Blog
Comment
DrewRT
It is not complicated. The constitution states "To promote the Progress of ...
RandyG
Cont'd: Not only that, but out of about several thousand applications filed last ...
Patent reform act of 2011 will deter innovation and send jobs overseas
Alexander Poltorak
2/25/2011 5:12 AM EST
On Monday, February 28th, the U.S. Senate is going to vote on S. 23 – the Patent Reform Act 2011. The bill was unanimously approved by the Senate Judiciary Committee without the testimony of a single inventor. If voted into law, it will hurt American innovation.
President Obama, in his recent State of the Union speech, made innovation a priority for empowering the U.S. economy and ensuring its long-term competitiveness. The President laid out his vision as follows: “The first step in winning the future is encouraging American innovation…In America, innovation doesn't just change our lives. It's how we make a living.”
The President continued the “innovation” mantra in the speech he delivered along with his budget on February 14, stressing the need to “invest in those things that are absolutely critical to preparing our people and our Nation for the economic competition of our time… We do this by encouraging American innovation and investing in research and development.”
Yet despite the President’s newfound commitment to innovation and R&D, he is supportive of legislation that will severely discourage innovation which has been reintroduced in the Senate by Democrats as the Patent Reform Act of 2011. The President is not the only one who adopts an inconsistent position characterized by public statements supportive of innovation while advocating legislation that will have the opposite effect. Sen. Patrick Leahy (D-Vt.), the Senate Judiciary Committee Chairman and the chief proponent of the Patent Reform Act of 2011, paid lip service to the idea of encouraging innovation in his enthusiastic response to President Obama’s State of the Union address, even as he pushed for ratification of legislation that will do just the opposite.
As the founder and president of American Innovators for Patent Reform (AIPR), I was disappointed to see not only the same bad ideas that characterized previous failed patent reform proposals, but also some new ones. For example:
• New fees. The President’s budget would have the Patent Office impose a “temporary surcharge,” which “will better align application fees with processing costs.” Last year, the U.S. Patent and Trademark Office (USPTO) collected approximately $51 million in fees over and above the agency’s authorized budget for fiscal year 2010, which ended September 30, 2010. That’s money the Patent Office could have used for hiring more patent examiners. However, the Patent Office wasn’t allowed to keep all the money it generated – only the amount Congress had allocated for it in the 2010 budget. The rest went to the Treasury for use elsewhere. The use of fees collected from inventors for government needs completely unrelated to the functioning of the USPTO amounts to nothing short of a tax on innovation. If you want more innovation, taxing it more heavily is not the best approach.
• Post-grant review. Another provision in the legislation called “post-grant review” is touted as a way to evaluate the validity of a patent that is “potentially 50-100 times less expensive than patent litigation” in the White House State of the Union Fact Sheet on Patents. Yet, this provision will add more work to the already overburdened Patent Office with the likely result that patent backlog will grow even greater. More expensive than existing reexamination proceedings, post-grant review will be unaffordable for many small businesses, universities and especially independent inventors. Driving up the costs of what is already an expensive process will diminish intellectual property rights by forcing many inventors to abandon their patents.
• “First-inventor-to-file” standard. In the United States, patents have always been awarded on the “first-to-invent” basis i.e., to the first inventor. If two parties file for patents on substantially the same invention, the patent will be awarded to the one who was the first to invent so long as such inventor was diligent in reducing the invention to practice. Other countries follow the “first-to-file” system where the patent is awarded to the inventor who is first to file the patent application, regardless of who was the first to invent. As a result, inventors rush to patent offices around the world with half-baked applications, many of which ultimately translate into low quality patents. The Patent Reform Act of 2011 proposes to change the traditional American first-to-invent system, firmly rooted in the U.S. Constitution, to the inferior foreign first-to-file regime.
• Judges as Gatekeepers. In order to reduce infringement damages awards, the Patent Reform Act of 2011 proposes provisions that require judges to prevent juries from even considering slapping an infringer with a large judgment The purpose can only be to further devalue patents by decreasing legitimate damage awards.
