[UPDATED 9-5-11]

URGENT ALERT

Education and Information about Legislation Related to Independent Inventors

AMERICA'S GREATEST ASSET
UNDER SIEGE 2011

Editorial Opinion By © Stephen Paul Gnass
(The views expressed are the personal views of the author.)

From the moment we wake up, we use inventions: the coffee maker that brews our coffee, the microwave, toaster, refrigerator, as well as so many conveniences and technologies that many of us take for granted: the cellphone, TV, computer, just to name a few. Inventions and innovations are an integral part of our lives and while some make our daily lives a little easier, others have revolutionized our way of living.

What's not so obvious is that these inventions and technologies were made possible due to the foresight of America's founding fathers just over 200 years ago. In this great experiment of democracy, they created a unique patent system, called "First-to-Invent", which granted patent rights to the true inventors of innovations and inventions for a limited time duration. This grant of a limited-time monopoly on inventions, called a patent, granted to the true first inventor, has acted as the greatest form of incentive that the world has ever seen.

Our Unique U.S. "First to Invent" Patent System
- America's Greatest Asset -

The unique U.S. patent system called "First-to-Invent", was built right into the U.S. Constitution by our brilliant founding fathers, and is the vital incentive and stimulus that has helped release the innate creativity and genius of individuals in America.

The U.S. Constitution, signed on September 17, 1787, states in Article 1, Section 8, Clause 8 that Congress shall have the power:

"to promote the progress of Science and Useful Arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

The U.S. "First-to-Invent" patent system has spawned the greatest entrepreneurs of all time. Everyone one knows about Thomas Alva Edison and many other inventors of the 19th and the 20th century. Today, Steve Jobs is in the news because he's a co-inventor on 313 of Apple's patents. See New York Times article dated August 25, 2011.

The U.S. "First-to-Invent" patent system is the underpinning which has made America the leader in invention and technology and has given us the greatest standard of living in the world. Innovation is the driving engine that all economies are built upon.

PATENT REFORM
FIRST-TO-INVENT vs. FIRST-TO-FILE

Patent reform. It's an issue that's made it to the very top of the political agenda. It's one of the key measures that's on President Obama's tip of the tongue, that's being touted as a solution to the creation of jobs in America.

Amongst other issues in the current bills, our unique 200+ year old U.S. "First-to-Invent" patent system is under attack. The U.S. system awards patents to the "first inventor" (whether or not he has filed a patent yet), which is on the verge of being changed to the foreign "First-to-File" system which awards patents to the first entity who files a patent.

Misleading claims are being made that the U.S. patent system is antiquated and out of step with the patent laws of the rest of the world. The patent system is said to need major "reform". On the contrary, the U.S. "First-to-Invent" patent system is the underpinning which has made America the leader in invention and technology and has given us the greatest standard of living in the world. Innovation is the driving engine that all economies are built upon.

Even though America's unique "First-to-Invent" patent system is a right that's granted to citizens in the U.S. Constitution, it's on the chopping block, ready to be made into minced meat.

The official title of the current patent reform bill is "The America Invents Act", a nice sounding name for what I believe is such a damaging piece of legislation. It is bill S-23 in the Senate, and bill H-1249 in the House.

It's been attempted quite a few times before in the mid 1960s. Then again in the late 1980s through 1990s. And several times during the 2000s. Each time, strong opposition from small and medium-sized businesses, independent inventors, legal and business associations, and concerned citizens made the difference and prevented the change.

This time around the patent reform bill which includes giving up our "First to Invent" patent system has made it through both houses of Congress and is extremely close to being passed and signed into law.

The Senate approved its version S-23 in March with a 95-5 vote.
See how all Senators voted on this bill at this link.
( www.opencongress.org/vote/2011/s/35 ).

The House approved their version of the patent reform bill HR-1249 in June with a 304-117 vote.
See how all House members voted on this bill at this link
( www.opencongress.org/vote/2011/h/491 ).

Due to a conflict over certain provisions, the bills have not been reconciled yet into one that both sides have agreed with. To pass it, however, the Senate is willing to let go of their differences and vote for the House version.

Congress is currently on recess for the summer, and when they get back next Tuesday, September 6, 2011, Senate Majority Leader Harry Reid (D-NV), is pushing to make sure that patent reform is one of the first bills that they rush and push through.

Senator Reid is planning to call for a special "couture vote" on September 6th. This requests all the Senators to vote for no further debate, no further amendments, no further possibility of opposition. After that, another final determining vote would be cast on the bill.

This small period of time between now and September 6th gives those who oppose giving up the unique U.S. "First-to-Invent" patent system, an opportunity to let their voice be heard and hopefully make enough of a last minute impact to stop or at least delay the legislation from becoming law.

