More Stupid Patent Reform Attempts Brought to You by POTUS

I don’t even know where to start on this one but here goes.

Yesterday President Obama announced that his Administration is going to take on patent trolls.  From the White House press release on the matter:

“The White House issued five executive actions and seven legislative recommendations designed to protect innovators from frivolous litigation and ensure the highest-quality patents in our system. Additionally, the National Economic Council and the Council of Economic Advisers released a report, Patent Assertion and U.S. Innovation, detailing the challenges posed and necessity for bold legislative action.” (emphasis added.)

How exactly does the Executive Branch intend to solve these perceived problems?

1.  By requiring updated patent ownership information at the USPTO (so you know who’s suing you);

2.  By reeducating patent examiners to think like the Administration thinks they should about functional claims;

3.  By creating a “You will know that you have been sued by a Patent Troll when…” page;

4.  By discussing and studying the problem with Academics; and

5.  By auditing the ITC and Customs.

So if I can extrapolate from this, here’s how the Obama Administration sees the issue.  Patent examiners don’t know how to examine “functional claims”.  This leads to bad patents that somehow only end up in the hands of patent trolls, and you’ll know you’re dealing with a bad patent when a troll is the assignee.  (I’m really not sure why the President dragged in the ITC and Customs.)

Really?  This is the best the President’s men can do?

Just when I thought the discussion couldn’t get any worse, I’m floored by the incompetence, or perhaps it’s willful blindness, that our President and his administration is showing when it comes to patents, patent litigation, and “trolls”.

Seriously, people, we are living in the story of Chicken Little, and the Obama Administration is playing the starring role.

chicken littleCan’t you just hear the refrain now…

“The sky is falling!  The sky is falling!”

And the President is here to save us.

With all due respect, the President is so far off the mark here.   It’s laughable.

I know there are technology executives from Silicon Valley whispering in his ear about the crimes that the evil patent trolls have committed against them.  And they’ll be handing him tons of cash over dinner soon.  But couldn’t the Administration just try to gain some perspective.

And I know perspective is hard to find in Washington, D.C. right now.  But try.

Can’t he smell the hypocrisy?

These technology companies (his donors) want to stop “frivolous” lawsuits while at the same time be able to sue whomever they want with whatever patent they have.

Because of course, their patents are valid and well examined.  It’s just the ones enforced by “trolls” that aren’t.

In fact, I think the President would be better served by just decreeing that if you’re a non-practicing entity, there is a presumption of invalidity.  (I know. I know.  He can’t but you know he’d like to.)  Because based on the recommendations of the Administration, it’s obvious that trolls couldn’t own an enforceable patent.

Does there need to be a discussion about abusive patent litigation? Yes.  But when the President is only talking to (and receiving big fat donation checks from) very bias actors who play a central role in the problem, the discussion isn’t really worth much.

As Gene Quinn of IPwatchdog.com said in his blog post of yesterday:

“Yes, tech giants get sued on terrible patents that are clearly invalid and which they don’t infringe anyway, but those same tech giants settled bad claims on crappy patents while at the same time they litigate to the death good, valid patents on important technologies that they do infringe. There are few “Snow White” players in the patent litigation space, and the constant vilification of patent trolls and claims that the patent system is broken are too broad to the point that they are misleading.”

Of course so much of the President’s remarks are simply rhetoric.  He can’t change the nature of patent litigation.  He has no power to change the patent laws.  We still have a Constitution and the Doctrine of Separation of Powers is still alive and well, so only Congress can do that.

And for that I am kind of grateful.  (But they did pass the AIA so I’m not totally confident that Congress won’t screw things up.)

Beware the Ides of March

Today I come to praise the United States First-to-Invent Patent System, and to bury it.

CaeserI was a fan of your fairness to solo and small inventors, allowing them the opportunity to compete with big business on a small budget by giving them the opportunity to prove they were the first to invent, even if it took them longer to perfect the invention and file a patent.  I loved how you made the system about the invention not the patent.

