It’s crunch time. The Patent Reform Act of 2011 is scheduled for an up-or-down vote on the Senate floor this Monday, Feb. 28. It’s time for all intellectual property professionals to look carefully at the Patent Reform Act, and decide: is this bill good for American innovation or bad?
I am convinced that it is bad.
This bill (and its predecessors) has been extensively lobbied. A handful of large, multinational companies have lobbied vigorously for it. A handful of other large entities have lobbied vigorously against it. Yet consistently, small businesses, start-ups, entrepreneurs, and independent inventors – the present and future job creators in the U.S. – have said that this bill will hurt them today and it will hurt U.S. competitiveness tomorrow.
Their concerns are valid.
I encourage you to go to www.senate.gov, call your two Senate offices today and ask for the staffer handling patent reform, and ask for three things:
(a) support an amendment to strike the “first to file” provision.
(b) adopt Sen. Coburn’s amendment to end fee diversion.
(c) unless both amendments are adopted, to oppose the bill.
Without the two proposed amendments, the “improvements” the bill purports to make are trivial, but the harms are substantial.
The “first inventor to file” section of the bill is particularly troubling. It effectively repeals the “grace period” afforded inventors under current law with a hodge-podge of deadlines and conditions that are both operationally and commercially impractical — and are malpractice traps for practicing attorneys. Because the proposed change gives no reliable procedure for overcoming risks of disclosure before filing for patent protection, inventors must behave as if there were no grace period at all. Small companies will be “forced to file,” expending precious resources on pre-emptive patent filings rather than innovation and creation, prioritizing bureaucracy over creativity.
As if that isn’t bad enough, this change also disrupts the unique American innovation ecosystem, an ecosystem that has allowed American start-ups to flourish far beyond any other nation. As a practical matter, the bill further tilts the scales against American innovators, and presents the same risk of loss of patent rights as exist now in Europe and Japan. But worse, with the proposed changes enacted, a start-up will be forced to either curtail its participation in this ecosystem – to restrict conversations with investors, limit interactions with strategic manufacturing or marketing partners, and bar prototype field testing – or else risk preemptive filings or disclosure that would prohibit its ability to later obtain the protection of a patent.
This proposed change doesn’t harm certain large, multinational advocates of the bill in the same way. With their size, scale, and market presence, they can conduct their financing, manufacturing, marketing, and testing in-house. As a result, they can file most of their patent applications on “no grace period” schedules. But the change would take away a company’s option to wait, investigate, and choose critical paths – determinations that are particularly critical to companies that rely upon external collaborations or have comparatively limited resources. The bill is a “one-size-fits-all” fix for an increasingly shrinking way of doing business.
Thus, this bill may prove a death knell to open innovation.
Finally, why are advocates of the bill touting “international harmonization” as justification for the change? While our world is increasingly fraught with dissonance rather than harmony, it is also increasingly clear that innovation policy is among the few competitive advantages that nations – and in particular our nation – has left. Yet, in order to increase filing “harmonization” for some, the proposed bill takes away a preference that current U.S. law gives to U.S. inventors by redefining “public use” and “on sale” prior art to be international, instead of only “in this country.” Why should a bill change U.S. law to take away a preference for U.S. inventors? If the U.S. has had twice the rate of startup formation, job creation, and new product introduction as Europe and Japan for decades, why is “harmonization” a good idea? If China is increasingly using its policy levers to strengthen its competitive position, why are we on the brink of weakening ours?
This is dense public policy, but the economic implications are very real. Your opinions – and your client’s opinions – matter. Your calls make an impact. Call your clients and call you Senators. Ask for your Senate staffer handling patent reform and ask them to:
- remove the “first inventor to file” section in the Patent Reform Act.
- adopt Sen. Coburn’s amendment to end fee diversion, preferably as a substitute for the entire bill.
- Unless both amendments are adopted, oppose the bill.
It’s crunch time. Your Senators need to hear from you – today.
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NOTE: The concerns expressed by the author are shared by many within the small business community, as expressed in a recent letter to Harry Reid.