding they do not create the new technologies that create high quality jobs and increase our standard of living.
Greta Van Susteren and the mainstream news, who have probably never thought about patents, are pointing out the disgusting special interest deals in the American Invents Act. See IS CONGRESS PASSING A BILL TO COVER UP FOR $214 Million MALPRACTICE OF LAW FIRM: Wilmer Hale? Why the SPECIAL TREATMENT ? (you know why).
There a number of youtube videos on the USBIC Briefing on Senate Consideration of House Patent Reform Bill H.R. 1249. These videos provide invaluable insights into the America Invents Act. Below I highlight some of the interesting points.
See http://www.youtube.com/watch?v=EPS9ORdD9DQ&NR=1
http://www.youtube.com/watch?v=As6bCYbp7d4&feature=related
Judge Michel, “I can guarantee you that if I went into private practice I could hold up any patent for almost a decade in post grant proceedings, it would never get to trial in the district court.” The value of patents will plummet because of this, since they are not enforceable for almost a decade.
Judge Michel
The funding problem not being solved is the biggest problem. The patent office will likely lose at least $100M next year. The continuing resolution funding bill this years has killed the Patent Offices’ budget to hire examiners, fix their IT infrastructure, and create a satellite office. It is inevitable that there will be another continuing resolution funding bill this year. The 15% increase in Patent Office fees are going to be nothing but a tax on inventors.
First to file system: large corporations already act under this system. But, this will hurt small companies and start-ups. The advantages of first to file, if any, are more than offset by the funding issue and the post grant procedure.
The idea that this bill will create jobs is a joke. If you want to create jobs, you need to clear the backlog of 1.2 million patent applications. Passing this bill will slow down the process of granting patents, so it will not create jobs.
First purpose of patents is to disseminate technology information
Second purpose of patents is to incentivize investment.
Delays and backlog have increased during the time that Congress has been considering patent reform.
Fee diversion began in 1992. In 2010 there was over $50M in fee diversion and in 2011 $85M, and it is likely that over $600M will be stolen from the patent office in 2012. Without access to fees, the Patent Office will become a job killing agency, not a job creating agency.
The patent system isn’t broken, the patent office is broken because of the diversion of patent fees.
Fatal defects of the legislation includes section 18 (business method patent – Wall Street giveaway), section 14 (no patents on tax strategies), parts of section 5 (prior commercial use – trade secret protection system), parts of section 6 (post grant review).
Thomas Edison got his patent on the light bulb in 3 months. It now takes on average over 3 years to obtain a patent and many patents 5-10 years to issue.
Gary Lauder
Small business, startups, and investors have not been heard on this issue. Many Venture Capitalists are not aware of the changes that are occurring.
Every famous living inventor is against this bill, including Dean Kamen – inventor of the segway, Steve Perlman – inventor of quicktime.
The national venture capital organization, IEEE, National association of seed and angel funds is against the bill, all of which represent small companies and small company innovation and do not have the money for lobbying.
Kappos lobbied for these same changes when he was at IBM. This is a violation of the administrations revolving door rules.
Misrepresentations of what the bill says or will do: Include we need first to file because small companies cannot afford interference proceedings. Interference proceedings happen 0.01% of the time or less, but interference proceedings are replace by more expensive derivation proceedings. These proceeding require you to present evidence that was stolen from you. So if you got hacked, you have to prove you got hacked and who hacked you. There is not right of discovery under this America Invents Act.
First-to-file’s worst effect is on companies between the ages of zero to one. The derivation proceeding make it almost impossible for these startups to prevail, because of the time, expense, and lack of discovery.
The rest of the worlds patent systems do not work. They do not encourage startups or individual inventors. The advice to startup is that they need to apply for patent before they talk to investors, but they need investment to afford to apply for patents and before they talk to customers and potential employees. There is 10 times more angel and venture capital investors in the U.S. per capita than in Europe.
This bill is also going to an enormous boon to cyber criminals, because IP will be worth more money.