To all the inventors out there, today is the last day to file your patent applications under the First-to-Invent rules.  I know patent attorneys across the nation are working hard to ensure their clients get the benefit of the old rules, by filing thousands of patent applications by Midnight tonight.

But beware.  One amendment to the claims after tomorrow means your patent could be governed by the new rules.

Tomorrow our patent system will turn its back on small business and solo inventors in favor of those who have the money to file early, file often.  Embracing the First-to-File model means that the United States follows the herd in the name of “predictability” and “certainty of outcome” (not really, but it sounds good in soundbites), while at the same time creating uncertainty and unpredictability in our courts for at least the next 20 years.

Tomorrow we declare in unison with the rest of the world that the only thing that matters is the patent.  As if inventing somehow is the equivalent of filing a patent application.  This is such an un-American notion to me, but one I will have to live with.

At a time when we should be doing everything to help our future business leaders, we are ensuring that small startups and entrepreneurs will have to choose between designing great products and filing patents, just to win that “race to the Patent Office”.

I guess I have to accept that Congress in its infinite wisdom knows what it’s doing to help our economy recover, just like when it decided that the Sequester was the answer to our Federal budget woes.  You multi-millionaires who sit in seats of power must truly understand what this nation needs.

Maybe you are hoping to siphon off all of those extra filing fees to shore up social security.  Certainly all of the extra money spent on patent attorneys will help our sagging legal industry.

But alas, I know this is not true.  I must face reality and live with your stupid, dumb-ass attempts to fix a patent system that isn’t broken because solving the real issues that we face as a nation is just too damn difficult for you.

Our unique Patent System comes to an end to day.  A grand experiment that has helped build a great nation.

Rest in peace First-to-Invent.  American business is better today because of you.

7 Things American Companies Need to Know About the America Invents Act

patent-reformIt’s amazing how fast 18 months flies by.  It seems like just yesterday I was lamenting the passing of the America Invents Act, and now here we are mere days away from its final implementation.

If you haven’t heard, the United States will officially follow the herd and become a First-Inventor-to-File nation on Saturday, March 16.  In light of this new beginning, here are 5 things you should know about the AIA to ensure that your inventions are protected.

1.  First-Inventor-to-File Wins

Here’s the scenario.

Two competing companies are working to solve the same problem.  Both companies invent the same solution.  Each company files a patent application with the US Patent Office.  Who does the Patent Office award the patent to?

Under the First-to-Invent system, the patent would be awarded to the inventors who could show that they invented the invention first.

Under the First-to-File system, the patent would be awarded to the inventor who filed their application first.

To quote Tom Hanks’ character in Cast Away, “We live and die by the clock.”  You don’t have time to make everything perfect before you file a patent application.  Good enough will have to do.  (You might even have to settle for just OK.)

2.  You Will Spend More Money Earlier in the Process

Under the First-to-Invent rules, an inventor could tinker around with his invention, tweaking it until he turned his concept into a finished product.  At that point, he could file one patent application to cover the end result without fear that someone would step in and file their application before he was ready.

Those days are gone.

You no longer have the luxury of waiting.  An inventor will have to be on top of his patent game from the very beginning.  The new corporate patent process might look something like this: file at conception, file again, maybe multiple times, as the inventor works the concept into something that resembles a more complete product, and at the end when the final product finally reveals itself.

That’s a lot of money earlier in the process to ensure that you have won the race to the patent office.

3.  You Need a New Attitude

In order to make this adjustment successfully, your organization MUST adjust your thinking when it comes to patents.  You can’t file a patent as an afterthought in your New Product Development process.   You need a procedure to identify any and all patent issues as early in the process as possible.  If you don’t, you run the risk of losing your valuable business assets.

4.  The Strategic Use of Provisional Patent Applications

Make sure you and your patent attorney understand how to use provisional patent applications.  When money is tight and time is of the essence, these informal, non-examined patent applications may just be the answer.

5.  Amending Claims Can Change the Rules

It all seemed so simple.

Applications filed before March 16, 2013 will continue to be subject to the old First-to-Invent rules.  Applications filed on or after March 16, 2013 will be governed under the new First-to-File rules.

But nothing is ever as simple as it seems under the AIA.

