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UIA Letter to Congress on Patent Reform, Kappos & First to Invent


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: March 11, 2010 @ 6:24 pm
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Earlier this afternoon the United Inventors Association, a 501(c)(3) not-for-profit founded in 1990 and dedicated to providing inventor education and support, wrote to Congress to set the record straight on the UIA stance on patent reform efforts.  UIA Executive Director Patrick Raymond sent a letter to Senator Patrick Leahy (D-VT), who is Chairman of the Senate Judiciary Committee, and an identical letter to Congressman John Conyers (D-MI), who is Chairman of the House Committee on the Judiciary.  The primary purpose of the letter, as stated in the letter itself, was to make clear that the primary mission of the UIA is to provide reliable information to inventors and not to undertake lobbying efforts.  The letter makes clear that the UIA is “not involved in any campaign against this proposed legislation.” The letter goes on to explain that while some “coalitions” and “alliances” are claiming to speak “on behalf of all independent inventors nationwide,” they do not speak for or on behalf of the United Inventors Association or its membership.

According to the UIA letter, signed by Raymond and authorized by the Government Affairs Committee of the UIA:

While certain ad hoc “coalitions” and “alliances” have voiced their opposition on behalf of all independent inventors nationwide, the UIA would like to clarify that any inclusion of the UIA and its membership in such opposition is not based in actual fact.

Specifically, we are concerned that independent inventors may be portrayed as universally opposed to “first inventor to file” versus “first to invent”. Please know that our membership has not brought this to our attention, nor are we aware of any case of “interference” that resulted in the loss of patent rights by an independent inventor. And though we have not been able to scour every email, phone call or mail correspondence in our 20 year history, we nevertheless cannot recall such a scenario.

When reached for comment, Raymond explained to me that “by an overwhelming and large majority” the questions inventors ask when they contact the UIA relate to “who can I trust, what is my next step and where can I find funding or a licensing deal.”  Raymond went on to explain that the clear focus of the inventors who reach out to the UIA is to gain information about “inventor friendly companies” an to get information and support that will “ultimately allow them to realize a return on their invention.” Other questions inventors ask relate to technical issues about signing into their UIA account or receiving the UIA newsletter, for example.

In my discussion with Raymond I explained to him that this UIA letter would likely become quite newsworthy because of the first to file issue.  In fact, there are many within the independent inventor community who are quite frightened about moving from a first to invent to a first inventor to file system, and there are many who have an agenda that are, in my opinion, inappropriately fueling this fear and playing on it in an effort to derail patent reform.  So the fact that the United Inventors Association has no record of inventors inquiring about or retelling stories of inventors losing rights in an interference is likely to become a part of the debate and dialogue moving forward.  In fact, it will likely be picked up and used by those who both support patent reform and those who object to patent reform.

Proponents of patent reform are likely to seize on this as further confirmation of what the statistics clearly show, that first to invent provides little or no statistical advantage.  As Director of the USPTO David Kappos has explained, “[t]he chances that a patent will be subject to interference based on a first to invent claim—that’s our current system—is .01%.”  On the other hand, opponents of patent reform are likely to seize on this as further confirmation of their own views, arguing that no inventor has complained of losing rights because the first to invent system is there to help them and save them.

In my opinion, the argument of the opponents is disingenuous at best, and intentionally misleading at worst.  The fact that it seems that first to invent should help independent inventors is indeed logical, but not played out by the facts.  Furthermore, arguing that first to invent is essential but not talking about or even acknowledging the costs associated with prevailing in an interferences is rather ridiculous.  In fact, simply based on cost it is ridiculous to believe that an independent inventor could ever engage in an interference and prevail.  According to the a 2005 economic survey conducted by the American Intellectual Property Law Association (AIPLA), the mean cost of an interference through the completion of the preliminary motions phase was a whopping $417,130.  The mean total cost of the entire interference was  $656,306.  See An Interference: What, When and How Much Does It Cost? (page 9 at bottom).