• Raising the Bar for Proving Willful Infringement. This provision seeks to make it harder for patent owners to prove willful infringement in order to obtain treble damages. If the Patent Reform Act of 2011 makes treble damage awards highly improbable, infringers will have less of a reason to settle, thereby clogging the courts with longer litigation.
Many of the reforms undertaken recently by the USPTO under Director David Kappos have improved efficiency. Experimental programs such as the Peer Review Pilot, Accelerated Examination, the Green Technology Pilot and the Multi-Track Patent Examination proposal indicate that the Patent Office is streamlining its processes and issuing higher quality patents. The goal of future reforms should be the continuation of encouraging innovation by making it quicker and less expensive to obtain patents.
The real reforms our patent system needs, should address the speed and quality of patent examination. One way to do it is to create a two-tear patent system with junior patent application examined only for novelty and senior patent applications also examined for non-obviousness, as any patent application is examined today. A junior patent (such as Australian Petty Patent, German Gebrauch Patent or Utility Model adapted in most other countries) would have shorter terms and lower filing fees so that many inventors and cash-strapped small business can avail themselves of this form of protection. While a determination of non-obviousness requires a subjective human judgment that only a qualified patent examiner can make, the examination for novelty can and should be computerized. Advances in artificial intelligence in general and semantic search in particular makes it possible. Anybody who doubts it should watch IBM Watson computer win hands down against best human players Jeopardy game last week. Machine-based examination of junior patent application will free off examiners to focus on senior patents. This will speed up the examination process and assure higher quality of issued senior patents.
Patents are critical to encouraging innovation by enabling inventors to keep the fruits of their labor. They are also the primary drivers of job creation in the U.S. The Senate should reject these harmful changes to the U.S. patent system.
Alexander I. Poltorak is the founder and chief executive officer of General Patent Corporation (GPC), an intellectual property (IP) management company focusing on patent licensing and enforcement, IP strategy and valuation. He also founded and serves as President of American Innovators for Patent Reform (AIPR), a nonprofit organization dedicated to strengthening the U.S. patent system.
President Obama, in his recent State of the Union speech, made innovation a priority for empowering the U.S. economy and ensuring its long-term competitiveness. The President laid out his vision as follows: “The first step in winning the future is encouraging American innovation…In America, innovation doesn't just change our lives. It's how we make a living.”
The President continued the “innovation” mantra in the speech he delivered along with his budget on February 14, stressing the need to “invest in those things that are absolutely critical to preparing our people and our Nation for the economic competition of our time… We do this by encouraging American innovation and investing in research and development.”
Yet despite the President’s newfound commitment to innovation and R&D, he is supportive of legislation that will severely discourage innovation which has been reintroduced in the Senate by Democrats as the Patent Reform Act of 2011. The President is not the only one who adopts an inconsistent position characterized by public statements supportive of innovation while advocating legislation that will have the opposite effect. Sen. Patrick Leahy (D-Vt.), the Senate Judiciary Committee Chairman and the chief proponent of the Patent Reform Act of 2011, paid lip service to the idea of encouraging innovation in his enthusiastic response to President Obama’s State of the Union address, even as he pushed for ratification of legislation that will do just the opposite.
As the founder and president of American Innovators for Patent Reform (AIPR), I was disappointed to see not only the same bad ideas that characterized previous failed patent reform proposals, but also some new ones. For example:
• New fees. The President’s budget would have the Patent Office impose a “temporary surcharge,” which “will better align application fees with processing costs.” Last year, the U.S. Patent and Trademark Office (USPTO) collected approximately $51 million in fees over and above the agency’s authorized budget for fiscal year 2010, which ended September 30, 2010. That’s money the Patent Office could have used for hiring more patent examiners. However, the Patent Office wasn’t allowed to keep all the money it generated – only the amount Congress had allocated for it in the 2010 budget. The rest went to the Treasury for use elsewhere. The use of fees collected from inventors for government needs completely unrelated to the functioning of the USPTO amounts to nothing short of a tax on innovation. If you want more innovation, taxing it more heavily is not the best approach.
