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Forbes Explains How America Invents Act will Hurt Tech Entrepreneurs

Forbes Explains How America Invents Act will Hurt Tech Entrepreneurs

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.



  1. Dale,

    David Boundy has an excellent analysis here:

    Allow me to lift one noteworthy part here with inserts:

    … Once [a] company is formed [to solve an identified problem] , the hard work of research and development (R&D) begins. Many high-tech products require [many and] long trial-and-error [runs]: the inventors conceive and discard dozens of ideas before hitting the magic combination that results in a commercially-viable product. The work-and-rework for a commercial product often takes several years [of diligence]. Dozens of approaches, sometimes a hundred [proto-]inventions, are tried, explored, and mostly [all are] discarded. A company may pursue one for a year or more before finding that it doesn’t work, then go back and try one of the discarded ones modified by an insight from [the earlier] other work. The final product may embody only a tiny fraction of all of the inventions [tried and tossed]. Again, as we’ll see, today’s [old 1952] law fosters this R&D, but the new bill [AIA 2011] squelches it.

    Unfortunately, the America Invents Act makes these [above] two fact scenarios nonviable for startups—because the proponents concede that they “didn’t think” about them. [Oops, but then again, "mistakes" happen. So sorry.]

  2. The AIA is essentially the adoption of European and Japanese law – why is this automatically constitutional??? Shouldn’t such drastic changes to our Constitutional provisions (patents go tho “authors” NOT “filers”) only have been allowed through constitutional amendment – rather than Congressional fiat and lobbyist bill drafting?

    So, why haven’t ANY attorneys questioned the constitutionality of the AIA?

    Also, shouldn’t all patent attorneys advise their clients to continue with long-term record keeping, in the event that the SCOTUS decides to look into the constitutionality of the AIA??

    Furthermore, how the heck can the AIA protect an inventor (or univerity researcher) that requires more than 10 months to achieve even BASIC enablement, from having their invention stolen more than 12 months prior to filing (without the inventor learning of the theft till later)? Would the Founders have approved of this?

    How can the Congress SIMPLY REQUIRE “fast invention”, “fast filing” and “fast patenting”, when this might not always (or usually) be possible? Wasn’t the Congress displaying its complete ignore of science and technology (and how it gets done) when it introduced this abomination of unconstitutional legislation and wasn’t it essentially bought out by the large multinationals? Where is the outrage over this from IP attorneys (or at least trial attorneys)?!

    What if Congress had done the same thing with regards to gun laws? I’d like to see that too!

  3. Good point. There is a lawsuit challenging the constitutionality of the AIA see

    Also see my post why I believe the AIA is unconstitutional

    See also this article by law school professors arguing the AIA is unconstitutional

  4. The patent clause of the US Constitution is an “empowerment” clause, not a requirements clause.

    Congress is empowered to pass laws which promote progress.

    However, the Congress, in its ever infinite wisdom can at any time rescind the laws which “secure” for inventors the “exclusive” rights to their “discoveries”.

  5. Step back,

    I would feel bad that you got caught in the spam filter, but so have my own comments.

    Your argument fails on several levels. First of all RIGHTS are not optional for a government to secure. Second the clause was just stating which part of the government has the responsibility not that it was optional. It is a requirements clause – you constantly try to ignore the word right and the the Declaration of Independence when interpreting the patent clause.

  6. Dale,

    I respect you because you do not hide the fact that you are a card-carrying, full fledged Libertarian.

    The Libertarian sentiments are understandable ones. It would seem to be a more just and fair world if we were all born (“all” meaning all on this planet) with certain inalienable “rights”, among these, the right to be compensated for the fruits of our intellectual works (i.e. our IP works of authorship and invention as recognized by the copyrights and patents empowerment clause of the US Constitution).

    However the sad truth is that we are born into a dog-eat-dog world. “Rights” are won and lost at the end point of a gun barrel. For example, people in Egypt can argue till blue in the face about the rights they had under the most recent of their legal “constitutions”. But when the army brings out the tanks and rotates the turrets toward the yapping mouths of the “born free” citizens, all that goes out the window.

    I am extremely thankful that I am a citizen of this wonderful country of ours and that over the past 200 years, previous Congresses and Supreme Courts have chosen to respect the works of inventors and to compensate those works with rights of exclusive use for their respective and patented inventions.

    In the last decade, unfortunately, both the US Supreme Court and the Congress have gone about unwinding many of the gains of the first 200 years. It’s a shame. But it’s a reality. And like you I don’t intend to let inventor’s “rights” slip down the sewer drain without at least a good fight. Let us work together toward that strange bed fellows goal despite our differences about the Libertarian philosophy.

  7. p.s.

    I do find it an interesting argument under the Constitution that Congress does not have the right to “de-secure” inventors of the exclusive rights to their respective discoveries.

    The Congress shall have Power … To 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***.

  8. Rights do not disappear, just because the government’s protection for those rights ceases to exist. Rights are the standard and exist even if the government does not follow the standard. The blueprint for a building defines what should be built. If what is built is different than the blueprint it shows that a mistake was made. Both the blueprint and the building are reality. If we don’t have a blueprint or standard to hold Congress or the Supreme Court to, then whatever they do is right. That creates circular reasoning. Guns do not create rights. They can be used to protect those rights or violate those rights, but the rights exist either way.

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