This week the President signed into law the “America Invents” act, or better known as Patent Reform. Sadly, it will destroy American Innovation in the process.
The reasons for its existence are real: reduce the time it takes to issue new patents and reduce patent trolling (the dubious business of hoarding patents to sue inventors). Unfortunately what came out of the congressional sausage maker is a bill crafted by large multi-national corporations FOR large multi-national corporations.
For 220 years since Thomas Jefferson penned the original Patent Laws to be consistent with the Constitution, our country has benefitted from the structure of this uniquely American patent system that was designed “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”. As an inventor, Jefferson believed that the individual who invented something had the rights to his invention. This simple concept as embodied by the likes of Eli Whitney, the Wright Brothers, Thomas Edison and Steve Jobs has been so ingrained in the American psyche that it is a fundamental component of how we Americans view ourselves. Any one can build a better mousetrap and in doing so reap the rewards. There are a lot of smart and educated people in the world but one of the reasons that America has been a leader in innovation was that it set the stage for this innovation through our patent laws.
This all changed this week.
Pushed by large multinational corporations, the patent reform bill is designed to remove the level playing field from inventors big and small alike and tilt the board heavily in favor of big international money. The American landscape will be changed forever.
The most onerous aspects of this bill are:
- Awarding of patents would change from the person who invents the idea first to the person who files the paperwork first.
Small entrepreneurs and inventors are busy inventing and building businesses. They often takes years to work and re-work their concepts, frequently going down many dead-ends. This provision creates a race to the patent office. Inventors would now be burdened with the cost of filing many sub-par and inconsequential patents in order to protect their inventions. This is distractive at best and prohibitively costly at worst. Bear in mind that while the filing fees for patents are quite reasonable, the real cost is in securing legal council. Patents really cost $10,000 and up. Small companies simply can’t afford to “paper” every incremental aspect of their inventions.
- The “grace period” would be reduced effectively to zero.
- The Bill makes it easy for patents to be challenged by monied opponents.
Even though it takes years now for a patent to be granted (not necessarily bad), that patent has weight when it appears. There are provisions in this bill to extend the time frames to mount a patent challenge and to permit ex parte challenges which can be repeated and anonymous. The effect would be that an international corporation with vast resources can beat the patent holder down by challenge after challenge until they can no longer defend their own patent. Knowing this is possible will further remove the incentive of early stage investors to back these young startups.
Oh, and ALL NET NEW JOBS come from this sector.
Other rationales for this bill don’t pan out. The volume of patent filings is likely to go up. Contrary to proponent’s sentiment here are no provisions to prevent “patent trolling”. The business models for the likes of Lodsys and Intellectual Ventures go on unchecked. China has changed its patent system to be like our current one - what harmony?
At the end of the day, this is a big money bill for big multinational corporations and the end of an American Dream. Who would have thought 20 years ago we would have been saying “Remember when America use to make stuff?”. If this bill passes, in 20 years we will be saying “Remember when America use to invent stuff?”.