What if you amend or add claims in your first-to-invent patent application after the March 16, 2013 date?

Even though you had filed your patent application prior to March 16, 2013, certain changes you make to the claims may pull your application into the First-to-File rules, and you may not get the full protection of the First-to-Invent rules you thought you had.

6.  Change to the Grace Period Rules

Like the First-to-Invent system itself, America had another somewhat unique feature in its patent system.  The United States offers what is known as a Grace Period.

In the United States, inventors were given 12 months to file a patent application after the date the invention was first disclosed to the public no matter who disclosed the invention.  That was a benefit of the first-to-invent system.

Now, the grace period only applies to disclosures made by the inventor.  Public disclosure by anyone else anywhere in the world prior to you having a patent application on file means you lose your patent rights.

(Think about how this could impact heavily competitive industries with multiple companies working to solve the same problems.)

7.  Prepare for the Unexpected

Just when you think you understand the AIA things are bound to change.  Like any new law, what the various provisions and terms of the AIA really mean will be decided by the Courts.  Over the next decade (or longer) IP practitioners will closely watch as cases wind their way through the Federal court system.  There is already talk that a Constitutional challenge will be waged against the America Invents Act itself.

Don’t be fooled.  The America Invents Act brings significant change to American business.  In 10 days, we enter into a brave new world, America.  Good luck and God speed.

America Invents Act: Hurting Startups, Helping No One

patent-reformWell, we’re almost there.  Next month the United States will implement the last phase of the America Invents Act (AIA), and the First-to-File rules will go into effect.

It’s amazing how fast 18 months passes, and how the sentiment remains the same.

Foreign commentators think it’s a move in the right direction.  It creates a ‘certainty of outcome’ is what they tell us.  Try it.  You’ll like it.  Just like we do.  The rest of the world can’t be wrong.  (Really?  What’s the latest and greatest technology to come out of your entrepreneurship communities, France?   Seriously, should I be taking my lead from a country that bans the words “tweet” and “email”?)

Despite the idea that we will be one, happy, first-to-file world, Americans still aren’t feeling the love.

Most US patent attorneys I talk to don’t like the AIA.  In fact, I haven’t talked to one that does.  There is a general feeling that the law doesn’t solve the real problems in the system, and creates a whole slew of new ones.  Some of which (like the meaning of inconsistent language) we will only start to deal with years down the road as legal cases wind their way through the US courts.  (Certainty of outcome my ass!)

Why the difference of opinion?

Well your opinion of the Act might depend on what you see as the problem.

So I asked myself, what problem(s) does the AIA solve?  How does turning the US patent system on its head help US inventors, business, and the economy as a whole? (With the short answer being:  It doesn’t.)

The AIA solves a foreign policy problem.

As intellectual property and the related issues take center stage in trade discussions, the meat of the Act, the first inventor to file provisions, harmonizes our patent laws with those of the rest of the world.  Our leaders talk about certainty of outcome and how US law will be just like their laws, and it makes our trading partners feel good.

The AIA doesn’t make American small business owners feel good. 

It doesn’t make patent attorneys feel good either.  Even large American companies don’t like it.  And this is a problem.

Large companies have an advantage.

The only certainty of outcome small business owners see is that big business have the money to play by the new rules.  Small business can’t keep up.

Last week I was asked to give a talk at an entrepreneurship event at a local university.  I told them about the changes in US patent law.  I gave them the typical advice that is emanating from patent attorneys everywhere, “File early.  File often.”   I told them what other attorneys are saying about the problems with provisional patent applications, and what all of these changes really mean for business.

And guess what?  They were angry.

No one saw these changes as helping American businesses succeed.  All they saw was a scenario where they would have to file more patents sooner in the process.

As they informed me, the biggest barrier to entry for filing patents is the cost of drafting and prosecuting a patent application.  If a bigger percentage of their limited funds have to go toward legal expenses, there’s less money to actually get a product to market.

This mean Entrepreneurs are more likely to go without patents in favor of getting a product to market.

Is this the end-result our lawmakers were hoping for?

