February 11, 2008
Innovation nation | Inventors are concerned about the changes proposed in the Patent Reform Act of 2007
Ian Engelman has invented a shoe horn that allows the elderly to put on their shoes without bending over. He has designed an ankle brace that helps those with Multiple Sclerosis and neuropathy walk more easily. And he is also inventing a sneaker that he believes could reduce the aches suffered by workers who are on their feet all day. He's secretive about details, though, until a patent is in his hands.
But Engelman says all of his inventions, which are the backbone of his custom-designed orthotics business, could be threatened by a piece of pending federal legislation called the Patent Reform Act of 2007. The bill, which proposes the first significant changes to patent law in more than 50 years, was passed in the House of Representatives last September. It is scheduled for a U.S. Senate vote this month.
"This business wouldn't exist if it weren't for the [current] patent process, because I wouldn't have had the confidence of all that I risked to get this far," Engelman says, calculating that he has personally invested $200,000 into his Scarborough company, Insightful Products LLC. As Engelman talks, he punctuates his speech with small, hard chuckles. In his view, the proposed law has been tailored by high-tech companies to safeguard their profits. "What I see is a greedy grab by big corporations ˆ companies that have market share and don't need intellectual property and can outspend to protect any intellectual property that they have," he says.
While Engelman is just one voice among many who oppose the multi-faceted legislation, there are others who argue the bill will modernize the U.S. patent system to better suit the age of rapidly evolving computer technology. In the last 15 or so years, the volume of patent applications has exploded, especially in IT, inundating the U.S. Patent and Trademark Office. And as patents have multiplied, so too have lawsuits.
Proponents of the bill are represented by the Coalition for Patent Fairness, whose many members include Dell, Cisco Systems, Hewlett Packard, Intel and Microsoft. These firms for several years have been pushing for federal legislation that would reduce their number of court cases and, at times, multi-million dollar damage settlements over contested patents, often in technologies like software or business methods. (An example of a business method is one-click shopping, which has been patented by Amazon.com.)
While there are many changes being proposed to the patent law, the reforms garnering scrutiny include a change from a first-to-invent system to a first-to-file system, which would award the patent to whomever has first sent in a patent application to the U.S. Patent and Trademark Office. Another change would establish a new post-grant review window during which an issued patent could be challenged for its originality or quality. The law also seeks to change the way damages are awarded if a company is found to have infringed on another's invention. (For more on this, see "Patent pending," page 20.)
The patent reform provisions appear on first blush to be reasonable solutions to enforce a fair law. But they could produce results that are worrying groups ranging from the National Association of Manufacturers to the American Intellectual Property Law Association. And the side effect most troublesome to the handful of people in Maine who are watching the legislation move through Congress is the possible hobbling of the small inventor and business owner.
The Maine Patent Program, a publically-funded office that helps inventors prepare applications for the U.S. patent office, argues the system as it works now levels the playing field for small and large inventors. "My inventors benefit from the [current] law," Director Leonard Agneta says. If the bill were to pass, he predicts, "There will be a patent system, but they will be harder to get, more expensive to get and less enforceable."
Targeting "trolls"
The fight over the Patent Reform Act has a notable line of demarcation. On one side are mainly high-tech software companies and financial firms, as well as a few media companies. On the other are mostly pharmaceutical and biotech companies, manufacturers and small inventors. The different natures of these businesses, and their different reliance on patents, is causing much of the conflict.
Jon Yarowsky, chief policy counsel for the Coalition for Patent Fairness, says the bill is designed to reduce junk patents, patent "trolls" ˆ an industry term for speculators who snatch up patents but do not produce or commercialize the patented innovations ˆ and resulting litigation. "There is a constant stream of applicants [to the U.S. patent office], and some reviews have yielded poor-quality patents ˆ patents that if reviewed further would raise questions whether something is new or novel in that patent," Yarowsky says. "You are talking about unbelievably complicated software and other things."
But on the other side of the Patent Reform Act are pharmaceutical and biotech companies, whose innovations, like a new molecule for a drug, often take years to develop and require the confidence of high-risk investors to stick through the long R&D phase. If the current bill were to pass, these companies say patents would become easier to infringe and more easily undermined by competitors, possibly reducing the return on investment.
Not only does the pharmaceutical industry rely on investors' faith, but small inventors, too, attract capital by promising that they can bring a profitable product to market.
Yarowsky insists the bill does not pander to special interests. "That has been the larger goal, to make a generic bill to apply to every industry, and have the rules, the bright clear rules, that would apply to every company," he says.
He believes some of the opposition is driven by fear. "People opposed to the bill are worried about any changes, even if they ultimately are for the better in terms of clarifying legal documents or streamlining the system to make it less costly," he says. "Their understanding about how ˆ the system works will be undermined, and they fear that."
