On September 16, 2011, President Obama signed the patent reform bill (America Invents Act â Patent Reform Act of 2011) into law, finally ending a seven-year debate for innovation advocates and opponents who had initially hoped to significantly overhaul the patent system. Obama has repeatedly said the bill will spur job growth, however, patent experts have challenged that characterization.
"It really doesn't create jobs for anybody except maybe patent lawyers," says James Besson, a lecturer at Boston University School of Law and a fellow at Harvard's Berkman Center on Internet and Society.
While Congress has been wrestling with the legislation for the better part of a decade, they have steadily eroded the bill's original purpose and instead they have delivered a law that appears to favor politically entrenched corporations, from banks to multinational drug companies at the expense of small inventorâs rights.
While standing next to Eli Lilly Chief Executive Officer, John Lechleiter, at a science and technology focused high school in Alexandria, Obama again called upon the âspirit of entrepreneurshipâ and the âjob creating power of innovation,â saying the bill will make it easier and faster for inventors to obtain patents.
Obama went on to say that "We can't afford to drag our feet any longer, not at a time when we should be doing everything we can to create good innovative jobs." "We should be encouraging the entrepreneurial spirit anywhere we find it." I wholeheartedly agree, but this new law does not appear to do that.
As many of my readers know, in many key industries today, patents have become a tremendous barrier to innovation, rather than a facilitator. Consequently, granting more patents faster may well exacerbate the problem.
When Congress initially began considering patent reform during the first term of President George W. Bush, the bill was designed to fix a broken litigation system. A series of federal court decisions had authorized the U.S. Patent and Trademark Office to begin issuing patents on software and "business methods."
While patents had historically been restricted to new gadgets, these new patents were notoriously broad in scope and vague in definition, allowing their owners to launch lucrative lawsuits against companies making generally unrelated products. Inundated with applications, the USPTO issued hordes of patents on generic or commonly used business techniques.
Inventors who actually intended to bring new products to market could not know if their new products would violate some vague, decades old, and would therefore invite a barrage of time consuming litigation. Hundreds of companies dubbed "patent trolls" sprang up that did not produce any goods, but made their money suing for patent infringement.
In 2005, the House passed a version of patent reform, predominantly targeting computer, internet and software companies, but the bill never passed the Senate. Shortly thereafter, drug companies started throwing their weight around Capitol Hill, and consequently, the substance of the legislation was steadily worn away.
In 2010, Congress ceased all attempts to reform the patent litigation system, instead focusing on resolving disputes over who receives a patent when two people come up with the same new invention at roughly the same time.
The new law changed the US from a "first-to-invent" standard to a "first-to-file" standard, which is more consistent with patent systems abroad. This eliminates the need to hold court proceedings to determine which inventor independently came up with their idea within a span of a few weeks or months, but it does not address most of the issues with the patent litigation system.
The old "first to invent" system made sense to smaller inventors with its 1 yearâs grace period for inventor's to perfect their invention. The new law will also likely cause there to be more applications filed because the rights secure when the application is filed and not many small inventors have $7000 - $10,000 for each patent application. So it favors corporations that can file large numbers of these.
But there is another problem as I see it... the patent office already has a backlog of 700,000 applications and this will cause a greater influx of new applications.
The congressional decision to pass on litigation reform has changed the way innovative companies operate. Patent trolls are no longer small operations; rather, the nation's largest tech firms: Apple, Oracle, Google, Microsoft and more, now devote enormous resources toward acquiring patent portfolios and filing lawsuits against each other.
Google, is widely believed to have purchased cellphone maker Motorola Mobility in large part to enable it to defend itself from patent lawsuits and file new lawsuits of its own.