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What Would Real Patent Reform Look Like?

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.

 

 
Congress About to Pass the ‘Leahy-Smith Trade Secret Protection Act of 2011′

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!

 

 

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

 

 

Dear Inventors,

 

The Senate is about to take up the America Invents Act.  It is possible that this act will be the first thing addressed when they return to work Tuesday next week, September 6th.  A motion for cloture has been filed, which means a very limited debate if the motion gets a three fifths vote.  In this event, we could see the final vote on the bill take place next week.  Here’s the short version of what is wrong with the bill.

 

  1. The America Invents Act Will Increase The Time It Takes To Get A Patent: The biggest problem of the patent office, some say the only problem, is the time it takes to get a patent – 3 years plus on average and increasing.  Held-up patents mean held-up jobs, business ventures, and dreams.  At a time when the patent office needs every penny it receives in fees to improve its ability to handle its workload, fees are being stolen by Congress ($100 million this year alone!).  The only thing in the bill that would have helped reduce the backlog was the original Senate version’s guarantee that all of the fees paid by inventors to the patent office would be only available to the patent office.  The current House version put the Appropriations Committee back in charge, the same group that has been responsible for taking inventors fees.  In the face of current deficits, fee diversion will undoubtedly continue.  The only thing that would have helped reduce the patent backlog is gone now.

 

The change from First-to-Invent to First-to-File will create a rush to file that will increase the patent backlog, further increasing the time it takes to get a patent.  This belief is borne out by what happened in Canada after a similar change.

 

  1. The America Invents Act will Reduce Job Creation: Census data has shown that net new job creation in the US over the last 30 years comes from startups.  Large companies tend to export jobs.  If you compare the US to Europe, you know that the US has had more entrepreneurial activity than Europe.  The US has produced more groundbreaking technologies.  The First-to-Invent Patent System of America supports entrepreneurship and the First-to-File systems of Europe do not.

 

In a First-to-File system, the risk of another person filing for the patent before the initial inventor causes inventors to have to greatly reduce any communication with outside parties regarding their inventions.  Individual inventors, who are the greatest source of real innovation, usually need to work with others in research, development, funding, and marketing prior to filing for a patent.  Large companies, on the other hand, can often do everything needed within their walls.  In America, historically, an individual inventor could work toward making an invention successful without having to be nearly as secretive as a European inventor.  In First-to-File countries, inventors have a great incentive to not disclose an invention to anyone prior to a patent application being filed, leading to under-researched, under-developed inventions, and weaker patent applications.  Putting such burdens on individual inventors greatly reduces innovation.  This is a big reason why America has had a multitude of new technologies and new companies while Europe has been dominated by old companies and vested interests.

 

A friend who was an engineer at a large, well-known electronics company in America told me that if any employee came up with an invention that was too good, it got shelved.  The reason was that it would upset current product lines that are profitable.  Vested interests do not want someone coming up with an invention that will compete with them.  This is why large companies have been trying to change our patent system for many years.  The irony is that many of the large companies supporting this bill can be traced back to one innovative individual who was supported by the American First-to-Invent Patent System in his pursuit of the American Dream.  If innovation and job growth are the goal, changing from First-to-Invent to First-to-File makes no sense at all.

 

  1. There is much more.  Corporate attorneys will have an additional expensive procedure to use to challenge issued patents and will use it to wear down and defeat potential competition.  Past requirements that attorneys and inventors act “without deceptive intent” are repealed in the bill (!).  Companies will be able to keep trade secrets for as long as they want, hiding the information from the rest of the world, but still retain the right to keep making or using the product if someone else patents the invention, and will even be able to get a patent on the Trade Secret at any point in the future.  Harmonization is not only not accomplished with the bill, but there are situations where the bill creates disadvantages for American inventors relative to inventors from other countries (prior art cutoff date for obviousness).  Section 18 sets up a special procedure for challenging the validity of business method patents, under a weaker standard than any other kind of patent (a gift to big banks so they don’t have to worry about the valid patent of Claudio Ballard – if you don’t know the story, look it up and prepare to be outraged).  If you want more, go to www.SanePatentReform.org.  If all of the above weren’t enough, Thomas Jefferson, himself, opposed a similar change to First-to-File over 200 years ago, and many legal experts have stated that the proposed change is unconstitutional.

 

As usual, the odds are against us.  But that has been the case with virtually every decent effort any man or woman ever embarked upon.  Many saints were viciously killed by their numerous detractors.  Since we’re inventors, how about Galileo?  For publicizing his discoveries, he was tried for heresy by the Inquisition, threatened with torture, sentenced to house arrest for life, and not even absolved of his “crimes” until 1992!  You may not know that in our American Revolution, only about 1/3rd of the colonists were even for it.  The odds were phenomenally bad.  We won only through the efforts of heroic individuals, and we can win again here.

 

The America Invents Act is an example of the worst of politics and influence.  The result of its passage will be less innovation, fewer jobs, and a worse future for America.  But amazingly, many of the politicians who are about to vote on it know very little about it.  Their large company supporters are saying to vote for it, and the few of us fighting it are being drowned out.  The only way we can stop it is to call our Senators and educate them.  I am convinced that most of our Senators are sane enough to understand the issues if someone tells them.  Please call your senators and communicate the truth to them.  You can make a difference.  Do it because it is right.  Help defeat this bill.  Call this week (to find your Senators, go to http://congressmerge.com/onlinedb/).  Don’t wait, it could be too late.  Thank you.