Of course, the concerns of these startups weren’t news to me.  It’s just confirmation that the AIA doesn’t help the US and its economy, especially when the backbone of that economy is small business.  Right now, they’re the ones creating the jobs and the technology of the future.

Entrepreneurship thrives in America like nowhere else in the world.  Part of that is because of our unique patent system.  Believe it or not, the US patent system was designed to help inventors, and inventors have thrived in the US.  When we implement a patent system that’s stacked against them, what are we hoping to accomplish?

10 Intellectual Property Questions that Might Be Answered in 2013

Question-Mark-300x2252012 was a momentous year in Intellectual Property law, but it left us with a lot of unanswered questions.  Here are 10 to ponder as we start 2013.

1.  What will the fall-out be from the full implementation of the America Invents Act?

2.  What will be the impact of the First-Inventor-to-File rules being implemented in March?

3.  Will the Federal Circuit and the Supreme Court ever get on the same page when it comes to a §101 standard?

4.  What is the future of software and business method patents?

5.  Will the US Supreme Court strike down gene patents?

6.  Who will be the next Director of the US Patent & Trademark Office?

7.  Will there be peace in the Smart Phone Wars or has another offensive just begun?

8.  Will Congress grant IP protection for the fashion industry?

9.  Will we continue to see an increase in patent litigation by NPEs?

10.  Will we see more $1,000,000,000+ damage awards in patent litigation cases?

I’m not sure we’ll have definitive answers to all of these questions prior to the end of the year, but the potential for the US Courts to significantly change patent law in this country is great.

So what do you think?  Do you think software patents are history?  Do you see peace in the Smart Phone Wars on the horizon?  Share your thoughts and some questions that I haven’t mentioned in the comments below.

Be Prepared (It Applies to Your Intellectual Property Too!)

“By failing to prepare, you are preparing to fail.”
― Benjamin Franklin

Disaster preparedness seems to be on everyone’s mind this week.

With the effects of Hurricane Sandy lingering up and down the East Coast, the news media has been speaking out about the importance of being prepared when a disaster strikes.  I know that my family, along with millions of others, spent much of last weekend putting away lawn furniture, checking flashlights, and shopping for batteries, water, and non-perishable food.

Employees and business owners alike have spent countless hours trying to ensure that their companies can still operate in the wake of flooding and power outages.

One such story in particular struck me.  It’s the story of a data center, Peer 1, based in NYC.  The power went out, the flood waters came, and they’re keeping their servers running with the help of a generator.  A generator located on the roof of the building.

To keep that generator going, the employees (and their customers!) are carrying 5 gallon buckets of diesel fuel up 17 flights of stairs.

If that generator goes down, it will impact hundreds of customers, as thousands of websites will go down with it.  (As a lawyer, I hope they have a really good Force Majeure clause in their customer agreements.)

That’s a lot of pressure, but it seems like they were prepared.  They had the generator in place and made sure they had fuel on hand.  They even found help when they needed it.

Peer 1 had one more thing on their side, warning.  Hurricanes don’t show up unexpectedly, so they had time to plan and mitigate any damage.

But often times catastrophe strikes without warning.  If that happened, would you be able to make a “bucket brigade”, or its equivalent, to save your business?  Would your customers come to your rescue?

All of this got me thinking about intellectual property.

Companies are faced with intellectual property disasters every day.  Disasters they never anticipated and are ill prepared to handle.

What is an IP disaster you might ask?  Well, here are a few examples:

-  You receive a cease & desist letter (or worse, you get sued outright for patent infringement.)

-  You discover that a competitor is about to launch a product that looks an awful lot like yours.

-  You find counterfeit goods are being sold in the marketplace.

-  You stumble upon your artwork or photos on Pinterest, someone’s website, or printed onto t-shirts without your permission.

Any and all of these events happen to unsuspecting businesses everyday in the United States, and most small or medium-sized companies are not prepared for them, especially when it comes to patent litigation.

One patent lawsuit could wipe out your business more completely than any hurricane.