URGENT ALERT 9-5-11

FLASH NOTICE: Even though S.23 and H.R. 1249 have been passed by each house, they haven't been reconciled nor voted into law yet. There's a very short window of time between now and Sept 6 for you to contact your representatives if you would like to protest the patent reform.

1. Ask your SENATORS to vote "NO" on the Motion for Couture on Tuesday. Couture would stop all further debate on the bills and schedule it for a final vote. Ask them to keep the debate OPEN.
Click here to quickly find your two state Senators.

2. Ask ALL your representatives (Senators and House Reps) to vote "NO" on H.R. 1249 which will change our patent system to the foreign first-to-file.
Click here to quickly find your representative.

Click here to see INSTANT ACTION PLAN
Sending an email, fax, or making a phone call, is the absolute quickest way to get the message across, but it needs to be done right now in order to make any difference. Don't send anything by postal mail since it gets screened and can be delayed as much as weeks. Feel free to distribute this to your friends, relatives, and business associates through social media like Twitter, Facebook, blogs, etc.

CONCLUSION

The "American Dream" is about the ability of any individual, no matter what his background, to lift himself up by his bootstraps and make something of his life through dedication and being able to capitalize on his ideas, talents and skills. This is America's sacred legacy.

The U.S. "First-to-Invent" patent system, which gives equal treatment to the individual spirit - whether the lone inventor, a small company or a large corporation, not tipping the scale one way or the other, is the motivating factor that has fueled invention and entrepreneurship in America. We all benefit from the U.S. unique patent system which has provided us with an unparalleled standard of life.

In fact, most big businesses in the U.S. have their roots in an independent inventor who used the U.S. "First-to-Invent" patent system to create the company's breakthrough technology.

Small and medium-sized businesses (under 500 employees) rely on the patent system to protect their innovations. What's not widely known is that these businesses represent over 99% of all businesses in the U.S. and employ more than half of the private sector employees.

At a time when large corporations are bailing on Americans by cutting jobs here by the thousands, sometimes tens of thousands at once, and going offshore, we need to encourage and support more entrepreneurial small and medium-sized businesses who keep America employed. I believe that keeping our proven 200+ year old U.S. "First-to-Invent" patent system in place is a major component of keeping this business segment healthy.

There are many other complex issues involved with the proposed "America Invents Act". But I think that the most vital issue that will affect America's economical future and American entrepreneurs, small/medium-sized businesses, and independent inventors is the proposed change of the U.S. patent system from the successful "First-to-Invent" system to the foreign "First-to-File" process.

I believe that the proposed foreign "First-to-File" system will discourage the small entity and independent inventors by skyrocketing the costs, and making the invention process accessible only to well-financed large corporations with in-house "patent factories".

RESOURCES - GET UP TO SPEED

Here are resources that you can go to immediately and read up on the "America Invents Act".
You can also google "America Invents Act" and "patent reform".

Here are a few videos at Inventors Voice that will help quickly give you an overview:

Calif. House Rep Dana Rohrabacker gives a Gripping Speech against Patent Reform
Video Briefing

Calif. Senator Diane Feinstein on the Importance of Keeping the U.S. First-to-Invent patent system
Video Briefing

Alec Schibanoff, American Innovators for Patent Reform on the Importance of Keeping the U.S. First-to-Invent patent system
Video Briefing

Randy Landreneau Explains How the America Invents Act will harm America
Video Briefing

Here is a guest post by David Boundy on Patentability: A Weblog for the Intellectual Property Law Community titled "Patent Reform" and A Call To Action To Defeat the America Invents Act.
www.patentabilityblog.com/2011/04/27/guest-post-david-boundy-on-patent-reform-and-a-call-to-action-to-defeat-the-america-invents-act/

Here is an information description by Phyllis Schlafly, the founder and president of Eagle Forum, a national organization of citizens who participate as volunteers in the public policymaking process.
www.eagleforum.org/column/2011/mar11/11-03-11.html

PRESS ARTICLES

Patent Reform: Post Grant Review Musings
By Gene Quinn, IP Watchdog

September 4, 2011
http://ipwatchdog.com/2011/09/04/patent-reform-post-grant-review-musings/id=18981/

A Labor Day Message for President Obama
By Henry R. Nothhaft, Wall Street Journal
September 3, 2011
http://online.wsj.com/article/SB10001424053111904716604576542820083918028.html

How the new bid to reform patent law will kill jobs
By Gary Lauder, CNN Money
September 2, 2011
http://finance.fortune.cnn.com/2011/09/02/how-the-new-bid-to-reform-patent-law-will-kill-jobs/

