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    GOP-Backed Patent Reform Ignores the Constitution, Costs $1 Billion +, and Taxes Innovation

    GOP-Backed Patent Reform Ignores the Constitution, Costs $1 Billion +, and Taxes Innovation

    You probably haven’t heard about yesterday’s passage of the “America Invents Act” in the House, but as the bill goes into reconciliation after gaining the support of all but 67 Republican Representatives and three Republican Senators (along with two Democratic Senators and 50 Democratic Representatives), it’s important that you know what it means for the future of American innovation.

    The Copyright Clause ( Article I, Section 8, Clause 8 ) of the Constitution states that Congress has 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.”

    But the patent reform legislation that passed the House yesterday throws this out the window, turning the procedure one follows to get a patent on their idea into a European-style “first-to-file” system.  The bill also gives the patent office the ability to raise fees and hands over the legislative authority to appropriate that revenue to Executive Branch bureaucrats.

    Essentially, small business owners and individual inventors without the resources or ability to navigate a more difficult patent procedure are going to lose their ideas to larger, more connected corporations or, even worse, not pursue their idea at all.

    Congressman Dana Rohrabacher (R-CA) spoke Wednesday on the House floor a few times on this issue and laid out a good last minute argument against the changes, while also pointing out the $1 billion in new spending the bill contains that is not being made up for with other cuts, as his colleagues had promised they would do under their “paygo” rules.

    In one of the clips at the link above, Rohrabacher cites the Hoover Institute, which, in addition to the Constitutional conflicts, lays out the practical argument against the changes:

    A final big problem with the proposed bill’s shift to first to file is that, not surprisingly, a first to file approach creates a serious incentive to rush to file. That’s a problem because rushing a filing causes the technological disclosure in that filing to be anemic for all but those huge companies with teams of lawyers on call just waiting to make rich filings. Not only is this just another provision of the bill that favors large players at the expense of smaller ones, it also is likely to have the practical effect of stripping the U.S. patent system of those patents that might otherwise have been of a broad scope . . . The rush to file quickly under a first to file regime significantly decreases the chance that a broad patent will issue. That’s one big reason why the U.S. has long been unique in the world for having a decent number of significantly broad patents. These pioneering patents were key to the successful commercialization of many of the world’s most important technological advances from television, to the gasoline distillation process, to the catalysis of modern plastics.

    Why a bill that so clearly stifles innovation, creates additional taxes on the drivers of the American economy, and increases spending by creating a billion dollars worth of more bureaucracy isn’t attracting more grassroots opposition from groups like the Tea Party is beyond me.  But the good news is that, as the bill still has to go through the reconciliation process, there is still time to stop it.

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    WNC_Conservative | June 25, 2011 at 8:25 am

    I would have to study HR 1249, “America Invents Act,” before I jump to conclusions about whether it is good or bad for inventors, and our system of awarding patents.

    Text of the bill in PDF format is at:

    http://www.gpo.gov/fdsys/pkg/BILLS-112hr1249eh/pdf/BILLS-112hr1249eh.pdf

    And the CBO Cost Estimate, which contains their brief interpretation of the bill is here:

    http://www.cbo.gov/ftpdocs/122xx/doc12217/hr1249.pdf

    The Heritage Foundation does not agree with the changes in the bill giving the Patent Office authority to set fees and keep the money. (See the link in the original post.)


     
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    paulieva | June 25, 2011 at 11:08 am

    I think that most of the crtique in this article is unwarranted. There certainly are arguments for and against a first to invent versus a first to file system, but I believe that this bill will be very beneficial to the PTO and the IP community as well.

    I fail to see how this bill harms small business and independent inventors. All inventors must timely file their inventions and may file provisional applications which gives them filing priority up to a year while allowing them to get their applications together and suitable for examination.

    Congressman Rohrabacher assertion that this bill creates 1 billion in new spending is patently (much pun) false. The PTO is a completely fee funded agency (not getting a dime of taxpayer money), and for quite a number of years, Congress has been siphoning funds from the office to fund other areas of the government. In the least, that money should have been returned to inventors. However, the PTO is severely backlogged, understaffed and simply unable to serve the IP community with its current funding. Fees are structured based on what the PTO needs to operate and not what the PTO needs plus what congress wants. In short, congress has done a very poor job allocating funds for the PTO and has in essence been short changing the inventors who pay filing, issue and maintenance fees. This bill fixes that.

    […] GOP-Backed Patent Reform Ignores the Constitution, Costs $1 Billion +, and Taxes Innovation […]

    I am apparently late to this party, but Chuck is right – the bill is not necessarily bad.

    First, the Patent Office raises money through filing fees (and other fees). So the users of the service pay for the service – a novel idea in government. For many, many years, there has a backlog of patent applications such that it take years for an application to become an issued patent. The PTO could do a better job of processing the applications by hiring more examiners, but Congress takes 20%+ of the PTO’s revenues from filing fees. If the PTO can keep fees and adjust fees based on costs, that is really what we all should want from a government organization. If anything, it keeps the bozos in Congress from using patent filing fees to fund their spend-a-thon.

    Second, First-to-File has pros and cons. One pro is that it will help mitigate patent trolls, who are assuredly anticompetitive. It will also make the system similar to other patent systems, which will make it easier for companies and inventors to secure multinational protection of their discoveries.

    I recommend that you look into things a bit more before you start spouting crap. Also, while I appreciate that you are trying to look all tea party-y by citing to the Constitution, your cite has no relation to the remainder of your post, and makes you look ignorant of the law.

    Oh, you are the new guy. I didn’t realize that. Let me help:

    http://www.patentlyo.com/patent/2011/06/the-big-government-patent-bill-guest-essay-by-john-duffy.html

    The Bill apparently provides for a Detroit satellite office. Good stuff. It is worse than I thought.


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