 

 

Best Regards,

 

Randy Landreneau, President

Complete Product Development

www.CompleteProductDevelopment.com

 

 

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.)

 

 
Guest Post: Dale L. Carson – Patent reform: One giant step backwards?

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.

 

 

According to the excellent blog Gametime IP “The cloture vote will occur on Tuesday, September 6th after 5:30pm. Cloture will cut off debate and bring Patent Reform to a final vote.”  This is bad news for independent inventor, bad new for American innovation, and bad news for the U.S. economy.

 

 

Gary Lauder runs Lauder Partners LLC in Silicon Valley.  The firm is a private venture capital firm.

This page is not dedicated to the idea that our patent system can’t be improved; but rather that the specific changes in the “America Invents Act” would be bad for entrepreneurs and small companies.

Summaries:

One word: Bad

 

One sentence:

Due to the willful exclusion of small companies from the process, congress and the administration have crafted a bill that might mildly benefit big companies, but would drastically harm technology entrepreneurship/start-ups.

 

One paragraph:

There are many things wrong with our patent system, and many ways in which it might be improved, but this bill does not materially improve it, and would make it much harder for start-ups to obtain and enforce patents.  Unlike the Senate bill passed in March, the bill passed by the House (HR1249) in June does not fix the problem of the patent offices’s fees being diverted to help cover our federal deficit.   The change to First-to-file would be a benefit to those who would like to steal others ideas, and consequently will force entrepreneurs in the USA to have to follow the same advice that exists in Europe: file for your patents BEFORE talking with investors, potential customers or even potential co-founders.  This will stifle the open innovation model that has flourished in America.  Other changes will make it easier to accidentally lose the ability to obtain a patent (e.g. if you offer your invention for sale or publicly use it), will more easily enable an infringer to defend themselves by showing such actions prior to the plaintiff’s application, and will enable infringers to postpone the issuance of other’s patents by filing expensive post-grant review procedures…which can also cost a company more than they can afford.  The proponents have sold this bill based on superficial talking points that sound plausible, but are deceptions.  Every well-known US inventor opposes this, as does Judge Paul Michel, the US’s #1 patent judge who resigned early from his lifetime appointment in order to speak out against this.

 

Longer pieces are linked below.  URL’s are visible for ease of copying & forwarding.  Related articles are lumped together.

 

Requested action:

Please call your senators (and any others) to express your disapproval of this bill.  Their phone #’s can be found at:

http://www.reformaia.org/call

 

Gary Lauder’s writing and publications on patent reform:
One page article = 650 words: “Patently Absurd Changes Threatening Patent System” in Venture Capital Journal, 6/1/11: Reprint at: http://files.parsintl.com/eprints/23039.pdf
Magazine at: http://www.vcjnews.com/story.asp?sectioncode=32&storycode=5824547 (subscription required (free trial available))
4.7K words and most current and complete: Unpublished: “Patently Absurd: Or How to Go From the World’s Best Patent System to Worst-Than-Most in One Easy Step” 7/11/11: http://www.lauderpartners.com/PatentReform/HorrorsOfPatentReform.pdf
2K words: The Huffington Post, 3/7/11, “Patently Absurd or: How to Go From the World’s Best Patent System to Worse-Than-Most in a Single Step” http://www.huffingtonpost.com/gary-lauder/patently-absurd-or-how-to_b_832703.html (Note: comment function no longer works)
4.3K words (and a bit dated): “Venture Capital: “The Buck Stops Where?” in Medical Innovation & Business, Summer 2010, Volume 2, Issue 2, p.14 – 19 http://journals.lww.com/medinnovbusiness/Fulltext/2010/06010/Venture_Capital___The_Buck_Stops_Where_.4.aspx

Gary’s 4-minute speech at the Aspen Ideas Festival in early July:

Audio only: https://s3.amazonaws.com/ai-video/aif11_179_lauder.mp3

It’s also on YouTube, but the visuals don’t add much:

http://www.youtube.com/watch?v=d2UWz_CkiqI

 

The main reason why the administration favors it: they hired the main proponent of patent reform and made him the head of the PTO:

http://www.politico.com/news/stories/1109/29002.html

Here’s his testimony in favor of patent reform while at IBM on 3/10/09:

http://judiciary.senate.gov/pdf/09-03-10Kappostestimony.pdf

Kappos’s ongoing promotion of patent reform was in violation of Obama’s Revolving Door Ban which Kappos signed:

“I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.”

http://www.whitehouse.gov/21stcenturygov/actions/revolving-door

 

Why the “America Invents Act” is Bad for Startups and Bad for America by David Boundy (a patent attorney)

http://www.reformaia.org/news/why-”america-invents-act”-bad-startups-and-bad-america-david-boundy

 

Intellectual Property Watch Interview With Chief Judge Paul R. Michel On US Patent Reform, July 14, 2011

http://www.ip-watch.org/weblog/2011/07/14/interview-with-chief-judge-paul-r-michel-on-us-patent-reform/

 