Exactly how many independent inventors can afford that?  How many small businesses can afford it?  Those arguing first to invent must be kept at all costs to benefit independent inventors are misleading independent inventors and using fear tactics to promote their own agenda.  With this patent reform, which may not really do much to help the US patent system, there is still retention of the 12 month grace period, so exactly why are those who represent the interests of businesses trying to rally independent inventors based on a falsehood?

In any event, Raymond told me that he hopes that what is most newsworthy about the UIA letter to Congress is that the UIA is that they are “appreciative of USPTO Director Kappos’ outreach to the independent inventor community, and in particular, his concrete proposals to reduce patent pendency, extend the provisional period to 24 months, and create a new ‘micro-entity’ class with fees more tailored to independent inventors’ limited personal budgets.”

As Raymond explains, the issues Kappos is pushing, together with what the UIA is trying to do in terms of providing “reliable information supported by careful studies, certification to inventor-friendly firms and practical educational tools” strikes at the heart of what is most beneficial to independent inventors.

Oh how I wish the UIA mission and tax status would allow them to engage in lobbying.  Alas, it doesn’t, which is unfortunate indeed.  But at least the UIA strives “to keep inventing safe, rewarding, and fun,” which is no small task.  Yet, I can’t help but wish that members of Congress look beyond the surface and inquire whether adherence to a first to invent system is REALLY in the best interest of independent inventors, or in the best interests of those companies large enough to be able to fund an interference proceeding.

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Posted in: Congress, Gene Quinn, Inventors Information, IP News, IPWatchdog.com Articles, Patent Reform, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

13 comments
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  1. Gene,
    I’m glad you posted this. As the editor of Inventors Digest, I’m on record as supporting most of the elements of the current patent reform legislation – including first-inventor-to-file. I know this has many independent inventors and some in the patent bar perplexed and upset.

    Few other aspects of this debate are more heated than switching from the existing U.S. policy of first-to-invent to first-to-file or rather first-inventor-to-file, which is the practice in other developed countries.

    Personally, many patent-reform detractors have overblown this debate, or rather non-debate based on the data.

    Look at the numbers – as cited here and elsewhere there is only a .01 percent chance of having your patent challenged on a first-to-invent claim. Changing to a first-inventor-to-file system is statistically irrelevant.

    The USPTO argues that we essentially have a first-inventor-to-file system already. And it argues correctly that changing to first-inventor-to-file would “harmonize” our system with the rest of the world, reducing the cost to obtain a globally recognized patent.

    Objectively, this aspect of patent reform makes good business. Let’s leave the emotional demagoguery out of it.

  2. I also know of no one who is terribly opposed to first-to-file, were first-to-file standing alone. If S.515 did a clean change from first-to-invent to first-to-file by only replacing a few words in § 102(g)(1), then indeed the change would be only 0.01%, and there would be very little oppostiion.

    But that’s not this bill. S.515 makes a wholesale replacement of all of § 102, and its current robust grace period, with a new § 102 that is so tenuous that it can’t be relied on. Neither Gene nor Mike D nor UIA attempt to come to grips with the entirety of the change. Ignoring the facts, ignoring about 50,000-100,000 applications that are not filed at all today because they are directed to inventiosn that just aren’t worth it (with the additional insight that current § 102 allows), doenst make the facts or the wasted costs go away.

    There was a very good point counterpoint at Patentlyo over the last few days…
    http://www.patentlyo.com/patent/2010/03/patent-reform-act-of-2010-proposed-first-to-file-statute.html
    Importantly, this discussion starts with the language of the proposed statute, instead of an over-simplified and misleading label.

  3. David-

    You are simply wrong. I know you are smart enough to read the bill and know that it still has the grace period in it. Why are you running around working everyone up and telling them there is no grace period in this bill, when there clearly is a grace period?

