America Invents Act Does More Harm than Good

“Why does the U.S. want to pattern its system after other countries when ours is the strongest patent system in the world?  Other countries should be lining up with us.”   …Former Administrative Patent Judge Nancy Linck

 

When the Smith-Leahy America Invents Act (AIA) was signed into law by President Obama in September, 2011, Senator Patrick Leahy said, “Vermonters have a long legacy of innovation and creativity.  With the improvements included in the Leahy-Smith America Invents Act, that legacy is sure to continue.”

Vermont has a long history of “rugged individualism,” so presumably Senator Leahy was thinking of individual inventors as the source of Vermont’s “long legacy of innovation and creativity.”  Yet the bill he co-sponsored benefits large corporations far more than it will benefit small companies or individual inventors.

There are two key changes in the patent system introduced by the AIA that will have a negative impact on inventors and innovation.

The first key change is switching from a “first-to-invent” rule for granting patents to a “first-to-file” rule. There are two main arguments that were used in defending the switch to first-to-file.  

  1. The US was the last country in the world to use a first-to-invent rule.  Switching to first-to-file brings us into alignment with the rest of the world.
  2. First-to-file avoids the possibility of “interference proceedings” to determine who actually invented something first. "Who invented first" no longer matters – all that matters is who is the first to file.

This may sound like a welcome change – after all, it eliminates one basis for expensive and time-consuming legal challenges – but it works to the advantage of big firms.  Filing patents is expensive, both in terms of legal fees for the patent attorney to draft the patent, and in filing fees with the patent office.  Large corporations have the money to throw at patent applications, and they frequently try to find things they can patent that they may not even intend to use, simply to block others from using a particular technological approach. 

Small companies and individual inventors don’t have the money to "throw at the wall and see what sticks" in patent terms.  Being able to wait as they further develop a piece of technology before deciding to go to the expense of filing a patent benefits smaller inventors.  It allows them to defer an expense, always of value to smaller companies that are short on cash, and if the idea doesn’t turn out to be that useful they can avoid the expense completely.

The other major change introduced by AIA is a provision for post grant review of patents at the petition of third parties.  The new rules make it much easier for someone to challenge a recently issued patent (within nine months) at the US Patent and Trademark Office (USPTO). This change, like the first to file change, brings US procedures more into line with the rest of the world.  It is also claimed that the change will make it easier to knock weak patents out at a lower cost than with current methods.

The post grant review does not benefit inventors: it benefits those who want to use patented technology without paying for it by providing a new and cheaper avenue to challenge patents that have already been approved by the patent office.  It makes it likelier prospective licensees will be more aggressive in challenging patents, which will lead to more litigation.  Patent owners may be reluctant to enforce their patents during the first nine months after issuance out of a fear of the review process, which will make it easier for third parties to challenge patents.  This is not a change that benefits inventors.

Paul Michel, former Chief Judge of the U.S. Court of Appeals for the Federal Circuit said that the AIA is “another example of over-intervention by Congress.”

In our criticism of the proposed SHIELD Act we said:

Clearly, some patents should never have been issued, and some patent suits should never have been brought.  But the SHIELD Act panders to prejudice and endangers the very innovators it purports to protect.

The AIA has done the same thing.  In both cases Congress claims to have been looking out for inventors, but the results end up benefiting big corporations.  Until Congress figures out how to pass patent reform that truly supports innovation, inventors should say “thanks, but no thanks” when Congress offers to “help.”

 

 

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