The worst has happened. On September 8th, The America Invents Act was passed. The American Patent System, which has supported and protected individual efforts at innovation so much better than the patent systems of the rest of the world, has been lost. Once fully phased in, America will have the same barriers to innovation and new ventures that are found in Europe. Considering the superiority of America in innovation and subsequent economic power relative to Europe, it is inconceivable that we would bring our patent system down to their level. Yet, it has happened.
Why did it happen? First, the multinational interests that had been trying to change our patent system for decades intensified their efforts. Second, several key organizations that represent independent inventors that had fought valiantly against this onslaught in the past were compromised. Just as with much ill-conceived legislation today, most of the politicians were not aware of the real issues, but were led by the vested interests that were behind the bill.
In the coming years, it will become apparent that this change in our patent law was a mistake. It is important that we now work toward real patent reform. Below is a description of many of the things wrong with The America Invents Act:
The America Invents will Reduce Job Growth:
1. The key problem that could have helped job creation is not handled – the time it takes to get a patent. It currently takes an average of 3 years, and rising, to get a patent. New businesses based on new technologies are held hostage by this backlog at the Patent Office. The one factor that would assist in handling the backlog and help in job creation is allowing the Patent Office to use all of the fees it collects from inventors to improve its operations. Presently, this does not happen. The Patent Office is funded only by fees from inventors, and this year alone, Congress has taken $100,000,000 in inventors’ fees from the Patent Office. The current version of The America Invents Act will allow Congress to continue to divert fees from the Patent Office. The result will be the inability to reduce the patent backlog, and American jobs held hostage. Politicians’ predictions of new job creation from this bill are without logic.
2. Changing from First-to-Invent to First-to-File will reduce job growth.
A. There will be a rush to file that will increase the patent backlog, further increasing the time it takes to get a patent and holding more new jobs hostage. This is what happened in Canada after a similar change.
B. Changing to First-to-File is advantageous to large companies with greater resources to get inventions developed and patents filed. But census data indicates that, for the last 30 years in America, all net new job growth has come from startups. Large companies, on the other hand, tend to export jobs. Giving advantages to large companies over entrepreneurs will reduce job growth.
C. The independent inventor has historically been the greatest source of real innovation in America. In our traditional First-to-Invent system, an independent inventor has been able to develop his invention over time, involving the services of others to whom he makes confidential disclosures. This ability to develop and test an invention adequately, without undue risk, has been very important for successful startups in America. In First-to-Invent, the inventor is protected by being able to prove, through documentation, that he is the first inventor. Under the proposed First-to-File system, the risk of another acquiring the information and filing first causes the inventor to have to be more secretive, use necessary resources less, do less research and development, and file for a patent before disclosing the invention to anyone. This loss of ability to use necessary resources and develop inventions fully will make it much harder for new ventures to succeed, harming new job growth. Large companies, on the other hand, that can do everything within their walls and thereby not have much risk of exposure, are not as hampered as entrepreneurs. But large companies with profitable product lines will tend to shelve new ideas that will upset profitable income streams. Again, the result will be less innovation and less job growth.
D. First-to-File will cause more patents to be filed as a technology is developed. As new technologies are developed, it is typical that an inventor will reach various plateaus before the research and development is complete. To guard against others filing first in a First-to-File system, the inventor will need to file earlier in the process, which will lead to additional filings as new discoveries are made. The increased number of filings will significantly increase in the cost of developing technologies. This will make it harder to start new business ventures and will hurt job growth.
3. Post Grant Review eliminates competitive innovation and jobs. Post Grant Review is the new method of invalidating an issued patent. Proponents claim it is needed to invalidate “junk patents.” This claim is untrue. There are already methods of invalidating bad patents, and these methods are used whenever a bad patent of any significance is issued. None of the existing methods of invalidating issued patents is eliminated, modified, or curtailed in any way in the new legislation. Post Grant Review is simply an additional expensive method for corporate attorneys to use to wear down and defeat inventors of technologies that will compete with vested interests. The result will be less new job formation.
Many other things wrong with the bill:
1. Question of Constitutionality: Many experts state that changing to First-to-File is unconstitutional and subject to constitutional challenge. Thomas Jefferson, himself, rejected such a change over 200 years ago.
2. Inability for true inventor to successfully challenge a dishonest party: Under The America Invents Act, if a true inventor’s information is used dishonestly by another who files first, or if public disclosure is made by another, the remedy will be a Derivation Proceeding. Derivation Proceedings are some of the most expensive actions because the incriminating evidence needed by the injured party is in the possession of the other party, and must be discovered. Normally, the power of subpoena is used to gain access to this information. But, The America Invents Act does not provide for any means of compelling the other party to provide the information. For this reason, it will be virtually impossible for the true inventor to prevail.
3. Incentive to act dishonestly: The traditional American Patent System has had the requirement that an inventor be honest in a patent application. This requirement certainly serves the public interest. The America Invents Act removes the language that has protected against “deceptive intent” in seven specific places (see Section 20). The result of this change is that a dishonest party will have an incentive to lie in a patent application. This is in opposition to the purpose of the Patent System and makes mockery of the ideals with which our nation was founded.
4. Extension of Prior User Rights goes against purpose of Patent System: The purpose of the Patent System is to encourage the development of technologies that will help society. A key aspect of this purpose is that the technology will be made public in the patent application and freely available to all after the patent expires. Traditionally, an inventor could opt to keep an invention as a Trade Secret, but would lose the ability to file for a patent, and run the risk of another patenting the invention and exerting his patent rights against the Trade Secret user. The House version of the bill (H.R. 1249) extends prior user rights from just business methods to virtually all inventions. This means that virtually any invention could be kept as a trade secret, patented at a later time if desired, and defended against infringement if the invention is patented by another. This change incentivizes and protects the keeping of secrets, rather than the development of technologies that will be known and of benefit to all. In addition to going against the purpose of having a patent system, it lowers the value of patents and favors big companies over small ones.
5. Future shortage of funds for Patent Office: The need to file before having done enough research and development will cause a decrease in the quality of patent applications. The result will be fewer issued patents per filed application, meaning less in patent maintenance fees to the Patent Office long-term with increased numbers of patent examinations up front. This will cause a shortage of funds at the Patent Office.
It is important that people who really care about the true purpose of having a patent system be ready to stand together and fight to put the American Patent System back the way it was intended by our Founding Fathers.
Check SanePatentReform.org as it’s updated with new info.