Venture capital has declined by an order of magnitude since 2000. Since 2007 it has declined by a factor of four. If this bill passes the shrinkage in venture capital will accelerate.
Pat Choate
Ph.d economist, former vice presidential running mate of Ross Perot. Dr. Choate has written extensively on the theft of America’s intellectual property and is the foremost expert on this issue.
We have run out of policy tools. The way we worked ourselves out the 1970s was inventing a new economy and that is how we are going to have to work our way of this economic downturn. The companies that create all net jobs are startups. Technology is way increase real per capita income. The fastest way to kill creative destruction is to kill the patent system. This is a bill to Europeanize the American patent system. This effort has been going on since 1980. This patent bill was written by IBM and 14 corporations. In Europe, individual inventors get 0.6% of all patents This bill will choke off American innovation and this will be obvious within 2-3 years of passage.
http://www.youtube.com/watch?v=9zwqypPYXcQ&feature=related
Valerie Gaydos
Angel Investor and founder of CEO Growth Capital. http://www.youtube.com/watch?v=r3Q8H3vuuN0&feature=related
There is much more on Youtube.
I have written a number of times on what real patent reform would actually accomplish. One of the major problems with our patent system is that your rights stop at the border. This is different than any other property right. For instance, if I drive my car across the border into Canada, I still own my car. If I drive my book across the border into Canada I still own both the physical version of my book and the copyrights to my book. But, if I drive my invention across the border I no longer own my invention. This situation existed for copyrights 150 years ago and it was recognized that there was no logical reason for copyrights to end at a countries border and it discouraged the publication of domestic authors. The same is true of patents.
I suggest a system of reciprocity in which an inventor who obtains a patent in Canada, for example, has patent rights in the U.S. and vice versa. This would decrease the duplication of efforts across patent offices around the world and significantly reducing the present backlog in the U.S. patent office. More importantly, it would increase the value of a patent and increase the chance of obtaining funding for technology startups.
A friend of mine, Jim Lauffenburger, explains in practical terms why this important. His company has found trade secrets to be a much more useful tool, because of the lack of patent reciprocity.
It is interesting that in my company, EM Microelectronics, the best method for protection is definitely keeping a secret, not filing for patent protection. (And keeping those secrets is extremely challenging and difficult.)
Why, you ask?
Because we are unable to enforce patent protection in Asia, and unable to prevent literal copying.We spend man-decades of highly skilled (and expensive) engineering time to design a new IC. The IC goes into mass production in some successful product. It gets rapidly reverse engineered in Asia. Nearly direct copies of the part soon appear, and can be priced at only silicon-cost, without the huge development costs.
We visited several of these Asian “design centers” to ask them how they do it, under the guise of possibly utilizing their services. But even that guise was not really necessary, because they were proud of their “design method”: They do a layer-by-layer stripping and micro-photographs, and create a direct schematic from that. They convert the digital logic into standard cells, and then re-Place-and-Route using “their own IP” (the standard cells). For the analog portions, they use the layers as-is, but rotate or flip them 90 degrees so that it looks different. Then end result is what they claim is their own IC and their own IP, and it looks quite a bit different from our ICs. But, during that entire process they were simply “turning the copy crank”; not actually designing anything from concept.
Fighting this copying at a trademark level won’t work (it looks different). Fighting this at a patent level is extremely time consuming and expensive.
Thus, the only way to fight it is to try to hide features and make very special implementations that don’t work correctly in a layer-by-layer copy. (This of course, is very difficult, and expensive, and MUST be kept fully secret.)
This shows (to me) once again, that most of our law (and society) only works if the we all generally agree on the moral and ethical basis undergirding our actions and laws. Once that is lost, chaos follows. (And “messes get created” by all the reams of laws generated to try to make up for the lost ethical basis.)
While Jim’s company has made a logical decision under the present law, part of the reason for having a patent system is to encourage the spread of technical information. Trade secrets inhibit this dissemination of technical information and slow down technological and economic progress. The America Invents Act does nothing to solve this problem.
