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Is the US finally fixing its patent system?

Or is the little guy just getting hosed?

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The most innovative, and potentially most beneficial, development contained in the Senate bill is the proposed switch to a first-to-file system. In a rare move for the US Senate, the bill would draw the US patent regime in line with, well, every other patent regime on the planet. Moving US law towards congruence with international norms is a new trick for the Senate, but one that should improve the state of the law in this area and move the world a little closer to global patent uniformity.

Right now, the US employs a first-to-invent system for establishing patent priority. The patent code allows a previous inventor to interfere with the issuance of a patent by claiming that they, in fact, invented the subject of the application first. If the first inventor has “abandoned, suppressed or concealed” the subject of the patent, however, he loses his priority. Thus, if an inventor or developer sits on a new invention and does nothing, a subsequent inventor can come along and claim the patent. The subsequent inventor must have come up with the idea on his or her own, though – stolen inventions cannot receive a patent.

While the first-to-invent system seems wonderfully fair, it’s a mess to uphold. Patent applications, already immensely complicated because of technical investigations, can get bogged down in evidentiary battles over whose research notes contain the earliest mention of a certain algorithm or chip design. This delays the issuance of the patent, and keeps valuable inventions out of the public’s hands while the dispute rages.

The Senate bill alters this system in favor of the nearly universal first-to-file system. The bill cuts out the language dealing with the rights of the first inventor, and simply states that no one can obtain a patent if an identical patent has already issued, or there is currently a patent application on file for the same invention. Nice and tidy, no?

Now, the small inventor lobby argues that a first-to-file system will result in large companies gaining all the patents, since many small inventors will lack the resources to file patent applications for their inventions. This constitutes a valid concern, since a first-to-file system will undoubtedly result in some first inventors losing the race to file and the right to patent the idea. Research has shown that actual inventors often file their applications last (if at all).

While an important issue, the greater good must again win out. Sure, a few inventors might lose a patent. But really, once the first-to-file system is in place, most inventors will simply realize that they have to file immediately and get on the ball with their paperwork. Plus, under the current system, a prior inventor has to retain the services of an attorney in order to state their priority claim and interfere with a patent application. If the inventor can afford to hire an attorney for that purpose, then surely he can hire an attorney for the purpose of filing a patent application. Hiring an attorney for transactional work is usually cheaper than hiring one for litigation anyway.

Moreover, a first-to-file system will improve the benefit to the public in two ways. First, it will encourage inventors to patent their inventions quickly, which will in turn result in the invention entering the public domain more rapidly. Second, the new system will streamline the patent application process and result in products delivered to consumers more quickly than before. Patent applications already take a long time – discussions of prior art and novelty can drag on for months. Tack on a lengthy period of disputes over patent priority, and the application process can stretch out even longer. This can delay product releases and prevent useful products from entering the market stream.

Obviously, people will still dispute patents under the first-to-file system, but in much fewer numbers. The dispute process should take less time as well, since evidentiary clashes will become less common. The public benefits, inventors cash in, and there is peace and prosperity across the land. That’s the theory, anyway.

And in the End . . .

The Patent Reform Act of 2006 will be a shot in the arm for the US patent system, if it can make it through the Congress without losing its core provisions. The grand ideas contained in the bill have a great deal of merit. That said, the bill has its kinks – ambiguous language and clumsy machinations will definitely need some refinement before the bill is ready for a vote. But, after all, that’s what the legislative process is for. We’re sure that after the lobbyists – er, we mean legislators, of course – have gotten their hands dirty and fine-tuned the inner workings, the bill will translate into good law for US inventors and IP practitioners. Then, once it’s enacted, we can all start griping about the new system. Won’t that be fun? ®

Kevin Fayle is an attorney, web editor and writer in San Francisco. He keeps a close eye on IP and International Law issues.

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