Friday, September 23, 2011

The America Invents Act Isn't So Great for Inventors

Since I'm a patent attorney, I guess I'm obligated to write about the massive change that occurred in our patent system last Friday, when President Obama signed into law the America Invents Act.  Maybe you heard about it; maybe you didn't.  To be honest, I'm not sure how I feel about it yet, and only time will tell how it truly affects inventors and patents going forward.  All I know is that the folks in Congress don't seem to know anything about how the patent system works or what it is about.  They seem to believe that if the big companies are in favor of something that it must be the right way to go.  He who has the most money can speak the loudest, right?

My initial thought is that the America Invents Act doesn't do a whole lot for the guy inventing something out of his garage.  The guy who has little money to pay patent prosecution attorneys to help him get a patent issued, or to pay patent litigation attorneys, assuming he was able to pay the $5,000-15,000 (or higher) to get a patent issued, and assuming someone else is using his invention. 

This push for patent reform arose somewhat out of patent infringement lawsuits by so-called "patent trolls" and has been a long time debated in the patent community.  Non-practicing entity is the nicer word for "patent troll."  These are patent owners (many times the inventor) who don't practice the invention, but file lawsuits against companies they assert are practicing the invention.  The Constitution doesn't require that the patent owner actually use or practice the invention.  Patent rights create the right to exclude others from using the invention, so whether or not the patent owner is doing anything with the patent, they have the right to sue others for using the invention. 

Big companies have been overwhelmed with lawsuits from NPEs in recent years, and got pissed off about it.  To them (even though many of them also sue on patents they aren't practicing), it wasn't right that they should be sued for practicing an invention that the patent owner wasn't even practicing.  The whole NPE thing has become a business.  Right or wrong, I don't know.  But it is what it is, and as I said, the owner isn't required to use the patent, so all of this is above board. 

There are also individual inventors who get caught up in this mix.  What if you come up with some great invention relating to cell phones or televisions, and you can't get any of the major manufacturers of those projects to license your invention?  (Big companies have a huge upper hand over the little guy who approaches them with an idea.  They know most of them cannot afford the cost of litigation.)  Maybe you scrape together the fees for a good patent attorney to help you get your patent issued, but then what do you do?  Do you start a new cell phone or television company?  Where do you get the money for that?  There are a lot of barriers to entry for the individual inventor, specifically in some of the high technology fields, so yes, the inventor sometimes teams up with investors to enforce his patent because litigation against a big company is far from cheap.  (Could you afford around $2 million in legal and expert fees to enforce your patent?  Is it any surprise that an individual inventor might need a little financial backing to go up against a big company who can afford the legal fees?)  I don't see a problem with that. The big companies have a huge problem with that -- hence, the America Invents Act.  Surprisingly enough, though, there are some smart people out there who do come up with good inventions that are later practiced by large companies, even though they don't want to admit it.
 
To be fair, it could have been much worse.  Much of the goal of this legislation is to hinder NPEs from getting and enforcing their patents, at least in my opinion.  The biggest change -- and in my opinion an unconstitutional change -- is fundamentally changing our patent system from a first to invent system to a first to file system.  Patents are all about a "race to the patent office."  Now, the first person to file wins.  It used to be that an inventor could "swear back" behind a filing date on a patent, to show that they came up with the invention first.  No more.  First to file wins the day.  While this brings us in line with most of the rest of the world, who have first to file systems, it is not what the founders intended, and indeed, the Constitution talks about "inventions" not "filings."  Who has the resources or even realization to file a patent application quickly?  Big corporations, not a guy inventing stuff out of his garage.

Another big provision affecting individual inventors who want to enforce their patents deals with joinder.  Many times, patent owners will sue a number of entities who are infringing the same patent all in the same lawsuit.  (For example, if you have a patent relating to cell phones, you sue Motorola, Samsung, HTC, Nokia, etc. all in the same lawsuit.)  That is no longer allowed.  The patent owner has to file against each defendant separately, which means paying the $350 filing fee for each defendant.  It may not seem like much, but it can add up when a number of companies are infringing a patent.  This may also cause problems when it comes to construing the claims of the patent (in English, determining what the words of the patent mean, which always turns into a catfight) when there are multiple lawsuits and judges across the country all doing this at the same time, and ultimately different defendants pushing different claim constructions. 

From the patent owner perspective, ultimately you deal with each defendant separately with regards to discovery and infringement, but this requirements adds a lot of administrative details that have to now be separately dealt with for each lawsuit -- i.e. setting the case schedule and agreeing to a protective order.  Ultimately, I think this provision may provide results that the big companies weren't intending, in that it will end up costing them more money to litigate.  For example, many times defendants will team up and hire a technical expert to deal with invalidity issues, or to file a summary judgment motion on invalidity or inequitable conduct defenses.  Many defendants "free ride" the more ambitious defendants.  That will no longer be possible.  They will also lose their "joint defense privilege" should they decide to talk about things with defendants in other lawsuits.  I'll say this:  in seven years, I've never had a defendant request to be separated from the others for trial or any other reason in litigation, and to be fair, if they had, they probably would have won because under the rules as they were, the joinder probably wasn't kosher.  But no one ever complained until recently.  So now we have a specific rule eliminating joinder. 

There are other new provisions dealing with the right to basically challenge a patent within nine months of it being issued (essentially telling the Patent Office that they are idiots right out of the gate), and other things that will cost an individual inventor more money to get their patent issued, that I don't feel like getting into right now.

But overall....I have a sinking feeling in my stomach that this is not going to bode well for individual inventors who aren't associated with a big company.  It makes me sad.  This is not what our country is about.

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