GUEST POST
by
Neil Thomas, Esq.
Silver Spring, MD 20902
On September 6, 100 U.S. Senators began final voting on the ‘Leahy-Smith America Invents Act of 2011′ which will stifle 
U.S. innovation, growth of new American businesses, and long-term job growth in America.
This legislation should more appropriately be called the ‘Leahy-Smith Trade Secret Protection Act of 2011,’ because it will encourage and reward keeping America’s innovation and new discoveries secret. This concept of secrecy attacks the very foundation of our patent system put into place by our Founding Fathers. Our entire patent system has, for over 220 years, been based on the concept of individuals disclosing new ideas so society will advance more quickly.
The very purpose and the fundamental mechanism that makes the patent system work so well, is in a word, ‘disclosure’…of new ideas and discoveries.
Our Founding Fathers saw that sharing new discoveries and innovation would promote progress in America. They had seen in history how keeping new ideas secret had retarded the progress of civilization. Historically that is what governments, craftsmen, merchants, academics, and scientists frequently did. The problem naturally with secrets is that one inventor does not provide the seed for others to come up with even better ideas and improvements. As a result, many secret processes have been either retarded or even totally lost over the ages because they were protected as such and died with their creators. Society loses that considerable benefit.
From the making of violins by Stradivarius; to the Chinese keeping the making of fine porcelain a trade secret; for more than two thousand years the Chinese keeping the secret of silk the most zealously guarded secret in history; and, the making of concrete, known to the Romans, being lost for almost 2000 years.
Patents are not designed to benefit the inventor so much as to benefit society as a whole; patents are designed to encourage inventors to disclose their new ideas to the public. Think about it for a second, if you had a good idea, you might want to keep it a secret if you could. If I have a good idea, let’s say for a new formula for making iron harder, i.e. making steel, why do I want to share it with a competitor, cause he’ll just copy it. So we think to ourselves, how can we keep our ideas secret so others don’t find out. That might be good for you and me, for a while at least, but that would have an adverse effect on society and the economy as a whole.
Our Founding Fathers saw the need to give inventors a reason to disclose their ideas to the public instead of keeping them secret. They did that by giving an inventor an exclusive right to his idea for a limited time, i.e. a patent, if the inventor would disclosed their idea publicly. They even put it in the Constitution , “The Congress shall have power… To promote the progress of science and useful arts, by securing for limited times to…inventors the exclusive right to their respective…discoveries. “ ( U.S. Const. Art. 1, Sec. 8, Clause 8 )
That is why the ‘useful arts,’ science, technology, and commerce have exploded since the birth of the American patent system; literally a million ideas have come forth. As a consequence, patents have protected new ‘start-up’ companies with new inventions so they can grow and create jobs. Our patent system has been a major factor in America becoming the greatest economic success in history and the envy of the world…at least until recently. American inventions have created new jobs and prosperity in America for over 220 years. Where would America be without the: steam engine, telegraph, telephone, airplane, electric light, television, radio, copying machine, etc.?
But now the game is about to change…in a huge way.
Not only will patents now be open to more challenges under this new law, the whole concept of disclosing inventions appears to have totally eluded Congress. Congress is now going to encourage and reward secrecy . Beginning September 6, 100 U.S. Senators will vote on the ‘America Invents Act of 2011′ which will totally turn the patent system our Founding Fathers created upside-down and undo 220 years of success by encouraging and rewarding ‘trade secrets.’
They do that with something they call ‘prior user rights’ (Sec. 5) which says that if you have an idea, and if you can build, use it and keep it secret for a year, someone with a patent can’t sue you for patent infringement , and you can keep on using it…forever. And just keeping something secret will certainly a lot less cheaper than going through years of time, expense and uncertainty getting and enforcing a patent under this new law about to be passed.
If you can make it through the first year, there doesn’t seem to be much of a downside for secrecy. In fact there are many advantages to ‘hiding’ inventions First, you’re protected from any successful patent litigation; you don’t have to go through the cost, work and uncertainty of getting a patent; you don’t have to go through years, and years of enforcing and defending a patent; and you certainly ought to be able determine the value of your idea much easier than the value of a patent.