This presentation is by Steve Perlman, an entrepreneur whom I have backed twice who also is an inventor in >100 patents:

http://www.rearden.com/public/110319_Patent_Reform_Isnt_1.pdf

House bill took out the PTO funding part (which was the only thing good about the bill that he referred to)

 

History of broken promises regarding fee-diversion (why the present bill doesn’t fix the problem):

http://us2.campaign-archive1.com/?u=3341ca33e54ce6ceeeb33f5a4&id=5543db524f&e=e04d76df78

 

The problem with First-to-File (FTF) for start-ups as well-described by Senator Diane Feinstein:
YouTube (20 minutes): http://www.youtube.com/watch?v=xTWTpbIx4tE
Text of her speech: http://www.patentdocs.org/2011/03/senator-feinstein-opposes-the-first-to-file-provisions-of-s-23.html
Senator Cantwell’s speech in favor of the Feinstein Amendment (7 minutes): http://www.youtube.com/watch?v=cz8BjsTZ-lc&feature=related
There is a cyber-security problem w/FTF that has been completely ignored. The best description of this threat is in the attached letter from the Inventors Network of the Capital Area to Speaker Boehner: http://www.scribd.com/doc/57945178/Letter-from-INCA-to-Rep-John-Boehner

America Invents Act (formerly Patent Reform Act of 2011) – so big business can more easily steal inventions

http://www.burdlaw.com/blog/?p=96#comment-1450

America Invents Act – the erosion of inventors’ due process protections and a legislative cover for theft of patent rights

http://works.bepress.com/cgi/viewcontent.cgi?filename=2&article=1057&context=rkatznelson&type=additional

 

Op-Ed against by Rep. Manzullo

http://washingtonexaminer.com/opinion/op-eds/2011/06/patent-reform-proposal-threatens-american-jobs

 

WP: “Patent reform measure ignited fierce lobbying effort” (exposes the vast sums the proponents are spending)

http://www.washingtonpost.com/capital_business/2011/03/25/AFzD9VkB_story.html

 

National Venture Capital Association position (against):

http://nvcatoday.nvca.org/index.php/policy/nvca-sends-letter-on-house-patent-reform-bill.html

 

Judge Paul Michel: “Rein in the Big Bank Bail-Out” 7/7/11

http://www.patentlyo.com/patent/2011/07/guest-post-rein-in-the-big-bank-bail-out.html

Andrew Ross Sorkin/DealB%k: “In a Bill, Wall Street Shows Its Clout” 7/4/11

http://dealbook.nytimes.com/2011/07/04/in-a-bill-wall-street-shows-clout/
Jonathan Massey: Section 18 of H.R. 1249 Would Bail Out Banks and Expose the Treasury to Billion-Dollar Liability
http://www.scribd.com/doc/57945157/Jonathan-Massey-Section-18-of-H-R-1249-Would-Bail-Out-Banks-and-Expose-the-Treasury-to-Billion-Dollar-Liability

 

Judge Paul Michel on Post-Grant Review (PGR): “Torpedoing Patent Rights” 7/11/11

http://ipwatchdog.com/2011/07/10/torpedoing-patent-rights/id=18022/?

 

Former Senator Birch Bayh on the misuse of EXISTING post-grant review procedures (7/11/11):

http://thehill.com/blogs/congress-blog/labor/170659-patently-unjust

 

The most comprehensive coverage even though it under-represents the proponents’ views:

http://en.wikipedia.org/wiki/America_Invents_Act

 

Small Business Organizations Urge Substantial Amendments to House Version of Patent Bill

http://www.businesswire.com/news/home/20110621005690/en/Small-Business-Organizations-Urge-Substantial-Amendments-House

http://j.mp/SB-Objection

 

Several Universities Oppose Pending “Patent Reform” Legislation

http://chronicle.com/blogs/ticker/several-universities-oppose-pending-patent-reform-legislation/34091

Detailed letter from one of those universities:

http://www.warf.org/uploads/media/WARF__HR_1249_Disfavors_Innovators_06-01-11.pdf

 

Two former Chairs of the House Judiciary Committee

http://thehill.com/blogs/congress-blog/lawmaker-news/167549-patent-reform-is-long-overdue

 

Article on how the bill won’t solve the backlog and will probably worsen it:

http://www.lexology.com/library/detail.aspx?g=aa2f3083-8e03-422c-b7b3-e13e2e5a56cf

 

Article by Chinese IP judge on prior bill that is mostly the same as this one.  Last page is perfect summary:

http://www.reformaia.org/resources/china

 

Source of information on the monies that flowed to congress associated with the bill:

http://maplight.org/us-congress/bill/112-hr-1249/990582/total-contributions

http://maplight.org/us-congress/bill/112-s-23/897262/total-contributions

 

National Small Business Assoc. (NSBA) opposition:

http://www.nsba.biz/content/4012.shtml

 

Inventor of MRI: Ray Damadian’s critique: “Patents Shrugged Redux” 6/16/11

http://www.ecommercetimes.com/rsstory/72680.html?wlc=1308294830

 

Foreign Policy Magazine: “The Prevent American Invention Act” by Clyde Prestowitz, 5/16/11

http://prestowitz.foreignpolicy.com/posts/2011/05/16/the_prevent_american_invention_act

