Down to Business: Skepticism on overhaul of patent system

If you’re an inventor with a bright idea, don’t expect too much too soon from the overhaul of the U.

If you’re an inventor with a bright idea, don’t expect too much too soon from the overhaul of the U.S. patent system signed into law last week — except, that is, to start paying higher fees to have your invention evaluated.

Spencer Warnick, a managing partner in the Albany law firm Hoffman Warnick, which produces the quarterly Tech Valley Patent Index, says he’s skeptical the changes will reduce the backlog of filings awaiting approval, or tamp down patent litigation, or speed the commercialization of research on college campuses.

Those were some of the goals outlined by lawmakers as they wrote the bill now known as the America Invents Act. President Obama, who signed the legislation Friday, also cited the job-creation benefits of a faster patent process so entrepreneurs “can turn a new invention into a business as quickly as possible.” And as our country’s 9.1 percent unemployment rate will attest, new jobs are welcome.

But it typically takes three years for the government to approve a patent, which gives an inventor the exclusive right to produce and sell a novel product or service for a period of up to 20 years. Right now, the backlog of applications at the U.S. Patent & Trademark Office stands at nearly 700,000; last year, the agency granted some 220,000 patents.

Statistics posted by the office put our region in a favorable light: the Albany-Schenectady-Troy market ranked No. 28 among the country’s largest metros in the number of patents issued in the five years between 2006 and 2010, at 2,841. The only other upstate metros ranking higher were Rochester (think Eastman Kodak and Xerox) and Poughkeepsie (think IBM). Locally, General Electric, Tokyo Electron and Lockheed Martin were among the top five patent producers in the period.

Interestingly, the second largest number of patents issued here during those five years went to the catchall group “individually owned patent” — meaning an inventor or entrepreneur. And it’s that group – the small fries – who have little to worry about in the patent law’s shift in emphasis from “first to invent” to “first to file,” says patent attorney Warnick.

During deliberations on the legislation, some observers – including one vocal West Coast venture capitalist – worried that the change would hurt entrepreneurs who typically sought patent approval only after they knew their invention had value. If they had to rush to make sure their application was filed first, the reasoning went, they wouldn’t have time to vet the invention or line up investors. And filing costs – at roughly $1,000 for big firms and $500 for small ones – could be riskier as a result.

Warnick, though, said the U.S. “had, de facto, first-to-file [conventions] for many, many years.” And parties that tangled in so-called interference proceedings over who initially came up with an invention often found that “the party that didn’t file first loses anyway.”

Warnick said the new legislation, which will be phased in over the next few years, would have been more beneficial had Congress relinquished its control over the fees collected by the patent office. Revenue in excess of annual appropriations is channeled anywhere Congress sees fit, rather than being reinvested in the agency. “That’s the real issue,” said Warnick, as more equipment and staff are needed to evaluate ever more technical and complex patent applications.

Congress, though, did turn over authority to set patent fees to the agency. And until they’re determined, the patent office is tacking on a 15 percent surcharge to most existing fees beginning next week.

Marlene Kennedy, a longtime business editor in the Capital Region, can be reached by email at [email protected]

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