With this new law Congress is about to pass, Congress will make obtaining and enforcing a patent much more difficult, risky and expensive. Under this new law, the value of patents will become more uncertain because of all the new challenges and procedures they will be subjected to; and a lot of companies, particularly smaller ones with limited resources, are going say to themselves, “we’re better off just hiding our new ideas, cause we’re going to be protected anyway, and it’s going to be a lot less costly and time consuming than applying for and trying to enforce a patent.”
For small companies without $ millions of financial resources to litigate a patent against the big companies for years, the choice becomes even easier. Why get a patent if you can’t afford to enforce it?
And ‘prior user rights’ will ironically add more uncertainty to the value of patents, because no one will know for sure what ‘trade secrets’ are out there to detract from the value of a patent.
In fact, if I’m a venture capitalist looking for investments, I’m going to see a whole lot less risk in investing in ‘trade secrets’ than in patents. Why? Because the value of the ‘trade secret’ is pretty easily determined once you get past the first year, which by the way costs very little; all you have to do is to tell time and you’re pretty much home free; whereas a patent can be challenged endlessly, and will be open to a lot of time-consuming and expensive questions under this new law.
These fools in Congress are killing the golden goose. Not only is this a total contradiction of the Founding Father’s intent and 220 years of patent precedent, it is guaranteed to stifle U.S. innovation, growth of new American businesses, and long-term job growth in America.
This ill-conceived ‘prior user rights’ provision will encourage many new manufacturing, industrial, business, chemical, computer, biotechnology, nanotechnology, and medical “processes,” “machines” and “compositions” to be hidden from the wealth of knowledge of our society . That list pretty much covers all of burgeoning technologies as I see it.
I’m interested to see how this slows down biotechnology research and development in particular.
Unfortunately for the public, Congress has jumped on a speeding train that is out of control, and it doesn’t appear that anything can stop it at this point… even reason.
What a mess they are creating!
The Senate passed the cloture vote on the America Invents Act by 93-5 with two senators abstaining. The nay votes were cast by Coburn (R-OK), DeMint (R-SC), Johnson (R-WI), Lee (R-UT), and Paul (R-KY). It appears likely that the Senate is going to cram this job killing, multinational corporation special interest legislation through.
The United States was the first country to recognize an inventor’s rights in their invention. See Article 1, Section 8, Clause 8. Conservatives are fond of talking about American Exceptionalism. Our patent law was unique in the history of the world. It was what drove the incredible ingenuity and made the United States the economic and technological leader of the world. This bill is designed to protect the first person to file, not the rights of inventors. As a result, it is not the creative inventors that will obtain patents but their multinational bureaucrat competitors. These large corporations are notorious for killing disruptive technologies that threaten their existing product lines. If this bill passes, American Exceptionalism will die with it.
Gametimeip makes an interesting point about the America Invents Act:
The sheer size of the bill (150 pages) is massive compared to other legislation, such as the original patent act (9 pages), the Civil Rights act of 1963 (28 pages), and the National Labor Relations Act of 1935 (9 pages).
Paraphrasing Mark Twain: Congress did not have time to write a short, good piece of legislation, so they wrote long, bad piece of special interest legislation. This is beginning to be quite a trend in Congress. Write massive pieces of legislation that even the legislators do not read before voting on them. No wonder our economy is in a depression.
Dear Friends,
It is easy to take for granted what we have in America. Even with a terrible economy and crazy politicians, we are still better off than other countries. Consider how many people try to get to America. No other country has its equivalent of the “American Dream.” What is it that makes America different?
When every nation on earth was run by aristocracies, a few great men stood up and said we will create a nation where the every person has rights and the individual is empowered with responsibility for his government and his society. Furthermore, we will grant him the rights to that which he creates and will take away the barriers that other countries have for those who innovate. At the time in England, only the privileged could afford to invent.