 

Another overview article: Patent Reform Favors Corporations, Multinationals

http://www.theepochtimes.com/n2/index2.php?option=com_content&task=view&id=58714&pop=1&page=0&Itemid=1

 

Brookings article on bill that does not take a position but is revealing: “Balancing Disclosure, Protection of Trade Secrets, and Patentability in Light of Patent Reform”

http://www.brookings.edu/opinions/2011/0627_patents_villasenor.aspx

 

Two papers on the problem w/the Grace Period by Dr. Ron Katznelson:

http://bit.ly/Grace-Period-USA

How we got here: “Section 2 of America Invents Act: the undisclosed story of legislative obfuscation”:
http://works.bepress.com/cgi/viewcontent.cgi?filename=1&article=1057&context=rkatznelson&type=additional&sei-redir=1

Last year the ENTIRE issue of Medical Innovation & Business magazine was devoted to patent reform – against it.  I have never before seen an entire issue of magazine dedicated to stopping bad legislation:

http://journals.lww.com/medinnovbusiness/Fulltext/2010/06010/

(I wrote one article in it)

 

URL’s are self-explanatory:

http://gametimeip.com/2011/03/04/can-we-have-an-intellectually-honest-patent-reform-debate-in-the-house/

http://gametimeip.com/2011/04/07/patent-reform-boosters-invent-facts-to-combat-real-arguments/

http://gametimeip.com/2011/05/30/america-invents-act-un-american-patent-reform/

http://www.patentlyo.com/files/the-big-government-patent-bill.pdf

 

Hoover Institution:  6/7-13/11

The Perils of Patent Reform http://www.hoover.org/publications/defining-ideas/article/81446

Welcome to Patent Purgatory http://www.hoover.org/publications/defining-ideas/article/81626

Patent Reform Goes Haywire http://www.hoover.org/publications/defining-ideas/article/81961

File First, Invent Later? http://www.hoover.org/publications/defining-ideas/article/82096
NY Times, “Two Views of Innovation, Colliding in Washington” By John Markoff, 1/13/08 It is still quite relevant, particularly as it applies to the law of unintended consequences:http://www.nytimes.com/2008/01/13/business/13stream.html?pagewanted=print

Other relevant info on bill:

http://www.opencongress.org/bill/112-h1249

 

Congressional Research Service’s 35-page report on the bill.  One of the authors (John Thomas) was on IBM’s payroll and has shown a pattern of bias in favor:

http://pub.bna.com/ptcj/HR1249CRSJun30.pdf

http://www.bna.com/crs-updates-report-n12884902369/

John Thomas’s long association with IBM:

http://www.google.com/search?client=safari&rls=en&q=%22Thomas,+John+R.%22+or+%22John+R.+Thomas%22+IBM&ie=UTF-8&oe=UTF-8

His decade-old backgrounder on international patent law (interesting, but not opined on here):

http://wikileaks.org/wiki/CRS-RL31132

http://assets.opencrs.com/rpts/RL31132_20010831.pdf

 

Unfortunate Statement of Administration Policy

http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/112/saphr1249r_20110621.pdf

 

Bill itself: http://pub.bna.com/ptcj/HR1249VotedJun23.pdf

The bill’s Grace Period language is quite confusing. Compare the bill section 102 (p. 5-9) with the existing Grace Period law:
http://www.uspto.gov/web/offices/pac/mpep/documents/appxl_35_U_S_C_102.htm

See if you can figure out the double/triple negatives.  The proponents created a deception that takes advantage of the confusion to state that the bill means the opposite of what it really says.  The colloquies on this claim the bill means the opposite of what it actually says.  Courts hold that the bill always supersedes the colloquies.
Senate Colloquy:
http://works.bepress.com/cgi/viewcontent.cgi?filename=1&article=1057

 

Web sites against:

http://www.noonhr1249.org/ (Links to excellent articles on the bill’s constitutional problems)

http://www.reformaia.org/

http://www.patentreformact.org/

http://sanepatentreform.org/

http://inventionsarejobs.org/

http://www.inventsact.org/

http://truereform.piausa.org/
http://inventorsvoice.com/

 

Hall of shame: Organizations who should have stood up for start-ups/tech entrepreneurs but have, in the words of Dante “retained their neutrality”:

The Kauffman Foundation

http://www.kauffman.org

 

The Small Business Administration

http://www.sba.gov/about-sba

 

The movie, “Flash of Genius” was based on a book about Robert Kearns, who invented the intermittent windshield wiper, and his struggle w/Ford to get paid after they ripped off his invention.  It is a perfect example of what entrepreneurs face and what we are fighting to keep.  If you have not seen it, I recommend it.