• Post-grant review. Another provision in the legislation called “post-grant review” is touted as a way to evaluate the validity of a patent that is “potentially 50-100 times less expensive than patent litigation” in the White House State of the Union Fact Sheet on Patents. Yet, this provision will add more work to the already overburdened Patent Office with the likely result that patent backlog will grow even greater. More expensive than existing reexamination proceedings, post-grant review will be unaffordable for many small businesses, universities and especially independent inventors. Driving up the costs of what is already an expensive process will diminish intellectual property rights by forcing many inventors to abandon their patents.
• “First-inventor-to-file” standard. In the United States, patents have always been awarded on the “first-to-invent” basis i.e., to the first inventor. If two parties file for patents on substantially the same invention, the patent will be awarded to the one who was the first to invent so long as such inventor was diligent in reducing the invention to practice. Other countries follow the “first-to-file” system where the patent is awarded to the inventor who is first to file the patent application, regardless of who was the first to invent. As a result, inventors rush to patent offices around the world with half-baked applications, many of which ultimately translate into low quality patents. The Patent Reform Act of 2011 proposes to change the traditional American first-to-invent system, firmly rooted in the U.S. Constitution, to the inferior foreign first-to-file regime.
• Judges as Gatekeepers. In order to reduce infringement damages awards, the Patent Reform Act of 2011 proposes provisions that require judges to prevent juries from even considering slapping an infringer with a large judgment The purpose can only be to further devalue patents by decreasing legitimate damage awards.
• Raising the Bar for Proving Willful Infringement. This provision seeks to make it harder for patent owners to prove willful infringement in order to obtain treble damages. If the Patent Reform Act of 2011 makes treble damage awards highly improbable, infringers will have less of a reason to settle, thereby clogging the courts with longer litigation.
Many of the reforms undertaken recently by the USPTO under Director David Kappos have improved efficiency. Experimental programs such as the Peer Review Pilot, Accelerated Examination, the Green Technology Pilot and the Multi-Track Patent Examination proposal indicate that the Patent Office is streamlining its processes and issuing higher quality patents. The goal of future reforms should be the continuation of encouraging innovation by making it quicker and less expensive to obtain patents.
The real reforms our patent system needs, should address the speed and quality of patent examination. One way to do it is to create a two-tear patent system with junior patent application examined only for novelty and senior patent applications also examined for non-obviousness, as any patent application is examined today. A junior patent (such as Australian Petty Patent, German Gebrauch Patent or Utility Model adapted in most other countries) would have shorter terms and lower filing fees so that many inventors and cash-strapped small business can avail themselves of this form of protection. While a determination of non-obviousness requires a subjective human judgment that only a qualified patent examiner can make, the examination for novelty can and should be computerized. Advances in artificial intelligence in general and semantic search in particular makes it possible. Anybody who doubts it should watch IBM Watson computer win hands down against best human players Jeopardy game last week. Machine-based examination of junior patent application will free off examiners to focus on senior patents. This will speed up the examination process and assure higher quality of issued senior patents.
Patents are critical to encouraging innovation by enabling inventors to keep the fruits of their labor. They are also the primary drivers of job creation in the U.S. The Senate should reject these harmful changes to the U.S. patent system.
Alexander I. Poltorak is the founder and chief executive officer of General Patent Corporation (GPC), an intellectual property (IP) management company focusing on patent licensing and enforcement, IP strategy and valuation. He also founded and serves as President of American Innovators for Patent Reform (AIPR), a nonprofit organization dedicated to strengthening the U.S. patent system.
|
|
|
|
|
Navigate to related information
moelar
2/25/2011 5:20 PM EST
I agree completely!
Just because they call it “reform” doesn’t mean it is. Patent reform is a fraud on America. What it will do is help large corporations maintain their monopolies and kill their small entity and startup competitors (which is exactly what it was intended to do) and with them the jobs they would have created. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs.
Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.
http://www.aminn.org/
http://www.connect.org/
http://www.ieeeusa.org/policy/policy/2011/021511a.pdf
http://www.ipadvocate.org/mibj/index.cfm
https://www.napp.org/resources/NAPP-PartialOppTo2009SenateBill.pdf
http://www.nationalcongressofinventororganizations.org/
http://www.nsba.biz/docs/patent_reform.pdf
http://thehill.com/blogs/congress-blog/economy-a-budget/141663-leahy-patent-bill-litigation-not-innovation
http://www.patentbaristas.com/wp/wp-content/uploads/2011/02/Small-Biz-Inventors-Empl.pdf
Sign in to Reply
RandyG
4/11/2011 4:49 PM EDT
The author seems to imply that small inventors will somehow be disadvantaged by the proposed changes to the laws, but his worst case scenarios as to what might happen are biased on his own opinions, it seems, not on any type of study, scientific or otherwise. This article is designed to appeal to your emotions instead of your intellect.
For example, he asserts that if the U.S. changes to a "first to file" system, then that will create a rush to the patent office, which will produce lower quality applications, and ultimately hurt small inventors. However, studies by the USPTO did not find that countries with a first to file system had lower quality applications than the U.S. did.
Not only that, but out of about several thousand applications filed last year, only about 10 or 11 applications made use of Interference Proceedings, where an applicant gets to prove a date of invention that is earlier than his filing date. Of those proceedings, the independent inventor won only once, I believe. So, switching to a first to file system would have hurt only one (1) independent inventor. Big corporations usually win in either: a first to invent system (the U.S.); or, in a first to file system (everywhere else). It makes no difference either way; a big corporation wins regardless because they will always have more resources (legal, technical, etc.) than an individual does.
The article overlooks the fact that changing to a first to file system would eliminate a need for time consuming Interferences hearings at the USPTO, which would free up government personnel to do other things, like eliminate the backlog.
The government has spent a lot of time researching and accessing the potential impact that these proposed rule changes will have on the economy; if these newly proposed rules were likely to hurt the economy, then they would have not been proposed in the first place. Give the government a break, it is not run by idiots.
Sign in to Reply
goafrit
2/26/2011 10:37 AM EST
Not an issue, this is America. Put this new one in practice for 3 months, people will tell you why it is bad. Nothing could be perfect and I do hate the patent system. Lawyers are made richer while the poor engineers toil. It does not matter what the changes are, nothing will change. Peroid.
Sign in to Reply
Charles.Desassure
2/26/2011 2:43 PM EST
I understand your point of view, but this bill, like many others, will do as much damage as everyone think.
Sign in to Reply
Dave.Dykstra
2/27/2011 12:43 AM EST
I doubt if anyone disagrees that first-to-invent is a noble concept. However, in actual practice it gives the large company a distinct advantage because they tend to be able to more easily show when invented while the individual generally has a tougher time proving that. In turn, this also drastically slows down the whole patent process. I believe the idea is to protect the inventor, but under first-to-invent, the speed of the process is such that individuals and small companies often simply run out of steam before the patent is awarded. First-to-file will at least give those a reasonable chance for success.
Sign in to Reply
iniewski
2/27/2011 1:51 AM EST
This is a very complex, multi-faceted issues...I wish EE Times did a more in depth review...Kris
Sign in to Reply
lifewingmate
2/28/2011 8:10 PM EST
This editorial is very interesting. It would be great to see multiple interpretations of the law. Many laypeople cannot understand the actual IP reform law firsthand, we need those who understand the law to describe the consequences in a non-biased manner. I am so glad EETimes has highlighted the issues through this author and want to know how we can all work to actually encourage innovation. Maybe patent law should be separated into two entities so that individuals and organizations can compete fairly. This way all voices can be heard and attended to...and I think it is interesting that money collected for IP licensing because it is capped is distributed elsewhere. We have to work with the current system because it is the only thing we have. I commend the legislators and individuals who are paying attention and doing their part to make a difference instead of letting the "it's too hard" scenario kick in. This article motivates me to want to spread the word to improve the reform and prevent damage that it would cause. I also wonder what good things does it do from another perspective?
Sign in to Reply
Sheetal.Pandey
2/27/2011 5:44 PM EST
I love to read about patent news in America. If patents development is not supported in America then it would be supported nowhere. I smell more politics than research and development in patent reforms.
