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Patent Reform at Last, but Does It Go Far Enough?

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.

19 comments on “Patent Reform at Last, but Does It Go Far Enough?

  1. Ariella
    September 15, 2011

    I share your reservations about the change in law. Granting the patent to the first to file rather than the first to invent is not likely to help the little guys out there, quite the opposite. Another thing that could prove detrimental is the question of fees. If they get very high, only those with deep enough pockets will be able to hold patents, and the individual genuis inventor without a fortune or a backer wouldn't stand a chance.

  2. scoleman
    September 15, 2011

    Patents are now being leveraged as a weapon to destroy compitition, and by non-producing entities to suck the life out of companies that actually try to make a living by producing quality products. Yes, there are some that try not to pay for IP, but there are far more that are attacked with patents that don't even apply to the technology being developed by that company. Patents are being used as weapons, not for the betterment of man kind as our forefathers had envisioned. That is the current state of affairs in the court system. Business are being extorted by patent thugs that are saying, 'thats a real nice Company and product you are building, it would be a shame if something happened to it, now wouldn't it?'.

    And then comes the “patent reform”? Why is it bad you ask? Because it removes one of the defenses that the defendants could possibly use in court to clear themselves of the charges. “Prior Art” goes away. If somebody already built one, but didn't patent it, they could be sued by whoever patents it in the future. In other words, the only way to keep from getting sued is to patent every possible idea, concept, ans gizmo you can think of, and then some! If you don't spend every last penny you have on patent lawyers and tie up all your engineers doing patent descriptions, and pay all the USPTO fees, then you are garunteed to get sued in the future. How is this helping the problem? The reform just made the problem worse by 100 orders of magnitude! And that's a conservative estimate.

    Nowhere does any of this promote more inventions, or aid the inventor in developing new inventions for the betterment of society. None of this is adding to the human side of the inventors problems and creating a better world. That is the very basis for having the USPTO in the forst place! Helping the lawyers and accountants to shovel money from one account to another is not helping anything.  

  3. AnalyzeThis
    September 15, 2011

    @scoleman, wow, one of the best posts I've seen on EBN, honestly. This is kind of similar to what I was I was going to reply with, only you probably expressed things better than I could.

    You're completely right about patents being used as weapons. And how none of this promotes or improves upon the very concepts that patents were originally intended for.

    Patents are a good idea. They worked (largely) great for many years. That's no longer the case. Although to be fair, the system was NEVER perfect.

    But at this point, can the system even be overhauled? Is there ANY reform proposal that would actually solve the majority of the current issues? I'm not particularly optimistic.

  4. giuann
    September 15, 2011

    The law , I think, with 90% of certainty, has been written by big and powerful companies attorneys.
    When I'll read it I will be 100% cert of that.

    I bet that no congressman or senator has read it.

    One more nail in the mortuary box of innovation.

    The patent were fist used in the republic of Venice to encourage the scientists to solve technical problems.

    Today they are used to stop progress.

    One thing the law should contain is the loss of the rights if the patent is not used for two years.

  5. itguyphil
    September 15, 2011

    giuann,

    It would be extremely hard to STOP patent legislation simply because it a service that people pay for. Not to mention that it is NOT cheap. So it will continue (even when patents are granted that may not necessarily hold up in court). Especially in the case where a small shop is going up against a big corporation. You simply cannot afford the legal strainer. So in some cases, it makes you wonder what the true benefits are of actually having a patent.

  6. FLYINGSCOT
    September 16, 2011

    I would like to see a streamlined patent system that makes it easier for anyone to file and not just those with deep pockets.  I would also like the patent review process to be a lot more stringent whereby the reviewers realy check for themselves that their is no prior art out there and that the patent is not frivolous.  There are too many poor patents out there just now.  Once I figure out how to pay for all this a I will be sure to inform you 😉

  7. Youjaes
    September 16, 2011

    I look at things this way.  Let's say, for example, a pharma company works for many years and spends millions of dollars developing a new drug.  At the last minute, one of the bio-engineers decides to run to the patent office and file for a patent.  Tough luck Pharma, you just lost your invention, huh?  You can fire the engineer, but so what?  They can just sell it to your competition and make a whole lot of money.  Maybe we had better keep the “prior art” part of the provisioning process.  I'm reminded of the question, “Who is Elisha Gray?” 

  8. Jennifer Baljko
    September 16, 2011

    As @Youjaes dubbed his subject line, it's totally a double-edge sword where there are obvious advantages for some and equally obvious disadvantages for others.

    The sadder part is that more and more frequently legislators put forth bills that don't really address the heart of the matter nor go far enough to create adequate solutions or at least viable alternatives. @scoleman said it well – patents are being used as competitive weapons. To some extent it's understandable that IP – much like supply chain practices – need to be leveraged to distinguish a company from its competitors, but not at the price of choking inventors and stifling innovation.  Time will tell if the America Invents Act lives up to its promise of pioneering ideas and slowing down uncessary legal battles, or if it's a law with more loopholes people and companies have to figure out how to jump through.

  9. Jay_Bond
    September 16, 2011

    I think scoleman is completely right. The law makers might have had good intentions in writing this new law, and I stress might, but it appears overwhelmingly like it is going to cause even more problems. The small time engineers or companies are going to have big issues fighting giant corporations with countless piles of attorneys and money.

    At this point I too remain pretty pessimistic that the system can be overhauled and brought into proper alignment.

  10. Daniel
    September 16, 2011

    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.

  11. Barbara Jorgensen
    September 16, 2011

    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.

  12. Eldredge
    September 18, 2011

    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!

  13. Eldredge
    September 19, 2011

    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.

  14. Eldredge
    September 19, 2011

    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.

  15. Youjaes
    September 19, 2011

    Employee agreements are eassy to get around.  Just get a friend to file the patent for you.  They didn't sign anything.

  16. Eldredge
    September 19, 2011

    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.

  17. Mr. Roques
    September 19, 2011

    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?

  18. Youjaes
    September 25, 2011

    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?

  19. Mr. Roques
    October 31, 2011

    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.

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