The patent system that our Founders created was revolutionary at the time, and continues to be significantly different and more favoring of the creative individual than the systems of other countries. Other patent systems favor large companies and vested interests, and that is one reason that America has out-innovated the rest of the world so significantly.
So, why would large companies that seem to benefit from a good patent system want to radically change it for the worse? Bill Gates said it best in an interview years ago with Ken Auletta: “The thing I worry about is some guy in his garage inventing something I haven’t thought of.” Once a company becomes large and has vested interests, it innovates less and tries to protect the income streams it is already receiving. The vested interest cannot help but try to impede innovation that will become competition.
The America Invents Act was written by the top attorneys of two of the key, large, multinational companies that are behind this bill. They weren’t thinking about you and me when they wrote it. In fact, fee diversion wasn’t even mentioned in the first version that was brought to the Senate (!) – it was added in an amendment. How could anyone who cares about our patent system not even address fee diversion? The answer is that they have different motives.
Up until now, our patent system has protected and supported the individual inventor, as our Founding Fathers intended. The America In vents Act changes that. If you are not aware of the issues, see the attached document. The bottom line is that a big part of what our Founders provided for us, and that is part and parcel to the success of this great nation, is about to be ripped away. The America Invents Act could face a final vote next week. If you care about this country, about freedom, and about the value of the individual, please call your senators and tell them you are against this bill. For talking points, use last night’s email or go to www.SanePatentReform.org. Please call tomorrow, Friday. For your senators contact information, go to CongressMerge.com/onlinedb. Every man, woman, and child who has ever hoped to pursue the ”American Dream” is depending on you. Please help in this critically important matter.
Best Regards,
Randy Landreneau, President
Complete Product Development
www.CompleteProductDevelopment.com
727-744-3748
The future of America lies in its ability to be creative — to “out think” the rest of the world. Come up with a great idea and you can become rich. You can build a business that will create many jobs. And there is a system in place to protect inventors, the patent system. Think of those who have done it: Thomas Edison, Henry Ford, Steve Jobs, Bill Gates, the Wright Brothers, and many, many more. That system, the system which made it all possible for the US to lead the world, a system in place since 1789, the system is about to be changed to discourage creativity, and to hobble the independent inventor. Large corporations have mounted a large lobbying campaign, spending huge sums of money, to get the so-called “America Invents Act” through Congress. They must be stopped. [More . . ]
Zach Carter observed in the Huffington Post:
Today, the patent bill looks like a scorecard tallying points for powerful corporations: a win for pharmaceutical companies whose monopolies are driving up Medicare costs; a win for Wall Street’s battle against check-processing patents . . . .
Left out of the tally is the public, even as the economic landscape for American families grows darker. Historian Richard Hofstadter famously observed that Congress during the Gilded Age busied itself with dividing the nation’s spoils among the rich and powerful. But as the current patent struggle suggests, the spoilsmen are back and Washington is once again an arbiter of who lands the lucre.
Here is just part of what the so-called “American Invents Act” will do if it becomes law and what you can do to stop it.
What the Proposed Bill Does:
Imagine this: you have a dispute with a large corporation and decide to sue. Then you find out that the winner of the law suit will be decided by, of all things, a race. Whoever wins the race to the courthouse steps wins the law suit. Sound ridiculous and farfetched. Think again.
Under the present system, the one who invents first gets the patent. What this means is that an inventor can’t be stopped because a huge corporation can beat the inventor to the door of the Patent Office. Under the so-called “reform” it will be whoever wins the race to the steps of the Patent Office will get the patent!
The repercussions are much broader than the obviously dishonest idea of giving a patent to someone who wins a race to the door of the Patent Office. To develop inventions takes time, effort, and money. By awarding patents to first inventors, the current system encourages development. Going to a first to file system, as called for in the proposed law, will discourage developments. More than that, it would increase the likelihood that patent applications would be defective because they would be filed too early in the development stage. But this is precisely the barrier to independent inventors that large corporations, who oppose startup competition, crave. Given such a situation, it would be no surprise that investors will be disinclined to support startups.