Sign in to Reply
Robotics Developer
2/27/2011 10:19 PM EST
Why weren't inventors involved in the creation of this bill? Or was it just big business/lawyers? I am always leery of "new" bills to "fix" things that are done with limited input from those affected. I am soundly against the first to file concept, the first to invent should be the rightful owner period!
Sign in to Reply
Duane Benson
2/28/2011 11:18 AM EST
The biggest problem that I have with "patent reform" is that the issue has become politicized. The people speaking the loudest are the ones with a personal agenda. Like other highly politicized subjects, it has become very difficult to determine what's good for innovation and what's not.
For those that happen to have an aptitude in law, perhaps it's not too difficult to weed through the morass of slanted and misdirected information. But I don't have that luxury.
Sign in to Reply
docdivakar
3/1/2011 1:43 AM EST
It is good that David Kappos (of the Bilski vs. Kappos fame!) is in charge of the USPTO; though that case dragged on in the US Supreme Court (on software patents; EE Times had a series of articles on that last year), I liked the process that was put forth to define frame work for what is patentable (machine vs. transformation argument).
One thing that puts US companies at a disadvantage is that the patentability frame work defined here is NOT universally accepted in other countries. Many countries including Japan don't allow software patents so any 'method' or 'process' patent granted in US is invalid in many other countries. So the reforms discussed above do not address this issue or its equivalence at all!
MP Divakar
Sign in to Reply
Etmax
3/5/2011 3:13 AM EST
And so it should be, fancy patenting one click. The patent examiner that didn't think that was obvious needed his head read. SW patents are evil and kill the very innovation they are supposed to encourage. SW is protected by copyright that offers better and more meaningful protection for the nature of it.
Sign in to Reply
Jerome.Krinock
3/4/2011 2:49 PM EST
I think we can use the biblical story of the Judgment of Solomon to resolve the first-filed vs. first-invented argument. If two people, working independently, file for the same idea within 12 months, then obviously the idea is obvious, and neither should get a patent.
Jerry Krinock
Sign in to Reply
Etmax
3/5/2011 3:11 AM EST
Well I'm not convinced first to file is fair but I certainly agree with Jerry Krinock that the same patent by 2 people does look a lot like obvious. I definitely agree that there needs to be a line drawn between deliberate and accidental infringement. That said, if you infringe my patent deliberate or otherwise and I tell you and you stop, why should I be due more than what I would have received for the use of the patent anyway? If you don't stop, then we go to court and then we get treble damages regardless of whether it was accidental or otherwise. Also they need to stop crazy commercially non-viable charges for use of a patent. There's actually more money to be made from a good idea that everyone uses than one that only a handful of people use. Look at the toner based photo copier, Xerox patented it, wouldn't let anyone else use the idea sold some ridiculously expensive copiers while many others sold millions of inferior copiers. If they would have charged say $50 for every copier sold using their technology, every copier in the world would have used the technology and $50 form every copier would have gone to Xerox. They would have maybe sold 1/2 as many copiers but would have made 10 times the money. People just don't understand how to make money.
Sign in to Reply
labnet
3/6/2011 5:25 PM EST
Patents were originally conceived to bring proprietary information to the public realm and protect sole inventors having their ideas stolen by corporations.
The opposite now happens, because corporations file patents like confetti. Companies now specialize in buying pools of patents, not to develop technology or better society, but to sue anyone who may happen onto the broad ideas expressed in those patents.
I strongly believe:- patent owners must be commercially utilizing their patent to keep it: patent application / renewal fees be based on the size of the entity: software and business process should not be patentable (ie 1 click): patent submarining / trolling be illegal : accidental infringement be non punishable : the bar for novelty to receive a patent be way higher than it is now.
Sign in to Reply
Etmax
3/6/2011 9:16 PM EST
I like the idea of it being size related, and I strongly support your view that you must actively use a patent to keep it. There should be a grace period for development of product, but essentially you are correct. The only thing I would say is that unintentional infringement should only not be punishable if reasonable steps are taken to desist. You probably meant that but it's unclear. And yes, scrap damned obvious patents which would account for 90% of them.
