Patent "Reform" Opens New Ways to Screw Small Tech Companies
The Leahy-Smith America Invents Act passed the Senate last night without amendments. Because it was identical to the House version, it now is a law waiting for President Obama's signature. It was supposed to be the culmination of years of trying to "reform" patent law. Instead, it will serve as a new end run for big tech companies to patent someone else's invention.
As law professor and patent blogger Dennis Crouch notes, the new act fails to directly address the patent system backlog or the slow pace at which the U.S. Patent and Trademark Office reviews applications and issues patents.
It's about the bureaucratic money
So why did the USPTO back the legislation? Two reasons. One, it ensures that Congress doesn't divert patent fees from the USPTO to other uses. Two, it moves the U.S. from a first-to-invent concept (a patent would belong to the first party to have conceived of the idea) to the first-to-file (first in with the paperwork wins) used elsewhere in the world. The assumption is that greater international cooperation will ensue, making all patent processing everywhere more efficient.
Will that help speed the patent process? Maybe, though my money is against it. The U.S. still has an enormous application backlog and the USPTO has never been able to hire enough people to get ahead. It's unlikely that will happen now. Maybe the post-grant challenge system could help, so companies would get an administrative process instead of a court review.
But the very USPTO that is buried is the agency that is supposed to handle the challenges. So much for any extra money and headcount coming in. Furthermore, the bill raises the threshold for getting a successful reexamination, which means it will be harder, now, to challenge a patent.
Taking one for the team
That leaves the screwing of small companies. Part of the patent reform PR (well supported by big corporations, by the way) is that first-to-invent has allowed patent trolls to kill off innovation and hold industry hostage. But the vast bulk of patent infringement litigation comes from companies, big and small, that are so-called practicing entities -- that put inventions to commercial use. This also won't stop so-called trolls from buying existing patents and suing others.
More importantly, there's a big downside to first-to-file. Those who have the money for regular filings can flood the system with applications before relatively thinly-funded start-ups, which must more carefully pick and choose what they will seek to protect. Working on something in secret? You're now out of luck if a big corporation gets its application in even one day before yours -- even if you were working on the concept in your garage for years.
According to the National Small Business Association, by forcing inventors to file early, they have less time to "raise capital, assemble partnerships, and perform field tests" before committing themselves to patent filings.
But at least big tech companies won't have to deal with those nasty trolls. Just the big ones like Microsoft (MSFT) and Apple (AAPL).
Related:
- Facebook Patent Locks Down Profiles... but Google Saw It Coming
- Facebook Locks Down an Important Patent on Social Gift Giving
- It's Time for Mobile-Patent Disarmament Talks
- Senate Passes a Patent Bill, but Don't Hold Your Breath for Actual Reform
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
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