The current Patent Act encourages inventors by providing a grace period for filing a patent application. During this period small companies can go to the marketplace, seek financing, find manufacturing and marketing partners, or decide whether or not to file a patent application.
Under the proposed act, the grace period would be eliminated. Go out and promote your invention and you lose the right to file. This means that small businesses will have to file first and then find out if they should commercialize an invention afterwards. The proposed act would cause small businesses to incur additional and unnecessary expense, and thereby discourage innovation, development and job creation.
Under the present system, if a new method of doing business (say, a great way of delivering music on the Internet) is created, it can be patented.
The new act, if it passes, eliminates business method patents. There is not a single other industry that has a special patent provision to protect it, not one.
The present law gives competitors the right to have the Patent Office review an issued patent. The proposed law would give competitors more weapons to have patents reviewed and re-reviewed, in order to delay inventions and innovations and upwardly spiral an inventor’s costs. So to the cost of patenting an invention add the cost of defending it again and again and again. This ups the price and the risk for small companies and puts them into expensive (very expensive) litigation, litigation they might not want, may not be able to afford and may not be ready for. The mere existence of these procedures will be another way of closing out the small inventor and small businesses.
Under current law, a company must file a patent within one year of putting the invention into commercial use, whether or not the public is aware. The new act would changes the rules. A company will be able to use an invention in secret for years and then file a patent application years later. This undermines one of the major objectives of patent law – to bring the benefits of innovation to the public as quickly as possible. After all, the Constitution provides Congress the power to enact laws that “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Today, it’s one patent for one invention. The new act permits the filing of multiple applications for the same invention. Issue multiple patents for the same invention and thereby create a legal thicket which will be used to block startups and competition.
This one’s a beaut. Today an inventor must disclose the best method of making the invention. Under the proposed act, a large company can keep the best method secret so long as they can show some other way of practicing the invention. The whole idea of the patent system is to require the inventor to provide for the public benefit the best way of making the invention so that when the patent ends, everyone can make the invention. Now, large businesses can hold the best methods and processes secret, thus the defeating the purpose of our patent system.
What Can Be Done About It:
Congress is in recess but they will take up the bill when it returns in early September. As complicated as the America Invents Act is, opposition is straight forward. If you agree that the proposed bill is wrong, you can:
Telephone your Representative and Senators right away and tell them to vote against the America Invents Act. You can find the name and phone number of your representative at this link. You can find your Senators’ contact information at this link.
Philip Furgang, a noted New York patent law practitioner. Philip is the author of the forthcoming book, “Patent Prosecution” (Oxford University Press.)
Philosopher George Santayana’s sage words: “Those who cannot remember the past are condemned to repeat it,” ring as true today as they must have when he wrote them in 1905. The words aptly apply to the ineptly titled “America Invents Act,” S. 23 and H.R. 1249, currently meandering through Congress.
Perhaps President Barack Obama is preparing for the day when he can sign the bill into law. That day is likely to bring woe to patent practitioners and users of the patent system alike, and particular woe to small inventors and startup businesses that collectively drive our nation’s economy.
As perchance an omen of tumultuous times ahead, Obama was seen holding a copy of Aldous Huxley’s Brave New World at the Bunch of Grapes book shop during his recent summer idyll on Martha’s Vineyard. Written in 1932, Huxley’s tome depicts a distorted social order, ushered in by the darkness of the Holocaust, in which science, technology and the media are collectively used to control human behavior.
U.S. patent law is rooted in incentivizing inventors to innovate in, among others, the fields of science and technology. The current patent reform initiative is steeped in media jargon promising job creation for America at a time when jobs are desperately needed. Unfortunately, there’s no data to support this promise. Indeed, all empirical evidence points to the likelihood that this patent reform will result in job destruction.
It goes without saying that Congress has the power, working in concert with the president, to reform or deform the patent system as we know it. In short, its members can change the patent laws of our nation in a manner that would reframe the social order pertaining to patents for better or for worse.