Finally, I'm sure you agree that patenting DNA sequences that occur naturally should not be allowed (prior art :-) )
Sign in to Reply
labnet
3/7/2011 8:39 PM EST
Even better, make it very expensive to hold too many patents.
eg x = v * n(n+1)/2 where v = the base patent cost.
Lets say v = $100
1 Patent = $100/annum to maintain
2 Patents = $300/annum to maintain
10 Patents = $5.5k/annum to maintain
100 Patents = $500k/annum to maintain
1000 Patents = $50M/annum to maintain
This would force very large companies / trolls to only keep their best patents and toss out the dross polluting the patent system.
You would need rules to stop companies spawning sub related companies to get around the intent.
Sign in to Reply
Axel_5
3/8/2011 9:35 AM EST
"Patents are critical to encouraging innovation by enabling inventors to keep the fruits of their labor."
I would question that statement and thus the resulting consequences. For example looking at the mobile phone industry today it simply stops new companies from entering into the market. Practically it only enables the companies big enough to set the standards to keep competition out and prices up. And the fairytale that jobs are created is just as stupid. These companies produce in China, protected by American Patents.
Sign in to Reply
fred b
3/9/2011 10:41 AM EST
Here we go again.
The United States has one of the best patent systems as people all over the world come here to register their patents . A patent was created so that somebody could invent something
patent it, then licesence it or sell it and have a gain. NOW big business wants to hire there
corrupt politicians to pass a bill the forbids a small inventor from going thru the system and after even suing getting paid . Well you politicians have sold out every industry in the USA , we manufacture less and less here . We were hopeful to have a thriving IP , Patent system in the United States but we can now count on our politicians selling that out too . We are done with no chance if a patent bill gets passed that takes away the patent from the small inventor , which is what this patent bill does . The real word starts with an "F" . Our politicians suck .
Sign in to Reply
Etmax
3/9/2011 8:11 PM EST
You're right, most real and worthwhile patents come from small companies and sole inventors. Most of the patents from the larger inventors are designed to exclude other players from the market by being overly broad.
Sign in to Reply
RandyG
4/11/2011 4:54 PM EDT
I've already said this in a reply to someone's comment, but I will repeat it here in case you missed it:
The author of this article seems to imply that small inventors will somehow be disadvantaged by the proposed changes to the laws, but his worst case scenarios as to what might happen seem to be based on his own opinions, not on any type of study, scientific or otherwise. This article is designed to appeal to your emotions instead of your intellect.
For example, he asserts that if the U.S. changes to a "first to file" system, then that will create a rush to the patent office, which will produce lower quality applications, and ultimately hurt small inventors. However, studies by the USPTO did not find that countries with a first to file system had lower quality applications than the U.S. did.
Sign in to Reply
RandyG
4/11/2011 4:54 PM EDT
Cont'd: Not only that, but out of about several thousand applications filed last year, only about 10 or 11 applications made use of Interference Proceedings, where an applicant gets to prove a date of invention that is earlier than his filing date. Of those proceedings, the independent inventor won only once, I believe. So, switching to a first to file system would have hurt only one (1) independent inventor. Big corporations usually win in either: a first to invent system (the U.S.); or, in a first to file system (everywhere else). It makes no difference either way; a big corporation wins regardless because they will always have more resources (legal, technical, etc.) than an individual does.
The article overlooks the fact that changing to a first to file system would eliminate a need for time consuming Interference hearings at the USPTO, which would free up government personnel to do other things, like eliminate the backlog.
The government has spent a lot of time researching and accessing the potential impact that these proposed rule changes will have on the economy; if these newly proposed rules were likely to hurt the economy, then they would have not been proposed in the first place. Give the government a break, it is not run by idiots.
Sign in to Reply
DrewRT
9/13/2011 5:35 PM EDT
It is not complicated. The constitution states "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." It does not say first to apply. In the few cases that it maters, it is also very important. If somebody where to patent the idea of another, the new law states the force of law will be on the side of the thief. Theft of ideas is very hard to prove, so why not steal. The US in the past has been the stop to this misbehavior, not any more. Steal all you want, now it is legal. Maybe you need to have the experience to understand.
Sign in to Reply