Column: Unique U.S. patent system in peril
By Gary Lauder, USA Today
September 2, 2011
http://www.usatoday.com/news/opinion/forum/story/2011-09-01/Column-Unique-US-patent-system-in-peril/50231894/1

Businesses Split on Merits of Overhauling Patent Process

By Adam Sege - McClatchy Newspapers

8/16/11

http://www.mcclatchydc.com/2011/08/16/120932/businesses-split-on-merits-of.html

The Spoilsmen: How Congress Corrupted Patent Reform
By Zach Carter HuffPost Politics
8/4/11 Updated 8/15/11
http://www.huffingtonpost.com/2011/08/04/patent-reform-congress_n_906278.html

Reid: Patent Reform Bill On Agenda After Recess
By Gautham Nages - The Hill's Hillicon Valley
8/2/11
http://thehill.com/blogs/hillicon-valley/technology/175099-patent-reform-bill-on-senate-agenda-after-reces

How Will Patent Reform Solve The USPTO Backlog?
By Courtenay Brinckerhoff, PharmaPatents Blog
7/5/11
http://www.pharmapatentsblog.com/patent-reform/how-will-patent-reform-solve-the-uspto-examination-backlog/

Patently Absurd or: How to Go From the World's Best Patent System to Worse-Than-Most in a Single Step
By Gary Lauder, HuffPost Business
3/7/11
http://www.huffingtonpost.com/gary-lauder/patently-absurd-or-how-to_b_832703.html

HERE ARE SOME KEY ISSUES
ABOUT THE PATENT REFORM LEGISLATION
TITLED "AMERICA INVENTS ACT":

CHANGING TO A FOREIGN FIRST-TO-FILE PATENT SYSTEM

What's so special about our current "First-to-Invent" patent system, and why will changing the system hurt the U.S.?

With the current U.S. patent laws, the inventor's idea is protected if a proper log or journal is kept proving the date of conception. This means that inventors can work on several ideas at once and patent them when they're prepared to market them. For instance, Thomas Edison worked on hundreds of ideas at a time, but only patented the ones that he was ready to market. This allows ideas to be fully developed by the time a patent is applied for.

With the foreign first-to-file system, inventors would be forced to immediately file for patents for each new idea. Patents would be filed on "half-baked" ideas due to the need to quickly file a patent first, and then subsequent patents would need to be filed on improvements to the patent as the design is developed and changed. So it would result is filing many patents on one invention. In addition to attorney's costs, inventors would also have to pay filing and maintenance fees for "each" invention for the 5 to 10 years average that it takes to market an invention.

According to a French inventor Phillip Bernes, where they have the first-to-file, he once said,

"With the first-to-file system, the inventor becomes enmeshed in a vicious circle: Before filing he cannot disclose his invention for marketing and manufacturing feasibility studies for fear that someone will steal his idea and file it with the Patent Office first. Without these feasibility studies, he doesn't know if the idea is indeed novel, can be manufactured at a reasonable cost, and is wanted in the marketplace. Without this knowledge, he risks wasting time, money and energy filing a patent application."

This would especially be harmful to inventors of significant inventions that require perhaps many years to develop and perfect before having to file a patent. Tomorrow's Edisons, Whitneys or Fords could be defeated even before they've had a chance to create their first breakthrough.

ELIMINATION OF ONE YEAR GRACE PERIOD

Currently, an inventor can publicly display his invention, and has up to one year before he has to file his patent application. It is known as a "grace period". With patent reform, this one year grace period would be eliminated.

INTERFERENCES

For decades, the elimination of "interferences" has been brought up as a key reason to change our "First-to-Invent" system. Interferences are when two inventors apply for the same invention, and a procedure for determination of who the first inventor is initiated by the patent office. However, the facts don't support these claims. In 2010, there were 219,614 utility patents granted and there were only 46 pending interference cases. One percent of all patents granted would be 2,196, so you can see that 46 interferences is significantly under 1%, it's .0002%.

According to David Boundy, Vice President and Assistant General Counsel for Intellectual Property at a well-known financial services firm in Boston MA, whose views are his own:

All net job creation for the last 30 years comes from startups, yet this bill takes away the key features of today’s patent law that allow startups to flourish in the U.S.

The bill's replacement provisions are similar to other countries' laws that squelch startups, with some added variations that are even more onerous:

The bill creates a major "disharmonization" on the single issue that affects the most patents, the "prior art" cutoff date for obviousness. The bill sets a cutoff date that is 18 months different for the U.S. than for any other country. The bill's cutoff date selectively disadvantages U.S. inventors relative to inventors in other countries. This is a recipe for export of America's R&D jobs.

