Delivering innovation and jobs through patent reform

The result? The backlog of patents is decreasing for the first time in years, even as new applications have actually increased 7 percent.

But if the USPTO is to speed the movement of job-creating ideas to the marketplace, it will take more than internal, administrative reforms alone. That’s where the patent reform legislation comes in.

Here’s what it promises to do: First, it allows the USPTO to set its own fees – a major part of ensuring that the agency has reliable funding.  This will enable the USPTO to hire more examiners and bring its IT system into the 21st century so it can process applications more quickly and produce better patents that are less likely to be subject to a court challenge.

Second, it decreases the likelihood of expensive litigation because it creates a less costly, in-house administrative alternative to review patent validity claims.

Also, the pending legislation would add certainty to court damages awards, helping to avoid excessive awards in minor infringement cases, a phenomenon that essentially serves as a tax on innovation and an impediment to business development. 

Finally, patent reform adopts the “first-inventor-to-file” standard as opposed to the current “first-to-invent” standard.  First inventor to file is used by the rest of the world, and would be good for U.S. businesses, providing a more transparent and cost-effective process that puts them on a level playing field with their competitors around the world.

There is some concern among some small, independent inventors, who feel like the current system is better for them, but it’s our strong opinion that the opposite is true.

 Here’s why: The cost of proving that one was first to invent is prohibitive and requires detailed and complex documentation of the invention process. In cases where there’s a dispute about who the actual inventor is, it typically costs at least $400,000 in legal fees, and even more if the case is appealed.  By comparison, establishing a filing date through a provisional application and establishing priority of invention costs just $110.  The 125,000 provisional applications currently filed each year prove that early filing dates protect the rights of small inventors.

 In the past seven years, of almost 3 million applications filed, only 25 patents were granted to small entities that were the second inventor to file but were able to prove they were first to invent.  Of those 25, only one patent was granted to an individual inventor who was the second to file.  Thus, in the last seven years, only one independent inventor in nearly 3 million patent filings would have gotten a different outcome under the “first-inventor-to-file” system.

 Many proposals in this legislation have been debated for a decade, but we now have core provisions with broad support that will undoubtedly add more certainty around the validity of patents; enable greater work sharing between the USPTO and other countries; and help the agency continue with operational changes needed to accelerate innovation, support entrepreneurship and business development, and drive job creation and economic prosperity.

And thanks to the leadership of Senate and House Judiciary Committee Chairmen, Patrick Leahy and Lamar Smith, getting this bipartisan jobs legislation passed is a top priority.

There’s a clear case for it. As President Obama said in his State of the Union address, “The first step in winning the future is encouraging American innovation.”

Reforming our patent system is a critical part of that first step.

Speeding the transformation of an idea into a market-making product will drive the jobs and industries of the future and strengthen America’s economic competitiveness.