Google Inc.?s $12.5 billion deal to acquire Motorola Mobility Holdings Inc. is evidence of the importance businesses place on patents. But there is a problem with the U.S. patent system.
Inventors must wait three years on average for their patent application to be processed. That means there are inventions that without the certainty of a patent aren?t attracting investment to make them commercially viable. Without protection to prevent theft of their inventions, startup companies are less likely to create jobs needed to boost the nation?s struggling economy.
Congress has for years been considering laws that would streamline the system and ensure patent quality as the U.S. Patent and Trademark Office struggles to handle some 450,000 applications a year. After much contentious debate, the U.S. Senate approved on Thursday the ?America Invents Act.? Because the House of Representatives passed identical legislation earlier this year, the bill will go directly to President Barack Obama, who has signaled his support.
The measure introduces substantial changes. The one getting the most attention impacts the way every inventor files for a patent. The bill would grant patents to the first inventors to file applications, rather than requiring inventors to prove they were first to develop an innovation.
Another widely discussed change would be the creation of a post-grant review process that would allow others to challenge patents administratively, rather than through litigation.
Will the measure cut the red tape impeding American innovation and economic growth? Chicago lawyers and academics are divided on the issue.
?Innovation should be helped by a law that helps provide more transparency and greater efficiency in the patenting process,? said Sharon Barner, the former deputy director of the patent office who works at Foley Lardner. ?Ultimately it results in patents that are clearer and issued more quickly than the current system.?
But David Schwartz, who teaches patent law at Chicago-Kent College of Law, is not sure the business community will benefit from administrative efficiencies. Undoing the current system, he said, would create legal uncertainties that could be bad for companies and investors that rely on patents.
?Unfortunately there?s been very little empirical analysis of the effects (of the proposed changes) on companies, jobs and inventors, which would seem important,? Schwartz said.
Barner and other supporters of the first-to-file rule say it would streamline the application process because it will eliminate expensive and time-consuming reviews to determine who was the first to invent something. The change also will bring the U.S. in line with the rest of the world, which could encourage countries to cooperate more in evaluating inventions.
Opponents, however, say the change puts individual inventors at a disadvantage to large companies that can afford full-time patent attorneys who can file applications quickly. Two researchers at the University of Pennsylvania who studied a similar change in Canada back the critics, concluding that a switch to a first-to-file system ?is likely to result in reduced patenting behavior by individual inventors.?
Some argue that change could have the opposite effect on the backlog. Entrepreneurs and companies could resort to filing applications for every incremental invention to preserve their rights.
The pharmaceutical industry was pushing hard to switch to a first-to-file system because it wants a more efficient system of patent protection so it can bring products to market faster. A quirk in the system grants patent exclusivity from the date of filing, not when the patent is granted. The result is that a legal fight eats into the valuable 20-year protection that comes with a patent.
There?s also something in the legislation for the tech industry, which seeks relief from patent lawsuits.
Google is involved in numerous infringement suits over its Android smartphone operating system. By taking over Libertyville-based Motorola Mobility, it could acquire 17,000 phone-related patents to defend itself and its Android partners.
The legislation gives companies another avenue to challenge bad patents by presenting evidence to the patent office.
?Right now the main way to invalidate patents is to go to court,? said Robert Gerstein, of the Chicago law firm Marshall, Gerstein Borun, which specializes in patents. ?Litigation is expensive and hopefully this new review process will be less expensive.?
But Schwartz said the post-grant review process could be used to tie up patents in administrative procedures, which would reduce their value.
One thing supporters and opponents of the legislation do agree on is that the patent office needs to be better funded so that it can hire more examiners to tackle the backlog. The bill would give the office authority to set its own fees, but its spending would still be controlled by Congress.
asachdev@tribune.com
Twitter @ameetsachdev
Article source: http://www.chicagotribune.com/business/ct-biz-0909-chicago-law-20110909,0,7253726.column
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