Patent reform effort raises questions

The Patent Reform Act of 2007, which has already passed the House of Representatives and is now being considered by the full Senate after receiving a favorable report from the Senate Judiciary Committee. It contains a number of provisions that will make it more costly to obtain and defend patents.

One provision, in particular, will dramatically affect the individual inventor, small firms and universities that have been the foundation of New Hampshire innovation. This provision will shift the current patent priority rule from “first-to-invent” to “first-inventor-to-file.”

The priority rule addresses the situation in which two inventors independently develop the same invention at about the same time. Currently, a patent will be awarded to the applicant who was the first inventor, even if the first inventor is not the first person to file a patent application. The act will change the priority rule to award a patent to the first inventor to file an application, whether or not the applicant is the first inventor.

The arguments advanced to support this change include the fact that every patent issuing nation except the United States uses a first-inventor-to-file rule. However, the United States has maintained its solo position for many years without any great problems. Supporters of the rule also argue that it provides a definite, easily determinable date to establish priority. This argument is made primarily by large entities who find themselves accused of infringement by small entities.

Opponents of the change raise concerns that a first-inventor-to-file rule will encourage premature, and possibly inaccurate, technology disclosures in a race to the Patent Office. Opponents also note that such a race is particularly burdensome on individual inventors, small firms and universities.

A number of states have concluded that individuals and small firms are, in general, a significant source of innovation. These small entities also rely more heavily on the patent system than larger companies. Larger companies have alternative means to develop and protect their technology. These include trade secrets, ready access to markets, trademarks, speed of development and goodwill. Small entities do not have the ability to use these means.

Moreover, these entities, which have been the traditional sources of the innovation that has driven the New Hampshire economy, have fewer resources than their larger competitors. With fewer resources, these entities are handicapped in quickly preparing and filing patent applications.

These entities have both limited budgets and limited administrative resources, making it more difficult for them quickly to file patent applications. Supporters of the act respond that the availability of provisional patent applications allows these entities to secure priority rights without significant expenditures. However, at most, the availability of provisional patent applications mitigates, but does not remove, this difficulty.

In addition, the biggest hardship for individual inventors, small firms and universities is their lack, in general, of knowledge and experience concerning the patenting process. These entities’ views of the patenting process are based on movie scenes of single inventors sitting alone in their labs late at night writing in their notebooks the dates on which they had the inspiration that made the invention possible. They argue, and will continue to argue, that the first-to-invent rule is the operative rule based on a meaningful event. The first-inventor-to-file rule is based on a bureaucratic, otherwise meaningless, event. nhbr

Paul Remus is a shareholder in the law firm of Devine Millimet. He can be contacted at 603-695-8506.