DVD: http://www.amazon.com/Flash-Genius-Greg-Kinnear/dp/B001LM64S8/

iTunes: http://itunes.apple.com/us/movie/flash-of-genius/id300387673

Amazon Instant Video: http://www.amazon.com/Flash-of-Genius/dp/B001O514F0/

Roger Ebert review (3 stars our of 4): http://rogerebert.suntimes.com/apps/pbcs.dll/article?AID=/20081002/REVIEWS/810020303/1023

Book: Flash of Genius: And Other True Stories of Invention (by John Seabrook Paperback - Sep 2, 2008)

http://www.amazon.com/Flash-Genius-Other-Stories-Invention/dp/B003R4ZHTK/

New Yorker article that tells the story (also by John Seabrook)(about 23 pages when printed out):

http://www.newyorker.com/archive/1993/01/11/1993_01_11_038_TNY_CARDS_000363341?printable=true

 

Please call your senators (and any others) to express your disapproval of this bill.  Their phone #’s can be found at:

http://www.reformaia.org/call

 

Thanks,

 

-Gary

 

 
America Invents Act H.R. 1249 Passes House

The America Invents Act passed the House with a vote of 304-117 Thursday, 6/23/11, night.  The House (H.R. 1249) version differs from the Senate version (S.23) so the passage of the Act is not a done deal.  The major difference was the House version stripped provisions stopping fee diversion.  Some people are optimistic that the Bill will die in conference because of these differences.  I hope they are correct, but I am not optimistic.

 

The following letter from a number of Law Professors deals with the Constitutionality of a First-to-File system as contemplated by the America Invents Act (H.R. 1249 and S. 23) 

 
First-to-File: Is it Constitutional?

The following letter from a number of Law Professors deals with the Constitutionality of a First-to-File system as contemplated by the America Invents Act (H.R. 1249 and S. 23)

June 17, 2011

By Email

Speaker John Boehner

Office of the Speaker

H-232 U.S. Capitol

Washington, DC 20515

Democratic Leader Nancy Pelosi

Office of the Democratic Leader

H-204 U.S. Capitol

Washington, DC 20515

Re: Unconstitutionality of “First-Inventor-to-File” Provision in H.R. 1249

Dear Speaker Boehner and Leader Pelosi:

We are writing concerning the issue of the unconstitutionality of § 2 in H.R. 1249, the provision titled “first-inventor-to-file.” It is the belief of the signatories to this letter, all of whom are law professors who specialize in intellectual property law, that this provision is unconstitutional under the Copyright and Patent Clause in Art. I, § 8, Cl. 8.

Section 2 of H.R. 1249 violates both the plain terms of the Copyright and Patent Clause and the historical interpretation of this clause by Congresses and the federal courts. Although there are many legitimate concerns about H.R. 1249’s impact on innovation, this unconstitutional provision by itself is sufficient to justify withdrawing this bill from consideration. At a minimum, this is a justifiable reason supporting the 54 House Members who have joined the June 1, 2011 letter to the Rules Committee in expressing their concerns about the constitutionality of H.R. 1249.

H.R. 1249 Unquestionably Takes Patents Away From Inventors

Although the word “inventor” appears in the title in § 2, which confusingly uses the phrase “first-inventor-to-file,” it nonetheless creates the same first-to-file rights that existed in the patent reform bills that had been introduced in prior Congresses and which were universally recognized as creating a first-to-file patent system. It also creates the exact same first-to-file rights that exist in other countries that have adopted first-to-file patent systems in both name and substance, such as Canada. Section 2 has to create a first-to-file patent system if only because one of the primary justifications for this provision in H.R. 1249 is that the United States should harmonize with other countries’ first-to-file patent systems. In sum, despite the confusion created by its title, H.R. 1249 unquestionably creates a first-to-file patent system.

The Constitution Only Empowers Congress to Give Patents to “Inventors”

The basis of the 220-year-old first-to-invent patent system in the United States is the Copyright and Patent Clause, which states that Congress has the power:

“To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” U.S. Const., Art. I, § 8, Cl. 8 (emphasis added).

The operative terms for patent law is that Congress is empowered only to “secure[e]” to “Inventors” their “exclusive Right to their . . . Discoveries.”

In the Founding Era, the term “Inventors” was defined in the newly independent United States of America as referring only to first inventors. In Samuel Johnson’s 1785 dictionary, often relied on by the Supreme Court as an authoritative source of meaning in the Founding Era, an “inventor” is defined as “one who produces something new; a devisor of something not known before.” Moreover, Johnson defined a “discoverer” as “one that finds anything unknown before.” Samuel Johnson, A Dictionary of the English Language (6th ed. 1785). Johnson was not alone in thinking that “Inventors” referred only to first inventors. St. George Tucker, for instance, defended the Copyright and Patent Clause against criticisms that it empowered Congress to create commercial monopolies by observing that “nothing could be more fallacious,” because this constitutional provision limited Congress to securing only an “exclusive right” in “authors and inventors.” St. George Tucker, Blackstone’s Commentaries: With Notes of Reference to the Constitution and Laws of the Federal Government of the United States and of the Commonwealth of Virginia, vol. 1, appendix (1803): p. 266.

Moreover, the First Congress, whose acts are often recognized as probative of the original meaning of constitutional terms, explicitly rejected the English practice of granting patents to importers of technology, recognizing that importers were not first and true inventors. During the drafting of the bill that became the Patent Act of 1790, the House committee decided not to follow the English practice of extending patent rights to the “first importer” of overseas inventions. Representative Thomas Fitzsimmons wrote: “The 6th Section, allowing Importers, was left out, the Constitutional power being Questionable.” See Karen E. Simon, The Patent Reform Act’s Proposed First-to-File Standard: Needed Reform or Constitutional Blunder?, 6 J. MARSHALL REV. INTELL. PROP. l. 129, 141 & n. 95 (2006-2007) (quoting congressional record).

