State of Innovation

Patents and Innovation Economics

Q. Todd Dickinson: Patent Reform

I was at an AIPLA conference in Denver on Thursday, June 24, 2010, and Mr. Dickinson did a presentation on the Patent Reform bill.  There has been a push to get patent reform back on track.  Mr. Dickinson has worked very hard on the bill and if they add eliminating fee diversion, he and AIPLA are ready to completely back the bill.  Mr. Dickinson’s presentation was excellent and he clearly is a very intelligent man.  The main justification for the bill is to harmonize our laws with Europe and the rest of the world.  He explained all the changes that have occurred to the bill and the players behind the bill.  Despite this I still have a number of reservation about Patent Reform and oppose its passage.

One point that bothered me about the presentation was no independent inventor groups were discussed as having a seat at the table.  There was token mention of independent inventors and start-ups, but the legislative process seems to ignore people who do not have money to play.  The one except was the very vocal independent inventor’s group from Nevada (Nevada’s for Fair Patent Reform) who are holding Harry Reid’s feet to the fire on several issues in the bill.

Another point that bothered me was Mr. Dickinson’s insistence that “First-to-Invent” issue is really a non-issue.  He pointed out that the system is really the “First-Inventor-to-File” and there will be procedures to show derivation from the true inventor.  This does not seem to solve the problems with a first-to-invent system.  If we are going to replace the few interferences with a few procedures to show derivation, where is the advantage to the US?  Second of all the first-to-filesystem is going to stack the deck in favor of large corporations.  A first to file system will result in many poorly thought out patent applications increasing the PTO’s workload and increasing the number of Continuations-In-Part (CIPs).  The confusion created by this system of filing early and then following up with corrected applications will result in litigation being more expensive and less certain.  In addition, this system will further bias the patent system in favor of large entities.  Large entities will use a first to file system to flood the PTO with patents to overwhelm small entities and individual inventors in the race to the patent office.  Small entities and individual inventors will never be able to compete financially in this race.  According to the SBA, most emerging technologies are created by small entities not large entities.  As a result, we need to make sure that our patent system is friendly for small entities if we want it to encourage innovation.

The result of the first to file system along with the publication system in the rest of the world has been to create a patent system for large entities.  The number of filings by small entities in these countries is trivial compared to the number of patent filings by small entities and individual inventors in the U.S.  There is no evidence that first to file system has spurred innovation in those countries that have this system.  So, the truth here is that the first to file system is not designed to spur innovation – it is a further attempt to bias the patent system in favor of large corporations.

As I stated earlier, one of the main reason Mr. Dickinson gave for passing the Patent Reform bill is harmonization with other countries.  In 2000, we gave up on the two century tradition of keeping patent applications secret during their pendancy.  This was inconsistent with the social contract of patents.  The reward for small inventors was to see patent pendancy skyrocket and to have a totally incompetent Director of the Patent Office appointed, Jon Dudas, who drove up costs and essentially shut down the patent system.  This was particularly true for independent inventors and start-ups that could not afford to fight indefinitely the PTO.  According to Ron Katznelson, pendancy times always increase by about double once a publication system is instituted in a country.  The reward for the US was to have foreign countries steal our technology by just reading our patent publications.  For more information see Pat Choate’s book Hot Property. We are giving away our most valuable asset for free – our technology.  As far as I can tell the Europeans and the rest of the world are not giving up anything for harmonization nor providing any compelling reasons it is in the US interest to harmonize.

Harmonization is a very bad reason for doing anything.  In the 1990’s we were the economic and technological leader of the world.  A decade of harmonization with the rest of the world has turned us into an economic and technological basket case – for more information see my book, The Decline and Fall of the American Entrepreneur. What we need is real patent reform that will help the economy and help start-ups and independent inventors.  Here are my suggestions for real patent reform that would not only help small inventors but the US economy.

1) Repeal Publication: This would restore the social contract

2) Repeal KSR: A subject standard of patentability just increases costs and uncertainty associated with the patent process.  KSR makes bureaucrats the ultimate arbiter of what is patentable instead of logic.

3) Repay PTO & End Fee Diversion:  Congress should repay the over $1B it stole from inventors with interest.  It should also end fee diversion, which if Congress was subject to Sarbane Oxley would land them in jail.

4) Regional Offices for PTO:  This would ensure steady funding of the PTO, increase examiner retention, and ensure that the PTO is not so Washington biased.

5) Repeal eBay:  This decision is a logical absurdity.  If a patent gives you the right to exclude, then if you win a patent infringement case you must be able to enforce your only right – the right to exclude.  This is not an issue of equity, it is an issue of enforcing the right associated with a patent.

6) Eliminate “Combination of Known Elements”:  The fact that the Supreme Court does not understand that every invention in the history of the world is a combination of known elements is pinnacle of ignorance.  Have they ever heard of “conservation of matter and energy”?

7) Patent Reciprocity:  If you drive your car across the border into Canada you do not lose title to your car.  If you take your manuscript across the border into Canada you do not lose the copyright to your manuscript.  But, if you take your invention across the border into Canada, you lose your patent protection and anyone can steal the invention – not the physical embodiment, but the underlying invention.

Patent reciprocity would automatically provide patent rights in a foreign country when you obtained a patent in the US and vice versa.  This idea was first proposed by the US in the mid 1800s according to B. Zorina Kahn’s book “The Democratization of Invention: Patents and Copyrights in American Economic Development, 1790-1920“. Unfortunately, the idea died and since then patent rights have been part of the convoluted process of trade negotiations.

Patent reciprocity would significantly increase the value of patents and increase the value of research and development.  As a result, it would spur investment in innovation.  It would also increase the valuation of technology start-up companies in all countries that participated.  Finally, tt would also increase per capita income.

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June 25, 2010 - Posted by | Innovation, Patents

4 Comments »

  1. […] This post was mentioned on Twitter by Mr. Gray and PriorSmart, Dale Halling. Dale Halling said: Q. Todd Dickenson: Patent Reform: http://wp.me/pwxHH-fx […]

    Pingback by Tweets that mention Q. Todd Dickinson: Patent Reform « State of Innovation -- Topsy.com | June 25, 2010 | Reply

  2. If Harm-my-nation is oh so wonderful, we should harmonize our Bill of Rights to match those of North Korea.

    Comment by step back | June 26, 2010 | Reply

  3. Step back,

    I saw a great short film that you would like. I think it is called Post Shredded Wheat. The boss in the movie had a chalk board where he writes “We put the NO in InNOvation”

    Comment by dbhalling | June 27, 2010 | Reply

  4. It’s not a film, it’s a commercial; shown nation wide. We all saw it.

    We all work hard at putting the KNOW into In-KNOW-vation.
    🙂

    Comment by step back | June 27, 2010 | Reply


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