For the first time since the Constitution gave American inventors the exclusive right to their patented ideas, that right will no longer be granted to the person who has the idea first, but rather the person who can get to the patent office first.
The Leahy-Smith America Invents Act takes effect today, 18 months after the president signed it into law. At its essence, it changes patenting from a first-to-invent to a first-to-file system.
The Capital Region, which has experienced a patent boom in recent years, has braced for it — with some businesses, researchers and lawyers welcoming the change to bring America in line with the rest of the world’s patent laws. Others, though, have declared it financially ruinous for the small business or individual thinker.
“In most cases under the previous law, if a second filer could prove with good record keeping that they had, in fact, had the idea before the first filer, they would be the one entitled to the patent,” said Maxine Barasch, of council for Albany patent firm Keohane & D’Alessandro PLLC.
First-to-invent was rife with trolls — or companies that don’t even make products, but instead buy up existing patents only to sue others for coming too close to those ideas. Of course, no one expects trolling to stop under the new system. But first-to-file takes away a bit of the uncertainty that comes with patenting.
Take for example, the company that files a patent for an innovation they genuinely think they created first. Under the new system, they no longer have to worry as much that dozens of companies will come out of the woodwork and sue them for an idea they didn’t know already existed.
“This is more desirable from a certainty standpoint,” said Barasch. “There was always the possibility of a second filer proving they were indeed the inventor. Under first-to-file, there is no uncertainty. It’s yours. There’s a certainty in knowing what you may or may not own.”
On the other hand, this has sparked increased concern over stolen intellectual property. In the past, when a business came up with a really incredible new product, so long as they kept records of the invention process, there was no rush to patent it and there was less concern that someone would patent it first. You could always just march to the U.S. Patent and Trademark Office and show them your records.
David Hauder is a bit frantic now. As Automated Dynamics’ vice president of engineering, he spends his days developing advanced composite structures for the aerospace, industrial, semiconductor and other industries inside the Schenectady-based facility.
He has also spent the last eight years trying to convince the USPTO that a lightweight pin made of carbon fiber invented by his company is not the same as a bolt. And if he thought that process was complicated and expensive, then he’s gearing up for a labyrinthine process now.
“The way the process works now, you file a patent and it takes several years for them to even look at it,” said Hauder. “Then they look at it and immediately reject it, because that’s their job. They don’t want to just pass patents along. But going through all those rejections is extremely expensive.”
Hauder said the law will force him and other businesses to file more patents, especially for broad concepts in an effort to cover their ground. But the office strays away from patenting ideas that are obvious or overly broad.
So as first-to-file sends people racing to patent every idea they have, those rejections are likely to multiply, he added.
Automated Dynamics currently holds nine patents and seven pending patents. The company spends anywhere from $10,000 to $20,000 to file a patent, and anywhere from $20,000 to $40,000 to appeal when they’re contested. Each year, the company sets aside about $100,000 for its patent attorneys, filing fees and other patent-related expenses.
“We’re going to have to divert even more financial resources now,” said Hauder. “We will probably spend double what we spent last year.”
Barasch agrees the law may unfairly favor big companies with deep pockets — about half of the region’s patents already come from General Electric and IBM. But, she added, no one really knows how the law is going to be enforced yet.
“We don’t know how any of this is going to be implemented or interpreted,” she said. “So over the next few years, as certain guidelines are tested or rules are enforced, companies are going to have to work their patent policies around those new rules. And as those changes are enforced, you adapt.”