New Small Business Coalition on Patent Legislation formed to oppose a"First to File" patent system

A new Small Business Coalition on Patent Legislation has been formed to represent the interests of small business in the patent "reform" debate. The Coalition believes the interests of small business have not been represented in the current debate. The Coalition includes the National Small Business Association and other organizations, more details are below.

The Coalition is very concerned about the lack of debate about a transition to a "First to File" patent system. A very detailed and conscientious examination of the adverse effects of a First to File system on Small Businesses is given in a letter from the new Small Business Coalition on Patent Legislation to the Small Business Administration (SBA).

A Press Release announcing the new Coalition and its members is at

http://www.marketwire.com/press-release/Small-Business-Coalition-on-Patent-Legislation-Established-Oppose-Proposals-That-Would-1091326.htm

The letter to the SBA is at

http://www.connect.org/news/pdf/Coalition-Letter-to-SBA-Dec-15-09.pdf

The nation’s largest engineering trade organization, the IEEE-USA, has also recently sent a letter to the US Senate on patent "reform" legislation that supports the Coalition’s position on "First to File," see

http://www.ieeeusa.org/policy/policy/documents/2010JanLetterSENATEpatentreform.pdf

More details of the Coalition’s letter to the SBA are below under my name.

Thanks,

Bob McGinnis, MD, MSEE, Registered US Patent Agent
Bozeman, MT
406-522-9355

More specifically the letter to the SBA makes the following important points explaining why a summary transition to a First to File system is a bad idea and why SBA should conscientiously study such a change before it is enacted:

* Departing from a decades-long, bipartisan foreign intellectual property policy position, Commerce Secretary Locke now supports unconditional "transitioning" of the U.S. patent system to a "First inventor To File" (FTF) system with a bill that would rewrite Section 102 of Title 35 in its entirety and has effects far beyond the small number of priority contests at the USPTO (termed "Interferences"). This rewrite redefines prior art and so greatly weakens the present 1-year grace period that there will be a resulting "race to the patent office." Many or most inventors will no longer be able to fully test, develop and commercialize their inventions before filing their patent application.

* No one has studied or evaluated the expected effects on U.S. patenting practices, the balance of costs and risks for small and large U.S. businesses, the adverse effects on patent quality, or the increased USPTO workload from such a change to a FTF system.

* Despite USPTO "explanations" to the contrary, this major change in the patent laws would have effects far beyond the miniscule number of annual Interferences in the USPTO. This major change will greatly harm small businesses by eliminating the possibility of even filing patent applications, let alone reaching the Interference stage. "Focusing on applications that reach the USPTO misses the point. The harmful effects of FTF for small startups and early-stage patenting firms will be in losing patent protection on inventions for which applications will not, or could not, reach the USPTO. Harm will arise due to the "race to the patent office" whether or not an interference occurs with a competing application. Harm will be inflicted when inventors race to the patent office with the wrong application, for the wrong invention, and for the wrong reasons, exhausting precious resources in the process."

* Proponents of FTF argue that it would provide the administrative convenience of improved certainty as to patents’ priority date. But FTF will unfairly shift costs and uncertainty risks from large firms to small patenting firms. Small firms simply do not have the funds to adjust to the realities of FTF that large firms have. FTF favors large incumbent firms and will make markets less competitive.

* A slide presentation attached to the letter illustrates the problems FTF will create for small business with an actual example of a five-year R&D and invention effort of one startup member of the Coalition. The example inventions described are those of Mova®, the contour reality capture technology. It was first used on The Curious Case of Benjamin Button (2008) for Brad Pitt’s age facial effects, resulting in an Academy Award®. Other slides in the slide presentation provide a detailed examination of further problems with FTF.

* The USPTO is an agency that examines patent applications; the USPTO has no expertise in the pre-filing stage, i.e., what happens before the patent applications it examines are filed. "The USPTO has very little understanding of the actual invention process, the startup pre-grant activities, the commercial decisions to patent, the entrepreneurial search and ‘mating’ with equity investors and the risks investors assume by developing new inventions." SBA’s expertise and history of studying such matters can help fill a significant void in understanding of FTF effects.

* Despite the USPTO’s advocacy of FTF, the USPTO apparently even lacks data and models within its field of expertise, for the inevitable increase in patent application flow, pendency, backlog and examination workload under FTF. Another careful slide presentation indicates that FTF will greatly increase the costs of obtaining a patent. These increased costs will disproportionately hurt small businesses.

* Secretary Locke is misguided in his suggestion that FTF will "simplify the patent system, reduce legal costs, [and] improve fairness" and will reduce the costs and complexity of global patent procurement, thus benefiting American innovators. The Coalition letter disputes this misguided suggestion and states that "Unfortunately, neither the Commerce Department nor its daughter agency, the USPTO, had substantiated any of these assertions with facts. Rather, ample evidence to the contrary is readily available. A connection between a U.S. transition to FTF and the achievement of the illusory goal of reducing the often-prohibitive costs of foreign patent procurement had never been shown to exist."

Bob McGinnis

Bozeman, MT

406-522-9355