Image via Wikipedia
"Today you passed reform that will speed up the outdated patent process, so that entrepreneurs can turn a new idea into a new business as quickly as possible," said President Barack Obama. "This is the kind of action we need to get the economy going."
September 8th, 2011 makes the day when the USA changes from "first to invent" to the "first to file" patent law. The U.S. Senate passed the Leahy-Smith America Invents Act (AIA) by a vote of 89 to 9. Washington boasts their decision as the much-needed patent reform the country needed. Many are raising a skeptical eyebrow in the aftermath.
What does this mean? As I said when the law passed in the House of Representatives, whoever files the patent first, is the true inventor of the idea.
Innovation and invention in the USA are driven by the startup. What happens to them when the USA switches to first-to-file? To begin, a break-down of the startup invention process.
Startups work in this order:
1. Conception of the idea.
2. Build a prototype.
3. Develop a business plan and market research.
4. Finally ready for the patent process.
Getting to step 4 is a difficult and costly journey. In a first-to-file environment, as in Europe, investors will not talk to the inventors until they have reached step 4. The catch 22; the startup often needs the investors to file the patent (often in the range of $2,000 to $20,000 depending on the complexity).
Opponents of the bill state that venture funding will be diverted to less risky investments. Where startups, the primary source of inventions, will be unable to raise funding to commercialize their inventions. "Over time, and compounding year on year, the decrease in economic growth and the failure to commercialize innovative, disruptive technologies will accelerate the economic decline of the United States relative to competing nations" (Wiki).
AIA favors those with the ability to move quicker to and through the patent process, a large company, for example. In the chart above, first-to-file has been shown to reduce the ability for the first inventor to get the patent by over 60% compared to first-to-invent.
The administration that has guided the bill are the same who lobbied patent reform on behalf of IBM and Microsoft. USPTO Director David Kappos represented IBM. Senior Policy Advisor of the Office of the Secretary, U.S. Department of Commerce Marc Berejka lobbied for these new laws in the past for Microsoft. For the record, the USPTO reports to the Secretary of Commerce Gary Locke, who also has ties to Microsoft. (wiki)
What happened to the Revolving Door Ban? President Obama, on his first day in office, issued an executive order banning appointees from performing jobs that are related to their former employers for a period of two years. Despite this order, some people were issue waivers to jump from the lobbyist job to key roles in the government.
Political intrigue aside, it is a disappointing day for the small company or individual with an idea. I have a few business ventures, and I will admit, I am a little panicked my products will violate someone else's patent. Unlike large corporations, I do not have the funds to defend my products against patent-infringement allegations. What will we all do now?
Cabe