Thus the Patent Act of 1790 authorized the grant of a patent only to a person who has “invented or discovered any useful art . . . not before known or used.” See Patent Act of 1790, § 1, 1 Stat. at 109-110. The Patent Act of 1790 further provided for termination of a patent “if it shall appear that the patentee was not the first and true inventor.” See Patent Act of 1790, § 6, 1 Stat. at 111. This uniquely American first-to-invent requirement was readopted in all patent statutes enacted by successive Congresses in 1793, 1836, 1870 and 1952.

As the famed patent law historian, Edward Walterscheid, whose work has been relied on by the Supreme Court in many patent cases, has written: “Implicit in the use of the terms ‘inventors’ and ‘discoveries’ in the intellectual property clause is the premise that before an exclusive right can be granted, the discovery to be patented must be novel. . . . Simply put, novelty is a constitutional requirement.” Edward C. Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective (Buffalo: William S. Hein & Co., 2002) at p. 310-11 (emphasis added). Walterscheid further writes that James Madison and early Congresses embraced a uniquely “narrow” conception of novelty compared to England (which permitted patents for importation), as they believed that for an invention “to be patentable in the United States a discovery had to be original to the inventor.” Id. at p. 312-13.

Supreme Court Confirms Patents Must Be Granted to Inventors

In numerous court decisions since the early American Republic, Supreme Court Justices have repeatedly recognized that the patent statutes imposed this constitutional requirement. In 1813, Chief Justice John Marshall, riding circuit, wrote that the “constitution and law, taken together, [give] to the inventor, from the moment of invention, an inchoate property therein, which is completed by suing out a patent.” Evans v. Jordan, 8 F. Cas. 872, 873 (C.C.D. Va. 1813) (No. 4,564) (emphasis added).

In the Supreme Court’s decision in Stanford v. Roche just last week, Chief Justice Roberts quotes from many of the Supreme Court’s decisions over the past 220 years to establish that “Our precedents confirm the general rule that rights in an invention belong to the inventor.” This included, for instance, the decision in United States v. Dubilier Condenser Corp., in which the Supreme Court held that U.S. patents have long secured “the result of an inventive act, the birth of an idea and its reduction to practice; the product of original thought.” 289 U.S. 178, 188 (1933) (emphasis added). Justice Joseph Story, recognized by patent scholars today as one of the founders of American patent law, wrote that “No person is entitled to a patent under the act of congress unless he has invented some new and useful art, machine, manufacture, or composition of matter, not known or used before.” Bedford v. Hunt, 3 F. Cas. 37, 37 (C.C.D. Mass. 1817) (No. 1,217) (emphasis added).

Congress May Not Define “Inventors” However It Wishes

Some supporters of the constitutionality of § 2 have stated that the meaning of the word “Inventors” in Art. I, § 8, Cl. 8 should be left to the policy discretion of Congress to interpret and apply in its patent statutes. But this cannot be a valid principle for applying constitutional provisions to Congress, because it would mean that every word in every provision of the Constitution should be left to the policy discretion of Congress as to how it should be applied to American citizens. Under this approach, Congress could freely redefine the meaning of “speech” in the First Amendment, or Congress could freely redefine the meaning of “due process” in the Fifth and Fourteenth Amendments. Certainly Congress has some discretion within the scope of its enumerated powers to enact legislation; this is why the Framers adopted the Necessary and Proper Clause. But the very idea of a Constitution that specifically enumerates limited powers in the federal government through expressly worded provisions requires that the limiting terms in these provisions not be read out of the Constitution by interpretative fiat. If “Inventors” is to have any meaning whatsoever in defining and limiting the scope of Congress’s power to enact patent statutes under the Copyright and Patent Clause, it can only mean what it has been consistently interpreted to mean for 220 years: patents may be secured only to the first inventors.

Supporters of the constitutionality of § 2 have further claimed that the instances in which patents are denied to first inventors given their post-invention activities, such as public use or abandonment, suppression and concealment of an invention, prove that the Constitution does not require that patents go to first inventors. Again, this is a nonsensical principle of constitutional interpretation. The Constitution establishes the presumption that first inventors are secured a patent, but it does not mandate that first inventors must receive patents regardless of their own actions. Thus, Congresses and courts have identified instances in which post-inventive actions by a first inventor can result in a default on the right to receive a patent. There are myriad examples—such as strategic behavior by an inventor in commercially exploiting an invention as a trade secret long before filing for a patent or an inventor’s publicly disclosing an invention and thus creating reasonable reliance interests in third parties that the invention is in the public domain—but they all entail post-invention actions that result in a substantive or procedural default by the first inventor in receiving a patent. This is no different from the constitutional practice of denying to felons the right to vote or the right to own firearms or restricting every American citizen’s due process rights through statutes of limitation, and so on.

