Wednesday, April 27, 2011

Why the esteemed Prof. Epstein is wrong on first-to-file

In a piece titled Patent deformation: US Congress sails into dangerous waters, Professor Richard Epstein, once of University of Chicago Law, wrote of first-to-file:

The single reform that makes the most sense is the displacement of the first-to-invent rule with the first-to-file rule for patent priority. The current American rule, which is out of sync with the rest of the world, has many defenders who think that this rule gives some advantage to the small inventor.

I doubt very much that this defence of the old order will withstand scrutiny. A simpler rule offers greater clarity, and it is that clarity that prevents the small inventor who files first from being outgunned by a larger firm which is prepared to spend a small fortune to muscle its later filing to a priority position. This transition, moreover, is relatively easy to execute, for it sweeps away the major complexities that dog litigation in this muddy area. On this point, at least, the presumption in favor of the status quo can be overcome.

The benefit to the U.S. public of having a patent system is the public disclosure of useful information. The public does not care "who" gets the right to exclude. The public wants the information out there. The small inventor does not have money to file applications at every step of the invention; the larger company does. That's a bias against small inventors in the proposed change. Moreover, the "risk" to any applicant is NOT merely getting scooped by another inventor; the inventor's idea can be disclosed publicly, through publication, use, or offers to sell. In "first to file," that means "too bad." In "first to invent," the inventor gets to prove the inventor was working on the invention before the disclosure. In terms of the impact of the proposed change to "first to file," declarations under Rule 131 are far more frequent than interferences. Epstein focuses on the less frequently occurring issue; not the big picture. Further, if the "prior art" risk were merely one of anticipation, the change would be a wash as to the public; it gets the information either way. Unfortunately, most rejections are for obviousness. The inventor, large or small, gets blown away by disclosures which are not directly on-point to the elements of the invention. That's a disincentive.

And, speaking of disincentives to disclosure, consider the prior use defense to patent infringement, also in the proposed reform. Somebody using something commercially, but not publicly, gets a pass on infringement. Hmmm, is that a benefit to the small inventor, who is trying to commercialize something, or the bigger company, who already has? Talk about a return to the guild system. Do we really want to harmonize with European ideals of the middle ages? Simpler, yes, but not designed to promote public disclosure. In fact, quite the opposite.


Blogger James Long said... good stuff

"Canada changed from FTI to FTF in 1989 and experienced a measurable "adverse effect on domestic-oriented industries and skewed the ownership structure of patented inventions towards large corporations, away from independent inventors and small businesses." [31] A 2010 study found that "long-term returns in the Canadian venture capital industry are such that capital has fled the market."[32]"

5:29 PM  

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