Sunday, September 4, 2011

The Senate should not just rubber stamp the House's version of patent reform

The Senate is about to vote on whether to invoke cloture with regard to H.R. 1249.  In all likelihood, that would mean that the Senate would simply end up passing the house version, which (as I argue below) is really bad for independent inventors.  I wrote my senators, Feinstein and Boxer.  I sent the letter by email and, almost anachronistically, fax.  As it turns out, the fax version is the only one they got (at least I hope they got it), since the Feinstein email address bounced and the Boxer email generated an autoreply saying that all electronic communications needed to come via the web based form.  

I will send my senators this link.  If you agree with the sentiments, please feel free to send this link to your senators as well.

Dear Senators Boxer and Feinstein:

I write to you as a constituent, a small business owner, and the inventor of fifty issued United States patents and hundreds of other inventions that are the subject of pending and soon to be pending patent applications (see

I am an independent inventor.  I am proud that I have been able to make a living as an inventor, create jobs, and build transformative technologies, all without the resources of a big corporation – and free of the creative limitations that would accompany those corporate resources.  Unfortunately, a bill that the Senate is set to vote on threatens my ability to control my time and cash flow and properly develop my inventions prior to filing for a patent.  If that bill becomes law, the resulting uneven playing field makes it quite likely that I will end up closing my business and seeking work with one of the large corporations that the bill tilts the playing field toward.

I urge you to oppose the Leahy Smith America Invents Act in its current form.  The Senate bill, S.23, did a lot to weaken our uniquely American pro-innovation culture, but contained an enormous counter-balance:  Section 20 provided that the USPTO would retain the fees paid by inventors, allowing the USPTO to issue patents in a timely manner.  Of my 50 issued patents, two took more than nine years from filing to issuance, and seven took more than six years.  The median time between my filing the first application in a patent family and the issuance of a patent is well over four and a half years. These delays kill jobs, forcing innovators to choose between waiting half a decade for a patent to issue or launching a business without patent protection – and in either case knowing that their patent application will be published well before a patent will issue, providing a blueprint for competitors to steal their idea while the patent application languishes.

Although the switch from a first to invent system to a first to file system goes a long way toward killing the independent inventor, it was a bitter pill many of us were willing to swallow in exchange for a patent office capable of quickly acting on patent applications.  Unfortunately, the House bill has stripped out this counterweight, leaving only provisions that damage or destroy our nation’s small inventors and small businesses.  The provisions that are of particular concern are the switch to a first to file system, Section 18, and the effective reduction in patent term that results from additional incentives to re-examine issued patents.

First to File:

The change from a first to invent system to a first to file system will make every invention into a financial and time management crisis.  The nature of invention is that some inventions come from years of research while others – often the most valuable – come from an inspired moment or observation.  The second category is replete with landmark discoveries, such as Fleming’s discovery of Penicillin, Spencer’s invention of the microwave oven, Schlatter’s discovery of NutraSweet/aspartame, and Hopps’ invention of the pacemaker.  Because so many important inventions are the result of recognizing the value of an unexpected or unanticipated event, at the moment of conception the inventor is often months or years away from fully developing their invention.

With a first to invent system, an inventor can properly research and reduce their invention to practice.  The inventor is not required to file for a patent immediately, so long as they continue to diligently work on their invention and they file within a year of the invention becoming public.  By the time the inventor files for a patent, the patent application will reflect a fully developed description of the invention that others in the field can read, understand, and improve on.

By contrast, a file to file system turns a moment of inspiration into a moment of crisis.  The inventor must instantly consider the viability of the invention; must consider whether his time and financial constraints allow him to turn his full attention to getting the invention ready to file; must compare the actual and opportunity costs of filing against the benefits; and must line up appropriate resources, on an urgent and therefore more expensive basis, to assist in quickly completing development of the invention. 

I have had weeks where I conceived of multiple inventions.  In a first to invent system, such a week is a blessing.  In a first to file system, it would be a curse. As an independent inventor, I simply do not have the resources to simultaneously prepare multiple inventions in the urgent time frame that a first to file system demands. Whereas an inventor working for a major corporation might be able to call several teams of developers and patent lawyers, disclose one invention to each team, and allow them each to urgently rush to file a patent application, independent inventors are forced to pick and choose which innovations to pursue. 

Perhaps most troubling is that in such circumstances, the rational way to prioritize is to develop the inventions that are the least different from the prior art first, since they are the ones most at risk of having a subsequent inventor file first.  The inventions that contain disclosures most likely to advance science are the ones that represent the greatest technological advances over the prior art.  Those inventions are, ironically, the ones that are the lowest priority for filing in a first to file system as they are least likely be invented by a subsequent inventor who files first.