Accommodating Foreign Laws Is No Excuse to Violate Constitution

Lastly, the supporters of the constitutionality of § 2 have alleged that Congress’s longstanding practice of accommodating foreign countries’ first-to-file rules when foreign inventors apply for patents in the U.S. somehow disproves the constitutional argument against this first-to-file provision. But such laws prove no such thing. The Constitution applies only within the jurisdictional boundaries of the United States of America, and thus it is merely an act of comity for Congress to permit foreign inventors who have created inventions in foreign countries to apply for U.S. patents; under the Constitution, Congress may permit or refuse such a patent application by discretionary fiat. This is why the United States has entered into treaties to secure international protection of patent rights. It is also why, since the early American Republic, foreign inventors working in foreign countries have always required Congress to enact special statutes to permit them to apply for U.S. patents. But the constitutional requirement for U.S. inventors is neither discretionary nor unclear: It requires that the laws “securing” patents to “Inventors” who are living and working in the United States may do so only for those “Inventors” who have created “Discoveries”—those who are first to invent, not first to file for the patent itself.

In closing, it is our belief that there is a serious question concerning the constitutionality of the first-to-file provision in H.R. 1249. But regardless of whether one agrees that a first-to-file system is unconstitutional, it is entirely appropriate that this debate occur in the deliberations concerning whether H.R. 1249 should be enacted by Congress. The constitutionality of a statute under consideration by Congress, in addition to whatever policy issues may be raised by it, is always something that should be openly and forthrightly considered by Congress, which has as much a duty to uphold the Constitution as do the Executive and Judicial branches.

Sincerely,

Daniel B. Ravicher

Lecturer in Law, Benjamin N. Cardozo School of Law

Executive Director, Public Patent Foundation

Adam Mossoff

Professor of Law

George Mason University School of Law

Lateef Mtima

Professor of Law and Director,

Institute for Intellectual Property and Social Justice

Howard University School of Law

Kali Murray

Assistant Professor of Law

Marquette University Law School

Sean Patrick Suiter Adjunct Professor of Law, Creighton University School of Law Visiting Professor of Law, Peking University School of Law

Dale L. Carson

Adjunct Professor of Law

Quinnipiac University School of Law

 

A patent reform bill is currently pending in Congress (Senate S. 23 and its House counterpart H.R. 1249) titled the “America Invents Act.” The bill proposes radical changes to the existing patent system that would impede innovation. Moreover, the bill contains ambiguous language that tends to confuse the reader, and is likely to confuse users of the patent system.

In particular, the bill attempts to draw a line of demarcation between “inter partes review” of a patent, on the one hand, and “post-grant review” on the other. The fly-in-the-ointment is that “inter partes review” occurs after grant, and is thus “post-grant.” Conversely, “post-grant review” is “inter partes” since it involves multiple parties, namely the patent owner and a third-party opponent. Accordingly, the bill is confusing since words appearing in one section are interchangeable with, and confusingly similar to, words in another.

In reality, the “post-grant review” proposal appears to be modeled after an analogous opposition procedure in place in Europe. Both procedures require the opposing party to submit a petition against the patent within a fixed number of months after the patent’s grant, or lose the opportunity to oppose using those procedures.

Significantly, other countries already tried European-style oppositions. In fact, Japan, China and South Korea implemented patent oppositions more than a decade ago. Within the decade, these efforts to mimic the European protocol all failed, and the procedures were abolished.

In Europe, there are no administrative alternatives to the opposition procedure. Hence, there’s no risk of redundancy in the European system, nor of confusion among users of the system. In contrast, Japan, China and South Korea have a separate administrative option, which still exists, called an “invalidation trial.”

The invalidation trial is comparable to the separate administrative option already available in the U.S. Patent Office, namely inter partes re-examination. The lesson we should learn from these Asian countries’ negative experiences with European-style oppositions is that introducing such a procedure is likely to confuse users of the system. Confusion among users of the patent system tends to stifle innovation.

Another provision of the bill would change our system from “first-to-invent” to “first to file.” That change might suit those who believe they can win a race to the U.S. Patent and Trademark Office. However, a race is not what Article 1, Section 8, Clause 8 of the Constitution envisions, nor is it what the Patent Act of 1836 formerly required or what the Patent Act of 1952 currently requires.

To the contrary, an “inventor” is not the person who is most fleet-footed in a race to the PTO, but rather the one who actually makes the invention first, unless the first party has “abandoned, concealed or suppressed it.”

A first-to-file system will demotivate inventors who believe that they do not have sufficient resources to win the race to the PTO. Demotivation of inventors tends to impede and stifle innovation. Such demotivation is the last thing that our nation needs, given the current state of the economy.

Another provision of the bill would undermine the incentive force associated with the constitutional mandate to “promote the…useful Arts” by tacitly encouraging each patent applicant to decrease the quality and quantity of disclosure of the invention in their patent applications.

Specifically, this provision would eliminate the penalty of unenforceability or invalidity that currently can be leveled against patentees in litigation for failing to disclose the best aspects of their invention in the patent application.

By virtue of this proposed change, a patentee’s failure to provide “best mode disclosure” of their invention would not be usable as a defense against patent infringement.

Although the best-mode requirement would technically remain “on the books,” it would have a hollow ring to it since there would be no risk of judicial penalty for failure to comply with the requirement.

Without the risk of sanctions, patent applicants may decide that it is in their best interest not to comply with the requirement, irrespective of their patent attorney’s counsel to the contrary. The likely result will be a diminution in the quantity and quality of information provided.