Despite the bill's importance, many companies in Maine are not aware of the Patent Reform Act. Trade groups like the National Association of Manufacturers are not involving members in the issue, even though it is opposing the current bill. NAM doesn't want to offend mebers who support the bill, says Marc-Anthony Signorino, NAM's director or technology policy.
But the bill is on the mind of Shalom Wertsberger, an inventor of an anti-static light switch and a patent agent who owns a South Portland business called Saltamar Innovations. He has been closely following the bill. "It is insane, plainly insane," he says.
Wertsberger believes the patent law will hurt him both as an inventor and as a patent agent. He now charges his clients between $5,000 and $10,000 to file for a patent. But changes proposed in the bill affecting the patent application process could increase his workload. He says he would have to at least double or triple his fees, making his service unaffordable to most inventors. "It will very likely force me to close," he says.
A country divided
Both sides on this issue are resorting to dramatic language to describe the consequences if the patent bill passes or fails. Yarowsky, speaking for the Coalition for Patent Fairness, argues, "The patent system is an integral part of whether America stays competitive. Our economy is consumer driven with new products and services, but we're going to be waylaid if we get pulled behind by litigation."
Rep. Tom Allen on Sept. 7 voted for the bill, which passed 220 to 175 in the House, saying the reforms will streamline challenges to questionable patents. "He believes that these changes will encourage technological innovation and economic opportunities," according to his spokesman, Mark Sullivan.
A majority of Democrats favored the bipartisan legislation, which is sponsored by Sen. Patrick Leahy (D-Vermont) and Sen. Orrin Hatch (R-Utah).
But Rep. Michael Michaud, a Democrat representing Maine's Second Congressional District, rejected the bill, arguing it was fundamentally flawed. He wrote that the bill is "a severe threat to American innovation, American jobs and American competitiveness."
Although the two sides have contrary views, there is some consensus that the patent system requires adjustment. But how much or how little is arguable.
Agneta's position is, if it's not broken, don't fix it. "What we have [in the United States] has worked better than any other place for a long time," he says.
While the American Intellectual Property Law Association supports some patent reforms, Mike Kirk, executive director of the association, believes the bill would "diminish the incentives of the patent system for companies to engage in research and development."
Senators will likely vote on the bill this month, according to Leahy's office. Sen. Susan Collins says she has met with people on both sides and is hoping for a compromise. She writes in an e-mail, "I believe that our current patent system is in need of reform, but we must find a path forward that balances the different but legitimate needs of traditional manufacturers and high-tech companies."
But Engelman says all of his inventions, which are the backbone of his custom-designed orthotics business, could be threatened by a piece of pending federal legislation called the Patent Reform Act of 2007. The bill, which proposes the first significant changes to patent law in more than 50 years, was passed in the House of Representatives last September. It is scheduled for a U.S. Senate vote this month.
"This business wouldn't exist if it weren't for the [current] patent process, because I wouldn't have had the confidence of all that I risked to get this far," Engelman says, calculating that he has personally invested $200,000 into his Scarborough company, Insightful Products LLC. As Engelman talks, he punctuates his speech with small, hard chuckles. In his view, the proposed law has been tailored by high-tech companies to safeguard their profits. "What I see is a greedy grab by big corporations ˆ companies that have market share and don't need intellectual property and can outspend to protect any intellectual property that they have," he says.
While Engelman is just one voice among many who oppose the multi-faceted legislation, there are others who argue the bill will modernize the U.S. patent system to better suit the age of rapidly evolving computer technology. In the last 15 or so years, the volume of patent applications has exploded, especially in IT, inundating the U.S. Patent and Trademark Office. And as patents have multiplied, so too have lawsuits.
Proponents of the bill are represented by the Coalition for Patent Fairness, whose many members include Dell, Cisco Systems, Hewlett Packard, Intel and Microsoft. These firms for several years have been pushing for federal legislation that would reduce their number of court cases and, at times, multi-million dollar damage settlements over contested patents, often in technologies like software or business methods. (An example of a business method is one-click shopping, which has been patented by Amazon.com.)
While there are many changes being proposed to the patent law, the reforms garnering scrutiny include a change from a first-to-invent system to a first-to-file system, which would award the patent to whomever has first sent in a patent application to the U.S. Patent and Trademark Office. Another change would establish a new post-grant review window during which an issued patent could be challenged for its originality or quality. The law also seeks to change the way damages are awarded if a company is found to have infringed on another's invention. (For more on this, see "Patent pending," page 20.)