The bill does not "harmonize" with the law of any other country. "Close but not identical" creates almost no benefit. For example, among European countries, where a treaty brings the countries' laws very close to each other, an attorney in one country is unable to give an opinion on a patent from another country, even if the words of two countries' patents are identical, because small differences in law are sufficient to defeat an attorney's ability to provide an opinion. Because the bill leaves relatively large discrepancies in place, the bill's cost savings are tiny, and will be dwarfed by transition costs. This bill does not "harmonize" enough to achieve any meaningful efficiency — it's a job killer.

The bill takes away the primary characteristics of today's law that fosters American startups, and replaces them with provisions that benefit large companies. Today's grace period (particularly today's § 102(a) prong, which is entirely removed by the bill) lets an inventor go out and talk to people, to find investors and partners, to get a business going, before draining funds to the patent lawyers. It lets an inventor get through the trial-and-error of R&D before draining funds into patents on inventions that turn out to be duds. In contrast, in Europe, an inventor is totally locked down, and cannot talk to anyone outside the company until all patent applications are filed. This is fine for big integrated companies, it's totally unworkable for entrepreneurs and small companies that need to partner with an investor or strategic partner. It takes away the legal options that enable disruptive innovation, and replaces them with lock-ins for market incumbents. Europe has almost no startups, and this is a key reason. This part of the bill is a job killer.

The language is ambiguous, and constitutionality is suspect. Years of litigation will lead to commercial uncertainty. The bill is a job killer for everyone except patent litigators.

U.S. PATENT OFFICE (USPTO) BACKLOG:

As of July 2011, the USPTO had a backlog of 669,286 patent applications waiting for examination by a patent examiner. There are 6,798 examiners. For years, the USPTO has had a huge backlog of patent applications and has been unable to hire enough patent examiners to process the quantity of patent applications that are submitted to the patent office. It currently takes an average of three years for a patent to be granted.

They say that patent reform is supposed to solve the problem of the patent application backlog.

But the real problem that causes the USPTO backlog is "fee diversion", not a lack of funds. The USPTO does not receive taxpayer support so it is funded only by the fees paid by patent applicants. However the fees are collected by Congress, then a "budget" is given to the USPTO, and the balance is used for other projects by Congress.

If the USPTO were allowed to keep all of the fees that it collects from the patent applicants, it would be able to hire enough patent examiners to handle the backlog.

The H.R. 1249 bill does nothing to address this key problem of fee diversion in the patent system. It will permit continued fee diversion, and the Super Committee makes it a near certainty.

S.23, the bill the Senate passed in March, gained majority support because of Sen. Coburn’s amendment to end this fee diversion. However H.R. 1249 is essentially identical to current law.

Ending fee diversion is the solution, not changing the U.S. "First-to-Invent" patent system to first-to-file.

PERMITTING DECEPTIVE INTENTION:

The new bill repeals all of the requirements that inventors and attorneys act "without deceptive intention" when dealing with the Patent Office. How can permitting "deceptive intention" be good for the system?

PENALIZE COMPLEX INVENTIONS WITH FEES:

The bill gives the USPTO the power to set fees to penalize complex inventions. Today's law sets fee levels that increase proportionally to the Patent Office's costs of examining applications. The Patent Office has long sought to limit the complexity of patent applications — the USPTO proposed a statutory change in 2003 to have fee levels rise far faster than examination complexity, and proposed regulations in 2006-09 that would have capped the complexity of the inventions that could be patented. The statute should not give the PTO discretion to discriminate against complex inventions. This is a job killer.

I agree with what Courtenay Brinckerhoff said in her blog post, "How Will Patent Reform Solve The USPTO Backlog?", that the new patent reform will create new problems and costs in having to train patent examiners with the foreign patent system, as well as challenges in implementing the changes.
(see article in Press Articles section):

"Many of the provisions of the patent reform bills will complicate proceedings at the USPTO, at least over the next several/many years it will take to understand what the provisions actually mean. If the Leahy-Smith America Invents act is passed, the USPTO will have the first stab at interpreting its many new substantive provisions when it promulgates rules to carry out the changes.

From a logistical perspective, the USPTO will have its work cut out for it if and when patent reform becomes a reality. The USPTO will have to study the law, promulgate regulations, train its personnel on the "first to invent" provisions and the derivation and post-grant review proceedings (among other changes), and educate the public. The USPTO will need every penny of its user fees in order to take on these new responsibilities while still maintaining its daily operations."

URGENT ALERT 9-5-11

I N V E N T O R S' V O I C E [tm]

8/30/11