Monday, January 21, 2008

Does the current patent reform bill help small business in any way?

Within an article titled Proposed Patent Law Changes Could Help, Hurt Small Businesses, NJBiz notes in the first paragraph:

Some quirks in the [proposed] law can make it tough for new entrants to patent their inventions, while other anomalies may cause lengthy delays in patent litigation.

The article was not clear on how proposed changes could "help" small business.

There was mention of issues with patent in the area of taxes:

A proposal in the House version of the bill would prohibit the ability of accountants and others to get a patent for their tax strategies, or methods of minimizing tax liabilities, says Wall.

That would be fine for smaller CPAs, who complain that the prospect of paying royalties to a patent holder every time they implement a tax strategy could inhibit their ability to offer creative advice. But Wall says the Senate version of the reform act does not address this issue, diminishing its chances of becoming law.

IPBiz notes that the typical targets of so-called trolls are larger companies, not smaller companies. Smaller companies can be targets though. Nevertheless, this particular change would NOT seem to be one that favors small business over large business. It would remove a certain area from patenting for ALL people.

The article suggested that the patent reform proposal of "first to file" might be selectively harmful to smaller inventors:

If Congress adopts a first-to-file approach, it could streamline the process and prompt faster filings. But the change could also put smaller, cash-starved companies at a disadvantage since large companies often have the financial resources to quickly apply for patents without worrying about their commercial feasibility, notes Mentlik. In contrast, smaller enterprises may want to do more commercial research before shelling out thousands of dollars on the patent process.

“In theory, first to file might give some edge to bigger businesses,” says Mentlik. “But overall, I think that encouraging faster filing will mean that the public won’t have to wait as long to get the benefits of new inventions.”

IPBiz notes several problems with this analysis:

#1. The number of applications that become involved in interferences arising from the current "first to invent" process is miniscule, less than 1% of all applications. How eliminating a small issue will streamline the process in the face of an application backlog of over 700,000 applications is not clear.

#2. One has to distinguish "faster" filing from "more frequent" filing. Entities with greater numbers of patent attorneys might be encouraged to file more frequently in "first to file," but the contents of each application will be less. Changing from first to invent TO first to file does NOT change the number of scientists, engineers, and simple inventors. It will change "how big" each "report" is, and it will give more work to patent attorneys to do more frequent filings.

#3. The idea that this is "smaller enterprise" vs. larger enterprise issue is misleading. Universities (say, such as Princeton) are not "smaller enterprises) [Princeton being the largest employer in Mercer County). Princeton does not have a big staff of patent attorneys, or a big budget for filing lots of applications, even though they have lots of ideas. Universities will be disadvantaged by changing to first to file.

#4. The idea of enhancing the public's obtaining the "benefits of new inventions" faster is misleading on several levels. To the extent one views the public's benefit as the receipt of information (the actual purpose of the patent system), current law provides for the publication of applications in 18 months (with certain exceptions). This has NOTHING TO DO WITH first to file vs. first to invent. To the extent one views public benefit as the receipt of tangible new products (innovation changing the way the public lives), one notes that 90% or so of ISSUED patents don't make anybody any money (they are NOT commercialized). Again, this has nothing to do with first to file vs. first to invent.

One can view other relevant posts on IPBiz, including:

One can gauge the "true colors" of the position of small business on patent reform by looking at
the strenuous opposition by small business to patent reform. See for example the IPBiz post:

The NJBiz article also had the text:

A move like that could drive the cost of an uncomplicated patent application to the $20,000 range, nearly double the current average, he adds. Wall worries that a hike like that could make it tougher for patent-heavy business proposals to attract venture capital.

As IPBiz has noted, the typical venture capitalist will quickly tell one: "patent are not why we are investing."
See for example:

Venture capitalist stresses management; ideas are a dime a dozen
and IPBiz posts cited therein.


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