    You are the one who refuses to come to terms with the reality of this bill. You are becoming “chicken little” running around and trying to work everyone up into a lather. You are fear mongering and lying about what is in this bill. Why? Why do you refuse to acknowledge the proposed 102(b) still provides a grace period.

    In case you can’t find a copy of the bill, you might want to READ the language that you say is not present. I wrote about this at:

    http://www.ipwatchdog.com/2010/03/10/analyzing-patent-reform-chances-and-first-to-file-provisions/id=9607/

    So for you to say that those who disagree with Patently-O or you should discuss the language is over the top, even for you. You have an agenda, that is clear, and you are trying to turn the independent inventor community toward your agenda by misrepresenting. In my opinion that is pathetic.

    You know David, this bill is good reading. Perhaps you should read it.

    -Gene

  4. Mike-

    I agree with you 100%. I can’t for the life of me understand why there are those, like David Boundy, who are running around ignoring the facts and demagoging the bill. Worst is that they make arguments not based on fact or reality. They claim we should “read the bill,” but it is clear they have not read the bill. That is the only way to explain how or why anyone could say there is no grace period in the bill, when it is right there in black and white.

    Now, I think the grace period is sloppy and the language needs to be tightened up because it is ambiguous, but not acknowledging it is present is nothing more than a cheap parlor trick aimed at swaying sentiment of those who have not read the bill. That, in my opinion, is pathetic and smacks of an agenda.

    I also find it interesting that those who claim to be acting in the best interest of the independent inventor community never admit the cost to prevail in a first to invent system. Intereferences are extremely expensive and at $400,000 to $600,000 independent inventors are only fooling themselves, or letting themselves be fooled, if they think first to invent benefits them in any way, shape or form.

    -Gene

  5. Gene.

    I didn’t say it has “no grace period.” I said it has a grace period that is “so tenuous that it can’t be relied on.” It’s right there in black and white, Gene.

    I think all can see clearly now who’s reading carefully, vs. who’s “misrepresenting.”

  6. The last outside counsel estimate I got for conducting an entire interference, several years ago, was roughly one million dollars. Considerably more than even your numbers noted here. [Settled very cheaply [which must be done very rapidly these days] with cross-options for licenses.]

  7. Gene,

    The lack of a 1 year grace period in S.515 for putting a product “on sale” is huge omission for many independent inventors who will have no idea they have given up all of their patent rights by selling or offering their product for sale.

    As to the other protections of the “grace period”, why do you trust the courts to interpret these provisions in the same way they you interpret their provisions, given how the courts have handled Section 103 (see KSR) and 37 CFR 1.56 (see the numerous inequitable conduct cases which you yourself have commented on ). Changing Section 102 only makes it easier for the courts to “do their own thing” in interpreting Section 102 , because they are not even theoretically constrained by precedent.

    As to intereferences, although I think your point is well taken about their costs, they are also relatively rare. If the Congress were really interested in helping out small inventors (and large companies for that matter), the Patent Reform bill would abolish 37 CFR 1.56 which costs every inventor money. Also, given that first to file vs. first to invent only matters in a small number of cases and 37 CFR 1.56 affects every case, getting rid of 37 CFR 1.56 would be a better first step to “patent harmonization” than going to first-to-file would be.

    I would also remind you of the fact that the USPTO is not exactly living up to its end of the bargain that resulted in a 20 year from filing and publication of applications. This last major change of the patent laws was predicated on the assumptions that the USPTO would not greatly increase its average pendency and that the USPTO wouldn’t drastically reduce its allowance rate.

    Why should anyone trust that s.515 will work out any better given how it completely ignores most of the problems plaguing the patent system?

  8. Mark-

    All good points. I have been writing for several years about the chaos that is Rule 56. There will be no patent reform until Rule 56 is addressed. I would abolish personally (and am going to write about that some more coming up here).

    In terms of first to file vs. first to invent, I think first to file will give inventors incentive to do what they should have been doing, which is file and not wait. I do think the USPTO will get a lot more work out of it though because with a race to the Patent Office there will be a lot of disclosures filed that don’t support everything (perhaps anything) and the question will be disclosure vs. disclosure rather than claim vs. claim.