The United States stands alone in the world as the dominant source of new ideas.  It is not a coincidence that it also stands alone as the only major country with a first to invent system.

Effective Reduction In Patent Terms:

Issued patents may already be sent to re-examination based on a substantial new question of patentability.  While the patent is technically in force during re-examination, as a practical matter the patentee’s ability to license or assert it during re-examination is highly impaired.  Regardless of the impairment to the patent’s value during re-examination, the patent term continues to run.  Because of the glacial pace of patent office proceedings and proceedings before the Board of Patent Appeals and Interferences, it is entirely possible that a re-examination proceeding that ultimately results in a determination that the patent was properly issued could nonetheless cost the inventor most or all of the patent’s remaining term.

As the system now works, I expect it to take five years from filing to get a patent issued.  Once issued, even a bogus re-examination request can interfere with assertion of the patent for several additional years.

On top of these two factors impairing the creation of new businesses based on my inventions, the Act appears poised to impose a third:  Post-Grant Review.  Section 6 creates a new type of procedure that, like a re-examination, would interfere with enforcement of a patent.  Unlike traditional re-examination requests, though, a post-grant review request can be based on factors well beyond those that can be used to trigger a re-examination, including those already considered by the patent examiner or even factors that may raise “a novel or unsettled legal question”.

The public policy concern addressed by post-grant review is essentially that the patent examiner may not have had the resources or skill to identify reasons that the patent should not issue, and therefore allowed the patent to issue improperly. This concern has already been addressed in Section 8, which provides for the pre-issuance submission of prior art by any third party.

The crucial distinction between pre-issuance submission of prior art and post-grant review is that a delay in the issuance of a patent caused by the consideration of pre-issuance submissions will be offset by increase to the “patent term adjustment” while a review under the post-grant review procedures will effectively impair the patent while the patent term continues to move toward expiration.  Both procedures allow the public to submit reasons to deny the desired claims.

The delays in issuance and the slow processing of re-examinations under existing law combine to deny inventors a prompt decision on their patent application and then impair the patent after that long-delayed issuance.  Adding a new mechanism to impair the patent, triggered at a far lower threshold, deals an entirely unnecessary harm to America’s innovators.

Section 18:

Section 18 has been criticized as another bail-out for big banks.  Section 18 is that and more – it is a way to prevent small banks from challenging the hegemony of a handful of big banks.  If Section 18 were in place before the ATM was invented, and a small bank invented the ATM, Section 18 would effectively prevent that small bank from using that invention to grow large enough to become a competitor to the handful of existing large banks.

The ATM may already exist, but this is the United States, and we can be assured that sometime soon an invention of the magnitude of the ATM will be developed by an upstart small bank hoping to become an American success story.  Under the Act, though, the small bank would have to wait half a decade or more to get a patent, wade through the inevitable post-grant review proceedings, and deal with re-examination requests. 

When the upstart bank’s patent application is published, some 18 months after filing, the large banks would know exactly how to implement the small bank’s invention.  By the time the patent issued, the big banks would have fully implemented the invention, and the small bank would still be a small bank.

At this point, in any other field, the upstart company could turn to the courts for help in keeping its much larger competitors from getting away with having stolen its idea.  However, Section 18 protects big banks from competition by creating a special, simple to trigger post-grant review and relaxed standards for staying litigation.  Having already waited perhaps a decade to stop big banks from stealing its idea, the small bank would likely be denied judicial assistance for another half a decade while the special Section 18 review proceeds.


As a small business owner and inventor, I suffer with the uncertainty and glacial pace of the patent process.  I manage my time and cash flow as best I can, knowing that filing for a patent is an investment that pays, in the best case scenario, half a decade later.

H.R. 1249 leaves the USPTO with continued uncertainty about its budget, and leaves inventors unable to count on the kind of prompt USPTO review that the budget provisions in S.23 would have funded. H.R. 1249 burdens the USPTO with a larger workload and the same budgetary uncertainty.

The fix for the slow and uncertain patent issuance process may have been removed from H.R. 1249, but the provisions that harm independent inventors remain.  I enjoy owning a small business, and I take great pride in contributing to America’s scientific progress.  I urge you to vote against cloture on H.R. 1249, to insist on a return to the S.23 provisions on funding, and to seek to remove the post-grant review procedure and Section 18 bank bailout provisions.

Very Truly Yours,

Gary Shuster