State of Innovation

Patents and Innovation Economics

Guest Post: Fatal Patent Legislation Must Be Stopped

We are facing is the worst attack upon independent invention that we have ever faced. The changes from the America Invents Act pale in comparison. Having to be more secretive and file Provisional Patent Applications earlier can be dealt with, but having no possible way to defend a patent against a financially strong infringer is a fatal blow.

Many inventors have thought that bringing a patent infringement suit is financially beyond them. But this is America, and you can hire an attorney on contingency. Your patent and your case have to be strong, but it can be done. This isn’t some myth – I have a friend who did this and won. But the legislation that passed the House, H.R. 3309, has Loser Pays,  meaning that the patent holder has to pay the legal expenses of the infringer if the case isn’t won. There is some language in the bill that gives some leeway so that possibly not every inventor will have to pay the legal expenses of the infringer in every single failed case. But the inventor will have to go into the case with the risk and be subject to the whims of judges who can be biased, misinformed, wrong-headed, and maybe even influenced. Most of us would not be able to take on a financial risk that would be at least hundreds of thousands of dollars, if not much more. Loser Pays creates a situation where the typical independent inventor who is not wealthy will not be able to defend a patent.

I wish that were all. You know how the America Invents Act put into place some new ways to challenge an issued patent? Of course, that is bad for us. But at least the challenger had to bring his best case and could not later come forward with new arguments and additional challenges. This is referred to as serial patent challenges, which would very quickly deplete the typical inventors funds and ability to defend his patent. The passed bill, H.R. 3309 does away with the estoppel provision, and will allow serial patent challenges. The typical inventor will not be able to continue to defend a patent if an infringer employs serial patent challenges.

There’s more, but there is nothing in this bill that is good for the independent inventor. The stated purpose is to handle Patent Trolls (non-practicing entities [NPEs] who allegedly buy up patents and frivolously sue patent holders). There’s a lot of discussion on whether or not the troll issue is even a real issue rather than just large companies not wanting to be sued for actual patent infringement. I and a lot of others believe it is the latter. I believe that the average Senator just isn’t aware of how this legislation will affect independent inventors because they are only hearing the large corporation argument.

We cannot let our rights as inventors be stripped away, as they surely will if we don’t start making a lot of noise. It is possible that the Senate will just vote on the House bill as is and be done with it. I have heard that they will be meeting on it this week. In an effort to look like they are doing something, they could pass it this week!

If you are expecting others to make this go right, don’t. I know there are people fighting on our side, but there were with the America Invents Act as well. There, we were beaten 85 to 10 in the final vote. The only thing that will stop this tragedy, and it is a tragedy, is if you get this email out far and wide and call your Senators and tell them you are against what was passed in the Innovation Act, H.R. 3309, and whatever the Senate is may be adding without the input of any independent inventors. Tell them that independent inventors are the backbone of American innovation, and that they must vote NO to this and any future efforts to weaken the American Patent System. Tell them that the proposed changes are the exact opposite of what made America the greatest innovator and greatest economic power in the world. The proposed changes create the opposite of what was intended by the creation of the American Patent System. Call now. Thank you for your help.

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December 18, 2013 - Posted by | News, Patents |

2 Comments »

  1. Patent haters at work again:

    http://topromotetheprogress.wordpress.com/2013/12/20/when-asked-vast-majority-of-businesses-say-ip-is-not-important/

    Can you point out all of the flaws in their reasoning?

    Comment by Art | December 21, 2013 | Reply

  2. There are a number of errors in this post. First, IP is not a regulation, it is a property right.

    It is just nonsense to suggest that biggest economic benefit comes from trademarks. We know for a fact that all real per capita increases in wealth are due to increases in our level of technology, which means they are the subject of patents not trademarks.

    The problem with asking business owners is that they often do not know what affects their businesses. For instance, how many startups know that Sarbanes Oxley and weakening of our patent laws are why it is more difficult to get funding today than fifteen years ago? Very few, but it does not change the fact that this is why.

    The reason business cite Trade Secrets as important is because our patent system has become so cumbersome, expensive, and ineffective at protecting the rights of inventors, companies have turned to trade secrets. This is not a good sign for our economy. The Middle Ages were dominated by people using trade secrets to protect their ideas. Trade secrets prevent the sharing of knowledge that occurs with patents and this inhibits the growth in new technologies and therefore are economy. The AIA (America Invents Act) and the proposed Innovation Act are crony capitalist pieces of legislation (not patent law) designed to protect large corporations at the expense of startups and individual inventors. They have had their intended effect of entrench large corporations at the expense of property rights, startups, and our economy.

    Comment by dbhalling | December 22, 2013 | Reply


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