    It is impossible to argue with you that S.515 ignores the big problems, which is tragic. In this article I say we should be calling this “patent change” not “patent reform.” See:

    http://www.ipwatchdog.com/2010/03/10/analyzing-patent-reform-chances-and-first-to-file-provisions/id=9607/

    -Gene

  9. >In terms of first to file vs. first to invent, I think first to file will give inventors incentive to do what they should have been doing, which is file and not wait. I do think the USPTO will get a lot more work out of it though because with a race to the Patent Office there will be a lot of disclosures filed that don’t support everything (perhaps anything) and the question will be disclosure vs. disclosure rather than claim vs. claim.

    Gene,

    In principal, I understand the idea of giving inventors the incentive to file as quickly as possible. However, I think its important to realize that many small inventors are not as up on the patent laws as patent professionals are. For example, many very intelligent inventors don’t realize that publishing their ideas or putting their product on sale kills their international rights and starts a 1 year clock ticking on the their US rights. I also worry that too many small inventors are going to think they can rely on their provisional applications and delay filing their utility applications, even though the provisional applications will not provide enablement for the claims in the utility application. As you note, many provisionals (disclosures) won’t provide enablement, but will many small inventors understand this?

    When I look at the s.515 bill I see very little in the way of benefits to small inventors and lots of potential harm to small inventors.

    Mark

  10. Mark-

    Aside from Rule 56, what would you like to see in the Senate bill that would help independent inventors and small businesses?

    How would you like to see the proposed 102(b) tweaked? I am going to write something this week with suggested revised language, and some other thoughts on reform, and would like to hear your take.

    -Gene

  11. Leave 102 alone, except to change 102(g)(1) from “before such person’s invention thereof” to “before such person’s effective filing date.” Simple. Non-disruptive. Not much for anyone to gripe about, significant cost savings.

  12. >How would you like to see the proposed 102(b) tweaked? I am going to write something this week with suggested revised language, and some other thoughts on reform, and would like to hear your take.

    I’m with David, in the present legal environment, I would leave 102 alone except for David’s tweak. If you change 102 in any significant way, you will unleash the courts to potentially ignore all precedents related to 102. This will create uncertainty in the patent law and that is almost always a bad thing for inventors and innovation.

    Passing this reform bill is likely hurt small inventors, hurt innovation in general, and allow the real problems with the patent system to be ignored for years to come, because people will assume that “Patent Reform” fixed the problem. I am far more scared of Congress passing this bill than I am of Congress doing nothing.

    For a cautionary comparative example, I would have you consider the effects of the Public Company Accounting Reform and Investor Protection Act, better known as Sarbanes-Oxley. Based on the recent meltdown on Wall Street, I think we can pretty well conclude that this “Reform Act” didn’t do a very good job of improving public company accounting or protecting investors in any meaningful way. However, the Sarbanes-Oxley “Reform Act” did a magnificent job of destroying the IPO market in this country.

    Sorry, I have absolutely no faith in any so-called “Reform Act” passed by Congress these days.

    Mark

  13. Mark-

    I can understand your lack of confidence in Congress, I share that feeling. The trouble is that if they do get to a vote on patent reform there will be change and 102 will be amended. So we can either work to get it as solid as possible or we can push keeping things the way they are and get whatever crazy ambiguity they throw at us. I am going to try and suggest revisions to the proposed 102, which I feel is better than doing nothing. They want first to file in some form, which will cause more work for the PTO no doubt, but I don’t see any momentum for dropping that.

    For those whom would rather nothing I guess hoping for a protracted health care reconciliation in the Senate is the best way to keep Congress well enough away.

    I do share your view that this is a missed opportunity. They really don’t want to spur innovation or fix the patent system. They just want some minor things done differently without addressing the real issues or providing real reform.

    -Gene