After years of political wrangling, US legislators last week passed a patent reform bill and sent the measure to President Obama for his signature. Now, the industry must review its potential impact on their operations.
The Senate overwhelmingly approved the America Invents Act in an 89-9 vote. The House of Representatives approved the bill in March in a 304-117 vote. The biggest change shifts the way patents are awarded, moving from the current "first-to-invent" policy, which grants patents to those who first developed the innovation, to a "first-to-file" standard, which favors the inventor who gets to the US Patent and Trademark Office ahead of anyone else.
Other measures allow the Patent Office to set its own fees, and to hire people and make technical upgrades needed to whittle down a backlog of nearly 700,000 patent applications. There's also a provision that would create a post-grant review process, allowing challenges to bad patents prior to litigation.
Advocates claim the reform will bring the US in line with policies in other countries, speed up the entire innovation process, and help curb the number of patent infringement cases.
As we all know, electronics companies are often tangled up in a never-ending spiral of IP-related legal cases. Bolaji Ojo's post about brawling OEMs provides a sampling of companies currently involved in such disputes. Obviously, the nation is in dire need of fixing a broken patents system.
"At a time when Americans are innovating faster than ever, a fully funded and functional patent office is fundamental to our economic success. We encourage House and Senate conferees to go even further and end fee diversion once and for all," said Michael Petricone, senior vice president of government affairs with the Consumer Electronics Association, in a press release. "For years, structural problems in our patent system have stifled innovation while imposing unnecessary costs on our crown jewel companies. This bill is an important step toward restoring common sense, encouraging innovation, and reducing harm by those using the present law to hurt our economy and productive companies."
However, there is a strong case to be made that the revisions will only really benefit the "crown jewel companies" Petricone refers to, and do little for the individual inventor who may well be the brains behind any new innovation. Companies that have the legal staff, international reach, and deep pockets will dash to the Patent Office faster than any single engineer could.
Perhaps the America Invents Act is the first necessary step in overhauling a patent policy that has seemingly been running amok for quite some time. The insane amount of time and money poured into litigation is mind-numbing; clearly, those are resources that would be better spent on additional research and development.
But, since I have a soft spot for underdogs, I would have liked to see more serious thought put into protecting the source of the innovation, not just the person who managed to get to the front of the bureaucratic queue first. I suppose many of the initial proposals that would have safeguarded individual creators were removed as the bill moved through various Congressional committees. That's often the case. And, it's doubtful, too, that any significant amendments will be added to the approved measure any time soon, given the long and slow process it has already taken to arrive at this point. I guess we'll have to be content with what has taken shape so far, and that it's going to have to be good enough for now.
One last thought crossed my mind just as I was hitting the send button: What effect do you think the legislation will have on high-tech IP companies that earn their bread and butter by building up a patent portfolio and then selling that technology to OEMs? Tell me how you see this shaking out.
Well, if patents worked well and they truly represented an invention, then yes, Apple and Samsung could go to court but if it's something else... let them compete.
Those are all good questions and I don't have any good answers for them. Then again, I can say a few things. If Apple and Samsung are misbehaving, how will changing the law stop that? They can misbehave if they want to and litigate no matter what the law says. We also have to be aware of the limitations on what a "contribution" is. If someone makes a contribution and doesn't ask for compensation at the time, can they come back and say "Pay me!"? Would "Prior Art" be considered a contribution? I was under the impression this stuff was supposed to simplify things, but it looks like it is making things more complicated. Has the President signed the bill yet?
What is the issue regarding patents? Are the legal fights between Apple and Samsung good for the industry? IMHO, they do more harm than good. Are patents too broadly described?
Perhaps, but the person or people identified as inventors must have contributed to at least one claim in the invention. Seems like it would be a fairly easy trail to folow back and make a case for derivation. It will be interesting to see how sections of the legislation actually work in practice. I certainly make no claims (no pun intended) about how well, or fair, the mechanics will prove to be.
Actually, patent and employee agreements have safeguards for such activities. The current legislation states "The owner of a patent may have relief by civil action against the owner of another patent that claims the same invention and has an ealrier effective filing date, if the invention claimed in such other patent was derived from the inventor of the invention claimed in the patent owned by the person seeking relief under this section." Employee IP agreements have similar, and probably additional wording that restricts such actions. I'm sure anyone working in R&D, particularly something as capital intensive as drug development, is cover by these contracts.
Regarding your question "What effect do you think the legislation will have on high-tech IP companies that earn their bread and butter by building up a patent portfolio and then selling that technology to OEMs?", I don't perceive much impact. I haven't had a chance to completely read the bill yet, but I am sure for these firms, rapid drafting and submision of applications is already a focus. If anything, this lesgislation gives them an additional advantage over inventive entities that have fewer resources , as you mention in your article.
I can see advantages to both first-to-invent and first-to-file methods. The first-to-invent method to award patent priority seems like it levels the playing field a little more for the small business or individual inventor, provided they do a good job of recordkeeping during development. The 1-year statuatory bar gives such inventors a chance to evaluate the market potential for the invention prior to committing to the full cost of the application process.
However, first-to-file would encourage inventions to be filed sooner rather than later in the development process in order to secure ownership, and therefore would get innovation into the public domain faster, spurring the pace of innovation.
Fairness of the system comes down to how well the legslation is codified into patent rules and process - the jury is still out on that!
Jenn, great post. As I mentioned in the EBN newsletter I think this is a bad idea. I see it as "He with the most lawyers wins." I know organizations such as the Lemelson Foundation do a lot of good work, but tactics such as submarine patents undermine th true intention of the patent system. First to file is just a way to position yourself for a lawsuit, rather then actually create value int he makeretplace.
Jennifer, I think patent registration is a global issue. I had read that most of the common names or the technologies are patented by crown companies, without many efforts. Since this technologies are already in place with some other name or in local form, most of such small scale users or companies are in problem with the patent/ royalty issues.
A new report shows that most of the worrisome issues that the supply chain industry has been dealing with for years are not new, but there are some new concerns that need answers. Here’s a look at what keeps supply chain professionals up at night.
When it comes to shipping supplies from China to Europe, trains might be the most cost-effective way companies have available to them. DHL is looking to jump on that bandwagon.
For many dealing with the enormous task of tracking,
reporting, and resolving issues associated with
potential counterfeit parts, there is a collective
hope that 2013 will bring clearer guidance on what
needs to be done by whom and when.
A necessary foundation for moving efficiently at real-time speed, supply chain analytics is still very much at the beginning stages of development at many companies.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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