The patent reform provisions appear on first blush to be reasonable solutions to enforce a fair law. But they could produce results that are worrying groups ranging from the National Association of Manufacturers to the American Intellectual Property Law Association. And the side effect most troublesome to the handful of people in Maine who are watching the legislation move through Congress is the possible hobbling of the small inventor and business owner.
The Maine Patent Program, a publically-funded office that helps inventors prepare applications for the U.S. patent office, argues the system as it works now levels the playing field for small and large inventors. "My inventors benefit from the [current] law," Director Leonard Agneta says. If the bill were to pass, he predicts, "There will be a patent system, but they will be harder to get, more expensive to get and less enforceable."
Targeting "trolls"
The fight over the Patent Reform Act has a notable line of demarcation. On one side are mainly high-tech software companies and financial firms, as well as a few media companies. On the other are mostly pharmaceutical and biotech companies, manufacturers and small inventors. The different natures of these businesses, and their different reliance on patents, is causing much of the conflict.
Jon Yarowsky, chief policy counsel for the Coalition for Patent Fairness, says the bill is designed to reduce junk patents, patent "trolls" ˆ an industry term for speculators who snatch up patents but do not produce or commercialize the patented innovations ˆ and resulting litigation. "There is a constant stream of applicants [to the U.S. patent office], and some reviews have yielded poor-quality patents ˆ patents that if reviewed further would raise questions whether something is new or novel in that patent," Yarowsky says. "You are talking about unbelievably complicated software and other things."
But on the other side of the Patent Reform Act are pharmaceutical and biotech companies, whose innovations, like a new molecule for a drug, often take years to develop and require the confidence of high-risk investors to stick through the long R&D phase. If the current bill were to pass, these companies say patents would become easier to infringe and more easily undermined by competitors, possibly reducing the return on investment.
Not only does the pharmaceutical industry rely on investors' faith, but small inventors, too, attract capital by promising that they can bring a profitable product to market.
Yarowsky insists the bill does not pander to special interests. "That has been the larger goal, to make a generic bill to apply to every industry, and have the rules, the bright clear rules, that would apply to every company," he says.
He believes some of the opposition is driven by fear. "People opposed to the bill are worried about any changes, even if they ultimately are for the better in terms of clarifying legal documents or streamlining the system to make it less costly," he says. "Their understanding about how ˆ the system works will be undermined, and they fear that."
Despite the bill's importance, many companies in Maine are not aware of the Patent Reform Act. Trade groups like the National Association of Manufacturers are not involving members in the issue, even though it is opposing the current bill. NAM doesn't want to offend mebers who support the bill, says Marc-Anthony Signorino, NAM's director or technology policy.
But the bill is on the mind of Shalom Wertsberger, an inventor of an anti-static light switch and a patent agent who owns a South Portland business called Saltamar Innovations. He has been closely following the bill. "It is insane, plainly insane," he says.
Wertsberger believes the patent law will hurt him both as an inventor and as a patent agent. He now charges his clients between $5,000 and $10,000 to file for a patent. But changes proposed in the bill affecting the patent application process could increase his workload. He says he would have to at least double or triple his fees, making his service unaffordable to most inventors. "It will very likely force me to close," he says.
A country divided
Both sides on this issue are resorting to dramatic language to describe the consequences if the patent bill passes or fails. Yarowsky, speaking for the Coalition for Patent Fairness, argues, "The patent system is an integral part of whether America stays competitive. Our economy is consumer driven with new products and services, but we're going to be waylaid if we get pulled behind by litigation."
Rep. Tom Allen on Sept. 7 voted for the bill, which passed 220 to 175 in the House, saying the reforms will streamline challenges to questionable patents. "He believes that these changes will encourage technological innovation and economic opportunities," according to his spokesman, Mark Sullivan.
A majority of Democrats favored the bipartisan legislation, which is sponsored by Sen. Patrick Leahy (D-Vermont) and Sen. Orrin Hatch (R-Utah).
But Rep. Michael Michaud, a Democrat representing Maine's Second Congressional District, rejected the bill, arguing it was fundamentally flawed. He wrote that the bill is "a severe threat to American innovation, American jobs and American competitiveness."
Although the two sides have contrary views, there is some consensus that the patent system requires adjustment. But how much or how little is arguable.
Agneta's position is, if it's not broken, don't fix it. "What we have [in the United States] has worked better than any other place for a long time," he says.
While the American Intellectual Property Law Association supports some patent reforms, Mike Kirk, executive director of the association, believes the bill would "diminish the incentives of the patent system for companies to engage in research and development."
Senators will likely vote on the bill this month, according to Leahy's office. Sen. Susan Collins says she has met with people on both sides and is hoping for a compromise. She writes in an e-mail, "I believe that our current patent system is in need of reform, but we must find a path forward that balances the different but legitimate needs of traditional manufacturers and high-tech companies."
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