Giles S. Rich and Paul Rose, co-authors of the 1952 Patent Act governing our nation today, opined on the differences. They concluded that patent reform should be adopted if, and only if, the proposed changes increase the incentive force associated with our patent system.
A key incentive provided by our patent system is the incentive for inventors to disclose their invention in a patent application in exchange for the possibility that they may achieve a patent grant in return. The subsequent publication of the patent application serves to inform the public about the invention, and thus enables others, including competitors, to build upon it. The net result of this incentivization is to promote “the Progress of the Useful Arts” as mandated by Article 1, Section 8, clause 8 of the Constitution.
Certain provisions of the patent reform bill will have the ill effect of disincentivizing small inventors and startup companies from using the patent system in the first instance. One provision would award the patent to the first person to file a patent application on the invention, rather than the one who is actually the first to invent. Another provision would eliminate the “grace period” that has traditionally provided a safe haven to allow an inventor to get his or her invention “off the ground” without forgoing the opportunity to patent it. The net result is to change the social order for patenting in a manner that selectively demotivates small inventors and startups.
There is no reason to believe that such changes will benefit society as a whole. To the contrary, the proposed changes will work to society’s detriment by disincentivizing inventors who fear that they can’t possibly win a race to the patent office and can’t properly vet their invention with others before filing. In short, these changes will discourage these inventors from disclosing their invention in a patent application.
Discouraging disclosure of inventions undermines a key incentive of our patent system, namely the incentive to disclose, and thereby undermines the patent system as a whole by inhibiting third- party access to information about those inventions, thus slowing down the rate of innovation.
Another proposal in the patent reform bill would adopt the European-style opposition protocol–ambiguously described in the bill as “post-grant review.” Such a protocol is analogous to the inter partes re-examination form of post-grant review that is already available under the existing U.S. patent law. The fact that a European-style opposition procedure was adopted by Japan, China and South Korea two decades ago, and was subsequently abolished in each of those countries within a decade, should be enough to give Congress and Obama pause.
The call for the United States to adopt a European-style opposition procedure is not new. It was bandied about back in the late 1980s during the Reagan era, as a bargaining chip in trilateral talks among Europe, Japan and the United States in an effort to “harmonize” their patent systems. The United States chose not to harmonize and did not adopt such a system then. Unfortunately for Japan, it did. Our nation needs to recall that history now.
At this critical juncture in the patent reform debate, the salient questions are: Why would a country that is a world leader in inventiveness change its patent system to comport with that of a European protocol that has been tried and shown to fail elsewhere? Why adopt “first to file,” and eliminate the “grace period” for filing, in the absence of evidence that doing so will improve the inventiveness of our nation’s inventors, which it clearly won’t?
So far, Obama’s term in office has been unremarkable, to say the least. The reasons, for what can be described as an abject failure of leadership, are set forth in Drew Weston’s Aug. 7, 2011 opinion piece in The New York Times entitled “What Happened to Obama?”
Mindful of Huxley’s warning about our “new world,” we can only hope that Obama, if not Congress, will reflect upon the likelihood that a patent reform initiative that has been tried, and found to fail in other countries, should not be adopted because it is likely to fail here. Likewise, a patent reform initiative that demotivates inventors with limited means should not be adopted because it is the antithesis of the incentive system that our patent system was established to provide. Both initiatives would deform our patent system, rather than reform it.
If neither Congress nor Obama respond to the risk posed by the patent reform bill, Huxley’s apocalyptic vision of control over human behavior via manipulation of ownership of science, technology and the media may become a reality sooner than we think. Under those circumstances, history will have all the more reason to discredit Obama’s term in office.
Dale L. Carlson is a partner at Wiggin and Dana in New Haven, Conn., an adjunct professor of patent law at Quinnipiac University School of Law in Hamden, Conn., and immediate past president of the New York Intellectual Property Law Association, the largest regional IP law association in the country.
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