Reduced disclosure in patent applications will impede innovation by causing the patentee’s competitors to have to “reinvent the wheel” in order to piece together details about the invention that were left out of the patent application in order to keep those details a trade secret.

In conclusion, the proposed bill will diminish innovation and should not be enacted. If enacted, the resulting statute is likely to be repealed, but only after a huge waste of time, effort and taxpayers’ money.

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.

 
Legislative Update: America Invents (not) Act

I met with a couple of Congressional aides today and it looks like there will be debate on the amendments Wednesday (6/15/11) and Thursday and the vote on the America Invents Act (H.R. 1249 & S.23) by the end of the week.  The only reason for the rush must be that the Bill continues to lose support and the big companies pushing this Bill want it crammed through before opposition can coalesce.

According to the aides one amendment is to gut the Bill and only preserve full funding for the Patent Office (PTO).  This is the only form of the America Invents Act that I could support.

Other amendments include the Paul Ryan and Hal Rogers proposal to cut the provision to stop fee diversion.  Some Conservative groups have supported this idea under the idea that stopping fee diversion is violation of the US Constitution.  The argument is that stopping fee diversion takes the power of the purse away from the Congress.  This argument is nonsense.  The PTO is and always has been a totally self funded agency.  When you apply for a patent you write a check to the PTO, not to the General Treasury.  When the funds are deposited into the General Treasury it puts Congress in the position of a trustee.  A trustee has oversight power, but does not have the power to spend that money on other programs.  When it spends PTO money on other programs it is committing fraud and theft.  If Congress was private entity, all Congressmen would all go to jail for converting funds.  When different (less stringent) rules apply to those in government than those in the private sector, then you have tyranny.

I was asked my opinion on giving the PTO fee setting authority.  I am mixed.  If the idiot, Jon Dudas former Director of the Patent and Trademark Office, had had fee setting authority, it would have terrified me the damage he could have done to the patent system.  Of course, fee setting without the end of fee diversion is completely meaningless.  So I see this issue with ambivalence at best.

Now is the time to put pressure on your Congressman.  Please call you them and tell them to vote NO on the America Invents (not) Act.

 
America Invents Act Will Not End Fee Diversion – Paul Ryan Thinks Stealing From Inventors is A-OK

According to the Wall Street Journal, “two powerful House Republicans, Rep. Hal Rogers (R., Ky.), chairman of the Appropriations Committee, and Rep. Paul Ryan (R., Wis.), chairman of the Budget Committee, called this week for changes in the legislation that would restrict the patent office’s ability to keep its own fees.”  Ending fee diversion was the only positive part of the America Invents (Not) Act, HR 1249, S. 23).  Representatives Rogers and Ryan should be condemned for this action.  Congress is in the position of trustee of the Patent Office funds and if Congress were subject to Sarbanes Oxley Mr. Ryan & Mr. Rogers would be in jail today along with the rest of Congress.  This makes the America Invents Act a complete farce.  Ending fee diversion was always a little bit is not red herring as the next Congress could always just change this law.

When the government creates laws that do not apply to the government, just private citizens, this is the essences of tyranny.  Rep. Ryan who is suppose to be a fiscal conservative and watching out for taxpayer dollars, is advocating the theft of inventor fees.  If that is what the Tea Party and Paul Ryan consider being fiscally conservative, then it is clear that everyone in Washington believes that you have no right to the money you earn.

 
Senator Feinstein: First-Inventor-to-File a Ruse

According to Broadbandbreakfast.com, Senator Feinstein nailed it!

“I think this is really a battle between the small inventors beginning in the garage, like those who developed the Apple computer that was nowhere, and who, through the first-to-invent system, were able to create one of the greatest companies in the world,” Feinstein said. “America’s great strength is the cutting-edge of innovation. The first-to-invent system has served us well. If it is not broke, don’t fix it. I don’t really believe it is broke.”

Feinstein discussed the importance of the first-to-invent standard in the United States at length, as well as the importance of the associated “grace period” to independent inventors.

She said that the changes sought in the current legislation would make it much harder for inventors to prove that they were the first to come up with an idea.

“Another problem with the bill’s first to file system is the difficulty of proving that someone copied your invention,” she said.

“Currently, you as a first inventor can prove that you were first by presenting evidence that is in your control–your own records contemporaneously documenting the development of your invention,” she continued. “But to prove that somebody else’s patent application came from you under the bill, was “derived” from you, you would have to submit documents showing this copying. Only if there was a direct relationship between the two parties will the first inventor have such documents.

If there was only an indirect relationship, or an intermediary–for example, the first inventor described his invention at an angel investor presentation where he didn’t know the identities of many in attendance–the documents that would show “derivation”–copying–are not going to be in the first inventor’s possession; they would be in the second party’s possession. You would have to find out who they talked to, e-mailed with, et cetera to trace it back to your original disclosure. But the bill doesn’t provide for any discovery in these “derivation proceedings,” so the first inventor can’t prove their claim”

Feinstein also dismissed the arguments for a change in the system, noting that there are only 50 proceedings a year at the United States Patent and Trademark Office that dispute who created a new invention first.

That is a minuscule number considering that there are about 480,000 patent applications a year.

 

 

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