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Patent reform is coming: Who should care

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When Congress returns from its summer recess in early September, it will vote on patent reform legislation that should represent a major overhaul of the United States patent system. It won’t do away with patent trolls or the software patents that have so many technology pundits up in arms, but at least one prominent patent attorney says it will level the playing field between large companies and individual inventors.

First to file is coming

According to Bernard Codd, an intellectual property partner with McDermott Will & Emery, the proposed “first to file” provision “would be a fundamental change to patent law.” The U.S. is among the only developed countries that clings to the “first to invent” system, he explained, which tends to inspire litigation over who actually invented a particular product or system. Under a first to file system, the first party to file is the presumed inventor, which creates what some refer to as a race to file.

Not everyone is happy about this likely change, with opponents claiming it unfairly favors large companies that can more easily afford the relatively expensive and complex process of filing patent applications. However, Codd thinks this characterization of the first to file system isn’t entirely accurate. Ultimately, he said, it means “you can’t afford to sit on ideas anymore,” regardless who you are, because if the guy across the street files first, you get nothing.

It might actually end up leveling the playing field for small businesses, according to him. Large companies often go through elongated processes when filing patent applications, Codd explained, and they’ll have to adapt to the new system. He added that there’s a tactic called the provisional patent application that should become a lot more popular. Codd thinks provisional applications will be a godsend for small inventors because they can draft and file a provisional application in a day and then have a year to undertake the laborious patent-application process.

Provisional patent applications are less formal — and less expensive — than official patent applications and give applicants one year to convert the proposed system into an official patent application. The contents of provisional applications are kept secret until the formal application is filed, and provisional patent holders are given the priority date of their provisional applications rather than that of their formal application, at least for the contents included in the provisional application.

Some protection against patent trolls

Of importance to the technology world, said Codd, is a proposed unlimited deadline for seeking post-grant review of business method patents. Business method patents generally cover software as well, as software is an intangible invention and the actual code is protected under copyright law. The line is blurry as to what types of business methods or software is patentable, except that abstract or strictly algorithmic processes generally are not. How those terms are applied, though, varies on a case-by-case basis.

There’s a fairly strong movement among technology professionals, and even a few members of the Supreme Court, who believe software patents should be abolished altogether. They believe software patents stifle innovation because the broadness of software patents leads to lots of potential unknowing infringements even from across a diverse pool of software developers.

With an unlimited deadline for seeking review, parties could question the validity of a particular business method patent whenever they happen to discover a potential issue. Post-grant review for all types of patents is presently limited to nine months after the application is made public.

The only point of contention between the House and Senate patent-reform bills on this issue is around the timing of the sunset provision, or the length of time before this new provision expires. Whatever that ends up being, Codd said, Congress will likely extend the unlimited post-grant review of business method patents if they end up being invalidated more often than other patents while the provision is in effect.

Codd said there was talk about provisions for cracking down on so-called patent trolls and patent litigation, but no such provisions made it into either bill. Probably, he said, that’s because “one person’s troll is another person’s hard-working small inventor” who’s being ripped off by large companies.

That stance certainly has merit. Although patent trolls give patent litigation a bad reputation, too high a standard for infringement or overly harsh penalties for losing a case could make small companies or individual inventors hesitant about enforcing their patents.

Interestingly, though, one class of software inventors do appear likely to feel some sting from the likely legislation. Codd said both bills prohibit patents for software claiming to find tax savings.

Why all the hubbub about patents?

Patents have been the talk of the tech world lately, especially in the white-hot mobile space. Oracle (s orcl) and Google (s goog) are embroiled in litigation over Android; HTC just sued Apple again (s aapl); Apple purchased a large cache of Nortel patents; and Google just bought Motorola Mobility (s mmi), ostensibly to get its hands on Motorola’s wealth of mobile phone patents.

Codd thinks there are several factors driving this activity, but it all comes down to money. Patent litigation is expensive, he explained, and the consequences can be even more expensive, so companies in big-money areas like mobile phones are girding their loins and preparing for battle.

Companies not selling products can make money by licensing patents and suing infringers, and companies afraid of getting sued can snatch up their own collection of patents to either defend against infringement claims or to threaten countersuits, he said.

It seems unlikely that new patent laws will have too great an effect on existing litigation, but a first to file system and post-grant review of business method patents could spur a lot of activity going forward as companies race to get priority and try their hands at invalidating longstanding patents.

Image courtesy of Flickr user Alexandre Dulaunoy.

11 Responses to “Patent reform is coming: Who should care”

  1. Ron Robinson

    I’ve been astonished at how the ‘patent reform’ legislation will kill jobs, and it’s a ‘two-fer’ for being unconstitutional. See:… It’s a huge payoff for the Big Banks and Wall Street, so Obama and Harry Reid want to bring this quietly to the floor of the Senate in non-amendable fashion on the very first day back from recess. I hope we can stop them and activists who want to help stop it can go here – see

  2. If this becomes law it would harm small businesses/start-ups. It is more favorable to big companies (the ones who lobbied congress for these changes).
    Provisionals would be worth even less under the new law.
    There are many differences between the original bill passed by the Senate and the House bill that will likely be the one to pass. The most significant one is that the PTO will remain starved of funds, particularly due to this bill’s increasing its workload w/o increasing its revenue.
    I have collected the best info that I could find on this subject (including a few things that I wrote) at:

  3. Dumber_texan

    For whatever reason, companies and people that develop software don’t seem to really care about other people’s ideas or intellectual property. The ease at which software can easily be copied compounds the issue. You don’t need any property, plant or equipment ($$$) in the new age. All you need is a bunch of free time and access to open source software and anything is possible.

  4. All this sounds like incremental improvement at best (if that). The patent system needs a re-thinking from the ground up, and it needs to be overhauled so it actually help the small business owner.

    But I don’t think small business owners care that much about patents, especially software patents, in today’s world of increasingly more popular open source software and code sharing, with sites like github and others.

    Things started changing a few years back with Wikipedia, which led to many crowdsourced movements. I think we need to move away from the idea that an invention can only come from one person. I don’t think anybody has ever invented something without being inspired by something else anyway, or using another invention for the basis of his invention. If patent law was enforced at maximum, every inventor would have to pay for 80% of his invention to others. Nothing can be truly built in isolation and with no relation to some other inventions.

    This video says it all:

  5. MichaelBrianBentley

    Numero Uno among problems with US patents by a wide margin has been what USPTO has been awarding: scorchingly horrible ones. Nothing in either House or Senate legislation does a thing about that. How long does it take them to re-evaluate a patent, years?

  6. The software patent is still a valid notion. The movement to first to file makes sense but a more fundamental problem is patent duration.

    Patents are designed to ensure that the inventor, who toiled away to develop an invention, has an appropriate time to profit from the innovation. In the days of colored glass and basic cranes, companies moved slowly and it took years to commercialize ideas. Hence the 20 year patent period.

    Unsurprisingly, this 600 year old policy of 20 year patent terms is outdated. Startups bring technology to market in 3 to 12 months. Technology adoption life cycles are shrinking dramatically meaning inventors profit from their innovations faster than ever.

    I discuss this more fully here:

  7. Abolish software patent. The idea of single inventor is romantic but otherwise a pure delusion. There is no justification to grant exclusive right to the so call “inventor” when it can be independently invented by anyone in their garage. The whole class of patent should not be grant unless they have demonstrated benefit to the society that cannot happen otherwise.

    Open source development foster innovation. Patent stifle it. The difference is so resoundingly obvious I dare anyone to argue against it.