Misplaced Fear about Patent Reform Legislation
A Commentary by Gordon Arnold
Recently, I was asked to meet with a congressman about the patent reform legislation. Our meeting coincided with a vote in the Senate to prevent the US from leaving the so-called “first to invent” patent system. Soon after that meeting, I was asked to discuss the legislation on “The Price of Business” radio program.
Since this issue is being discussed more and more in the popular press, I thought I might give an explanation of the current system, the fears people have in changing to a different system, and why my decades of experience in the US and foreign patent systems make me believe that the bill the Senate passed will enhance the value of businesses that hold patents.
First to Invent vs. First to File
In the United States, we currently have a “first to invent” patent system. One effect of that system is that when the Patent Office cites a publication against a patent application, the applicant may be able to challenge the citation by proving a date of invention before the date of publication. This is good for the applicant, but it can make it hard on honest competitors. Since you cannot know when the actual date of invention is by looking at the public records, a competitor cannot have full confidence that something seen in a published article could not be patented in an application filed after the publication. This problem can be managed, but it is real.
Sometimes, inventors compete to solve the same problem, and they invent solutions that are so similar that both inventors really came up with the same invention. Their patent applications are said to “interfere” with each other. Since the Patent Office is supposed to issue the patent to the first to invent, it has to figure out who the first one is. To do that, the Office holds a type of trial to see who was the first to “conceive” the invention and when the invention was “reduced to practice.” That can be a very expensive process when the commercial success of a new invention is still in question.
Even with these problems, for some time, I thought this system was the right one, and I spent a lot of time advocating against changing it. However, as I gained experience, and as the world became more globalized, I began to see trade-offs I could not see before.
One of the biggest problems is that the Office and the courts presume that whoever was the first to file was also the first to invent, and I could not argue with that as a proper starting place. The best evidence of what was invented, and when, is the application itself; we know the invention claimed in the application was invented at least as of the filing date. If you want an earlier date of invention, prove it.
Problem: few inventors who are the second to file have evidence corroborating their story that they were actually the first to invent. So, under the first to invent system, there is little glory in being the first to invent but the second to file. This problem leads organizations without in-house patent counsel to make mistakes; they rely on what the intent of the system is, rather than the operation of the system in the real world. This problem is further compounded by globalization.
Most inventors want patents both outside and inside the US. They don’t want to file applications simultaneously in all those countries, however. Luckily, there are treaties that allow inventors some delay, which can be critical to cash flow for a new invention. All of the treaties rely on pretending something happened that, in fact, does not. Those treaties are really agreements by the countries that ratified them. The agreement is: “We’ll pretend that your citizens filed their application in our country on the date it was filed in your country, if you’ll do the same for us.”
That means that a US citizen wanting a patent in Canada can file a US application without having to file in Canada on the same day. That delays the time when Canadian filing fees and Canadian lawyers have to be paid. In the case of Japan or some other non-English-speaking country, it puts off the translation fees, too. These fees can mount up. Further, when a Canadian application is filed later, Canada will pretend it was actually filed in Canada on the date the first case was filed in the US.
That sounds good, but there is a catch. They still give the patent to the first to file SOMEWHERE.
Even though the applicant may be a US citizen, they ignore the US “first to invent” system. So the US filing date is the date of invention outside the US, even if you can prove an earlier invention date. There are other safeguards for US citizens in the US law that are traps for those wanting patents in other countries (e.g., the “grace period”), but I will stay with the first to invent issue for this paper.
Why is this important? The rest of the world is on a first to file system, and they know it. They have no illusions that they can wait to file their applications. On the other hand, many US inventors, hearing that the US is a “first to invent” country, believe they can rely on the US law. They don’t realize that that reliance will likely prevent them from obtaining a patent outside the US, and they don’t realize that they probably won’t be able to prove they are the first to invent, even in the US, if they are not the first to file.
That is not good for the patent system, the economy, or the country.
The Pending Legislation:
Many have said that the patent reform legislation pending before Congress is a “first to file” statute. They fear that someone will steel their invention and quickly file a patent application on it, and the true inventor will not be able to win. Because of this fear of stealing, they hold on to the idea of a first to invent system being better.
There are two points to make here. First, as explained above, that view ignores two unfortunate facts: (1) the first person to invent rarely can prove it when the first to invent is the second to file, and (2) reliance on “first to invent” laws in the US handicaps the US inventor without handicapping foreign inventors.
One might argue that the solution is to make the US first to invent system better and not worry about the rest of the world. I have, myself, often argued that the US should do what is good for the US and not worry about what other countries do for (or to) their citizens by adopting bad patent systems. But that does not take into account that it is good for US inventors to have patents outside the US; and, frankly, I have lived with the “first to invent” system long enough to know how inefficient it is, even if it is “fair” (a word that my children are not allowed to use with me). The fact is that disputes about who was first are more of a drag on the system and the economy than the aid that they give on very rare occasions. Still, there are always some who justify bad law by using four-letter-words that begin with “f” (like “fair”). Yet the “first to invent” system fools those who it was designed to help: small business and independent inventors who believe they can rely on it when they shouldn’t.
One might also argue that the US should convince the rest of the world to adopt a first to invent system. I have lived long enough to know that no one can predict when revolutionary change will happen, but I have also learned that the US should not wait to change a bad law on its books because it is bargaining with other countries to change a bad law they have. And, at least among patent lawyers and patent offices outside the US, my experience is that there is little interest in a first to invent system.
My second point, about the fear that the pending legislation will let others steal patents, is that the statute is not drafted as a pure “first to file” system. True, it presumes that the first inventor to file is the first inventor, but it does require that the filer be AN INVENTOR. Someone who derives the invention from a true inventor is not to receive a patent.
Some argue that such a system has the same problems as a first to invent system, and that is partly true. However, many believe that the process of proving someone derived the invention will be less burdensome than proving that a second filer was the first to “conceive the invention” and “diligently reduced the invention to practice.” I share that belief, to a point, although I suppose it is possible a “derivation proceeding” could become as unwieldy as the interference. In any case, I don’t think it could be worse. Also, as it turns out, there is an interplay of the “first-inventor-to-file” provisions of the bill and the so-called “grace period” that is designed to help less sophisticated inventors; that interplay has caused some to name the system in the bill a “first-inventor-to-publish-and-file” system, but that interplay, and they way to use it to enhance value, is beyond what I think is the interest level of most reading this piece.
There are many issues with the current legislation that cause concern for me. Not the least of them has to do with the way the statute defines what technology can be used against a patent when challenging its validity. Much effort is now wasted without a benefit to the patent system or the economy because of the current interpretation of the existing law, and this legislation could fix that with a very few tweaks. There are also other issues that should be improved in the bill, and I hope that the House will make those improvements without adding other problems. Of course, that has been a false hope in all of the actions of that august body I have ever studied; however, on balance, I believe the bill the Senate passed is a net improvement over the system we now have: it does a better job of funding the Patent and Trademark Office; it should reduce some of the expense of enforcement of patents; it should make challenges to poorly examined patents easier; and it should reduce the ability for infringers to harass a patent owner. So, I am generally in favor of this bill, and I have been very negative on the vast majority of the previous patent reform bills I addressed when asked to go to Capitol Hill to meet with Congressional officials and staffers.
I hope this article gave anyone interested in the “first to file” issue a little better understanding of what the press is talking about. If you bothered to read this far, you may have other questions about the effects of the legislation. Please contact me, and I’ll do my best to address them.