The House Judiciary Committee approved H.R. 1249, on Thursday, April 14, 2011, by a vote of 32-3, and the bill is expected to reach the House floor in May or June.
Like S. 23, the America Invents Act of 2011, which passed the Senate in March, this bill switches the United States to a first-to-file patent system and allows the U.S. Patent and Trademark Office to keep the fees it collects in order to address the backlog of hundreds of thousands of patents. Amendments to strike the first-to-file provision and strengthen the grace period failed to pass in committee.
“Patent reform is an important key to our economic recovery and will help America invent its way back to prosperity,” Leahy said. “Patent reform is supported by Democrats and Republicans alike, by the Obama administration and by businesses, industries and manufacturers across the spectrum.”
A large range of tech firms support the bill, including IBM, Microsoft and GE, as well as several large pharmaceutical companies. Many small companies and independent inventors have complained the changes will reduce their incentives for innovation by favoring large corporations.
In his April issue of The Inventor’s Mentor, “First to File – Impact on the Small Inventor,” George Levy wrote, “The new law will recognize the first person who files as the legal inventor. Many analysts disagree with director Kappos and believe that it will encourage a rush to the patent office with half-baked inventions and poorly drafted applications and that it will hurt small inventors not supported by the legal and technical resources of large corporations.
Currently an invention cannot be patented if the inventor has publicly disclosed it more than 1 year earlier. Public disclosure can occur by a public use, public sale, a publication, or a patent (MPEP2133). If the disclosure is within the year, the inventor can still patent it in the U.S. In contrast, most countries disqualify inventions immediately after publication. This time interval called the “grace period” is of great benefit to small inventors who often need to refine their prototypes and test the market before they file.
The new law provides a much weaker grace period protection than the current law. While it recognizes the first to file, it also states that a public disclosure within one year of the filing date does not count as prior art to the invention.
This provision allows the inventor to lock in his rights to the invention by issuing a defensive publication. In doing so, he bars anyone else from patenting his invention – except himself.
Unfortunately, such a publication will prevent him from obtaining a patent in most other countries. In the US, it will start the clock ticking and commit him to file within one year or lose all his rights.
In summary the inventor will have to make a choice:
- Either to publish early and thereby commit himself to file within a year, losing his international rights and possibly tipping his competitors at a crucial time,
- Or not to publish and risk being preceded by someone else at the patent office.
It will still be possible for him however, to divulge his invention to others without starting the one year clock, if he does it on a confidential basis. To protect himself, he should have a non-disclosure agreement and record his invention with a time stamp service such as mycreativeregistry.com
The loss of the grace period will significantly impact the small inventor. It is extremely important for inventor associations to lobby their congressional representatives to maintain a strong grace period.”
After passage of the Senate bill, Adrian Pelkus, President of the San Diego Inventors Forum, emailed me the following comments, “This is a game changer for American inventors and the entire entrepreneurial system. I accept Mr. Kappos reasoning that proving who was first to invent is hardly ever an issue. I am glad to see the $ stay in the USPTO for much needed improvements! It is the one-year grace year period that is the deal killer.
Here is what I imagine, expect and worry about: China will bring our ideas to market faster than we can, killing U. S. startups. Investors leery of this new exposure risk will find safer bets depriving our country the chance to grow new jobs from new products and ideas. Those that stay in the “Angel” investment game will demand much more (expensive) competitive research and FTO letters more than ever. Universities may stop publishing research because someone can beat them to the Patent office. Every student presenting a poster or paper will have to file for a patent to protect their idea? Startups will have to fully develop their technologies before filing. What’s the use of continuations if another company can see your path and jump to your next conclusion? Or even filing if you know a company with more resources can see what you are doing and can out develop you.
Patent filing will become a corporate venture game to beat one another using software that auto generates patent filings based on mined information made public. So, companies with big $ will have the advantage over startups. Corporations will have an overwhelming advantage in the process over individuals.
Typically people invent an idea, put some private $ in to develop it to where it is presentable with minimal patents/pending to raise more $ to finish the Design for Manufacturing (DFM), patents, marketing, and launch the product.
Having to raise all the R&D and launch $ at once is an oxymoron. Just like SBIR grants goes in phases, so does private R&D investment in startups. Angels fund private R&D; the successes then go on to next round, DFM. Great risks, great rewards.
Hindering this process because exposing the Intellectual Property too early gives away the opportunities that an investor comes aboard for in the first place is counterproductive to our countries goals of creating jobs. ”
I also received the following email from Gary F. Witting, a Registered Patent Attorney in Scottsdale, Arizona. “I am writing this note in response to your article that came across my desk this morning.
I am very concerned about the state and future state of the manufacturing and research and development in the United States. It truly bothers me watching our patent system, which was the best in the world, getting moved around by large powers in the name of harmonization with Europe. One needs to consider how many sole, small inventors, and small businesses there are in Europe as compared with the United States. Typically, there are very few sole and small inventors in Europe. Also, one needs to consider, whether our recent business successes such as Apple, Google, Motorola, and the like would have been able to survive in the proposed intellectual property climate.”
In addition, Newton Ball, emailed me saying, “I am an inventor with more than twenty U.S. issued patents, and several active provisional applications. There is an element of U.S. Patent Law that is even more important to me, than “first to invent”. Since 1984, Chinese patent law has imposed an obligation to manufacture on patent holders. A “duty to manufacture” was part of the English law that was the basis for the U. S. early patent law. Sadly, to the detriment of small U.S. manufacturers, this duty has never been a part of U. S. patent law. This means that large U. S. corporations are free to patent and shelve inventions, preventing U.S. manufacture and sale. Several of my own inventions are in this “shelved” state. I urge savingusmanufacturing.com to join me and my non-profit, Orbic Institute, in bringing this to the attention of the public and congress. A simple no-cost change to patent law could bring a surge of new manufacturing in the U.S. of innovations, presently shelved.”
Sandy Rios, Vice President of Family-Pac Federal and a Fox News Contributor, commented in The Daily Caller Opinion, “America has always been a country of innovators. Within thirteen years of its first patent law, America had surpassed Great Britain in its number of annual inventions, even though Great Britain had a population twice as large. By 1865, the U.S. was churning out three times as many inventions as Great Britain… According to historians, it was no accident. As the Founding Fathers studied existing patent law, they discovered statutes that gave advantage only to the wealthy, not to the small entrepreneur. So they created a unique system that inventors have enjoyed for 250 years. It’s a first-to-invent system, not a first-to-file one. The first person to invent something gets the credit, not the first one to rush to a bureaucratic office and file a piece of paper.
Now Senator Patrick Leahy and the Obama administration, along with multi-national corporations, have a better idea. They want to change our system from a first-to-invent system to a first-to-file system. Under such a system, anyone who can co-opt the ideas of an inventor and pay the cash would be able to take the credit and reap the rewards. This would hurt inventors and give large corporations — and China — a leg up.
Currently, inventors are given a grace period to perfect their inventions and try to obtain financial backing. The new bill would replace that with a European-style post-grant challenge, which would force inventors to pay $20,000-30,000 every time they modify an invention.
The voices of Edison and Bell, Wright and Ford are crying out. Don’t put a stake in the heart of American innovation and job creation. Say “no!” to this patent reform bill.”
It’s not too late to contact your representative in Congress and urge them to vote no on this bill without amending it to strengthen the grace period to protect individual inventors and small businesses.