The US Patent System and Innovation

Patent Reform Bill Passes Senate Judiciary Committee

2011-03-24T15:52:00.000-07:00

On Feb. 3, 2011, the Senate Judiciary Committee voted on S. 23, the patent law reform bill. The was 15 in favor with 2 Senators voting present. This legislation has been pushed for several years mostly by Senator Leahy of Vermont. Several compromises since the original reform efforts failed have resulted in the bill in its current form. It is unclear what may happen in the House.

One of the popular provisions in an end to USPTO fee diversions. This means that fees the USPTO charges will not be diverted for general revenue uses. The USPTO will get to keep everything it collects and, hopefully, use the money to improve it's performance in prosecuting patents. That essentially means reducing the backlog of pending patents.

One of its most controversial provisions is a "first to file" rule, which would grant patent rights to whoever gets to the Patent Office first, eliminating the "first to invent" system that has been in place in the US since the patent system was established. This could cause a major change for small entities. Also controversial is the third party reexamination provision which makes it easier for third parties to challenge the validity of issued patents. These two provisions were pushed heavily by large corporations, especially those in the computer hardware, software, and IT industry. This provision and some others in the legislation are also put forth in the name of international harmonization since most of the world is first-to-file.

The Association of University Technology Managers is supportive. They believe that reform is inevitable and that this version is much better than past versions. Other groups are coming out in oppositions. Other than doing what is needed to fix the backlog, a strong argument can be made that we have historically the strongest innovation economy in the world and if it isn't broken, don't try to fix it.

We will write more about the debate as the legislation moves forward.

The USPTO's proposed program to allow expedited patent applications for an extra $4,000

2011-02-25T11:43:00.000-08:00

The backlog of patent applications is still a big problem at the USPTO. To partially address this, the USPTO is proposing an expedited application option for an additional $4,000. In my opinion, before they do anything else, they should stop diverting fees currently charged to applicants to other federal programs and use those very substantial resources to address the backlog. This fee diversion has been happening for years now. Fees charged by the USPTO have always been intended to support the USPTO. Those fees should go towards improvements in quality and efficiency such as better staff training, more resources, and additional patent examiners.

Regarding this new proposal, what about start up companies, individuals, or not-for-profit research institutions (like universities) that can't afford to pay for expediting? Where does that leave them, delayed even further because the expedited applications are the priority over standard applications? It seems like this sets up a system of haves vs have-nots. The government should address the delays and fix the system for all applicants.

2010-06-21T11:34:00.000-07:00

CNN.com's financial website has a story today about the pending patent reform legislation. It's an interesting read although the story, for the most part, is written from the perspective of some large businesses and their position on the issues. There is no doubt that there is a huge backlog of pending patents. Additionally, many patent professionals feel that overworked patent examiners do not have enough time to assure that valid, quality patents are being issued.

There are essentially two opposing camps in the patent reform political arena. One represents large companies, typically software/IT/hardware companies like Microsoft, IBM, Sun, Motorolla, Intel, etc. that support a first to file system, third party opposition to pending patents or post grant review, and a substantial reduction of potential infringement awards. Their arguments include a belief that jury awards from (weak) patents being asserted by patent "trolls" have been excessive and unfair.

On the other side, the pharmaceutical and biotech industry, which relies heavily on patents to protect their products, opposes pending reforms that would weaken (in their opinion) patent enforcement, especially third party oppositions and limits on damages. Independent inventor groups and small businesses share the position of the pharma industry and also oppose a first to file system. Universities are generally aligned with these groups due to a similarity of interests. The Association of University Technology Managers and other academia-based orgainizations have taken positions on the legislation.

This is one of those pieces of legislation that doesn't get a lot of press but could have a tremendous effect on the patent system and the innovation that comes from it - entrepreneurial efforts, new products, strong start up companies, and the jobs that are based upon all of this.

If you read the CNN article please note a substantial error. The author states that "inventors can sue for infringements on their intellectual property even if they never filed to patent it." This statement is simply factually incorrect and I am a little surprised that it remains in the story uncorrected. While pending patents provide a few limited benefits, you need an issued patent in-hand to have any enforceability under federal law.

Comments are welcome.

http://money.cnn.com/2010/06/21/technology/patent_reform/index.htm

Article on delays in the US Patent system

2010-01-20T09:37:00.000-08:00

John Schmid and Ben Poston of the Milwaukee Journal Sentinel have written an excellent series of articles on issues and problems with the US Patent and Trademark Office. You can find the articles at the link below.

Problems with patent delays at the USPTO are getting to be a big deal . It's an especially substantial issue for technology-based start ups. If start ups can't get issued patents in a timely manner investors don't invest and growth doesn't occur. If growth doesn't occur those start ups don't employ additional people. On the technology licensing side of this, at SIUC we have at least a couple of inventions that probably would have already been licensed if the patents had been issued within a reasonable time period (and more likely to have been commercialized to the benefit of many including the general public). While it's not uncommon in many industries to license pending patents, in some industries that is very difficult to do and the norm is to have an issued patent in hand before a licensor can get a deal done.

An agency like the USPTO doesn't sound that interesting to the average American, I'm sure. However, it's a crucial cog in the engine of innovation that drives our economy.

http://www.jsonline.com/business/53319162.html