The number of IP related lawsuits in general, and patent suits in particular, are increasing.  Companies are doing everything they can to ensure they protect their market share. If that means, suing somebody for patent infringement, then so be it.  Are you prepared to weather a patent litigation or protracted licensing negotiations?

Very few companies ever think they will sue someone, and they falsely believe they will never be sued, because they are small.

The idea that patents are the weapons for big business only is a myth.

Patent litigation doesn’t just happen to the likes of Apple, Google, or Microsoft, and if you aren’t prepared, one litigation could put you out of business.

I also anticipate that the number of IP disasters will rise sharply with the implementation of the First-Inventor-to-File Rules in March, 2013.

If you aren’t ready to file early and file smart before March 16, 2013, then you could lose valuable patent rights.

Many companies will not fully understand all of the implications of this change and how it impacts their business.  Unfortunately, they will be the first victims of the new system.

How your business handles unexpected intellectual property events will depend on how well prepared you are.

The best way to prepare for a possible IP disaster is to identify the intellectual property in your business early, protect it when appropriate, and monitor the marketplace for signs of impending doom.

Over the next several weeks, and in this month’s IP made simple Newsletter, I will be talking a lot about being prepared.  If you haven’t signed up for the monthly newsletter, you sign up here.

I hope you join me for the discussion.

If there are any issues that I don’t address and that interest you, please let me know so that we can talk about them in future posts.

How a Provisional Patent Application Could Save your Business

You invent something on May 1, 2012.

You are still in the conceptual stages, so you put off filing for patent protection.

On October 15, 2012, you are given the opportunity to give a presentation on your invention at a local conference.  You jump at the chance, and present your invention to the assembly of attendees.

You have now disclosed your invention to the public without the benefit of having a patent application on file.  Fortunately, you know about the 12 month grace period in the United States.  You know that if you file a patent application on or prior to October 15, 2013, you won’t lose your patent rights.

Time flies when you are busy working on your invention, your business plan, and your Kickstarter campaign.  You finally file your patent application on August 1, 2013, but that’s OK.  You filed well before your October 15, 2013 deadline.

What you don’t know is that one of the conference attendees really liked your idea.  In fact, he liked it so much that he decided to file a US patent application on it on April 1, 2013.

Two patent applications and the same invention…who gets the patent?

What you will painfully discover is that you don’t have the patent rights you think you do.

The final implementation of the America Invents Act goes into effect on March 16, 2013, and as of that date, the old rules no longer apply.

When you disclosed your invention at the October, 2012 conference, the United States was under a First-to-Invent system.  If there were two inventors claiming to have invented the same invention, the court would award the patent to the inventor who invented the invention first.  In our scenario, you would be awarded the patent.

This system gave the original inventors time to tinker with their inventions without having to file for patent protection.  This removed any fear that he would lose his patent rights if someone filed a patent application on the same invention before them, as is the case in the above scenario.

Unfortunately for you, the First-to-Invent rules end in March, 2013.  Patent applications filed on or after March 16, 2013 will be subject to a different set of rules.  As part of the America Invents Act, the United States will implement a First-to-File system.

Under the new system, if there are two inventors claiming to have invented the same invention, the court will award the patent to the inventor who filed the patent application first.

In the example above, the patent would be awarded to the conference attendee because he filed first on April 1, 2013 under the new rules.  And the kicker in all of this is…if you continue with your plans to make, use or sell that invention, you probably infringe his patent.

In order to get the benefit of a grace period and the old rules, you should have filed your patent application before March 16, 2013.  By waiting until after this date, you run the risk of someone filing a patent application on your invention before you.

The lesson in this story is the quicker you get your application on file, the better.  There will no longer be safety in delaying your patent application filing.

Filing a simple, inexpensive provisional patent application would have saved you a lot of heartache.  Having a provisional patent application on file prior to your disclosure would have ensured that you had the benefit of a full 12 month period before you had to file your non-provisional application.  The early filing date of your provisional application would have trumped the conference attendee’s later filing.

Don’t fall into this trap.  The rules are changing.  You need to understand those changes and how they impact your business.

If you must publicly disclose your invention, think seriously about filing a provisional patent application.  It could save your business.