Major change will alter how inventors, companies claim ownership

The most sweeping overhaul of U.S. patent law since 1952 is getting different reactions in the Corridor, as it is across the country.

The America Invents Act will change the way the U.S. Patent and Trademark Office awards patents from "first to invent" (first to actually produce an item or system that the patent reflects)  to "first to file" (first to patent an idea before actually inventing it). That provision of the act, which was signed into law Sept. 16 by President Barack Obama, will take effect March 16, 2013.

The change to "first to file" will bring the United States into line with the way patents are awarded in other countries. Critics worry the change will put small businesses and individual inventors at a disadvantage to corporations and universities with significant financial resources.

"This change to 'first to file' is going to kick the small inventor in the teeth," said Tom Maring, president of Safety First USA Inc. in Cedar Rapids and an inventor since 1975. "It will not make it any easier for the small inventor to protect his intellectual property. If a company is able to file for a patent and pay the $10,000 that's required for legal fees, it will be credited with the invention.

"We've always used logbooks and notes to keep track of what we're doing. The small inventor may putz along on his invention for years, and when it finally gets to the point where he feels it's where he wants it to be, he files for a patent.

"He has his logbooks and notes to prove he's been actively working on it all these years."

Inventors will still be able to file for a provisional patent, which will cost several hundred dollars and protect them for a year. That will establish the filing date of an application without entering the patent application into the examination process, making it a "patent pending."

Ryan Carter, a registered patent attorney with Nyemaster Goode in Cedar Rapids, said the America Invents Act will change the patent-filing strategy for companies and individual inventors.

"People and companies will certainly have an incentive to file earlier," Carter said. "That potentially does have a negative effect on the 'little guys' because they don't have the $7,000 to $12,000 to pour into filing a patent application. We will continue to encourage them to file a provision patent application."

Carter said the scenario of two people filing a patent application for the same invention and the individual who filed second ultimately being credited as the inventor have been relatively few in number.

"Practically speaking, this may not have a big change on outcomes, but I think inventors and patent lawyers will be nervous enough that someone may be ready to file a patent application that many inventors will file earlier," he said. "I think we will see a lot more provisional patent applications filed in the wake of this change."

While there is concern that individual inventors and small businesses will have to decide whether to spend money filing a patent application or fund more research and development to get a product ready to market, Carter said that's always been a risk.

"One provision of the America Invents Act that will help small businesses is an expansion of the 'safe harbor' for companies that have used a process or machine internally for many years," he said. "Under the old patent law, if someone later gets a patent on the process or machine and they were found to have infringed on that patent, they could be sued.

"The law will expand a provision that previously exempted only a business method that had been used for more than a year from infringement. Now, it will extend the safe harbor to any process or machine, as long as it has been used internally for more than a year."

Carter said the America Invents Act will provide more funding for the U.S. Patent and Trademark Office by allowing it to keep all the fees it collects, which will enable it to hire additional personnel and reduce huge backlog of patent applications. Congress in the past has decided how much the agency has been allowed to retain and earmarked the remainder for the general fund.

The law, which attracted bipartisan support in the Senate and House, was partially sold as a way to create additional jobs. Neither Maring or Carter are buying that argument.

"A patent in itself does not earn you a red cent," Maring said. "Actually, it's more like having a child. You need to spend money to support it every year."

Carter said nothing he has seen convinces him that more patents will translate into more jobs.

"If they are saying that patent rights filed by small companies are going to be more certain and thereby encourage investment in small businesses, that might lead to more jobs," Carter said. "I don't know if that's the angle they are relying on or not."

With its provisions taking effect at different times and some not that well known, the law is requiring attorneys to go back to school."Patent lawyers are going to spend the next year figuring out the law and its provisions," Carter said. "There will be a lot of continuing education classes this year. I have already watched several webinars and I will be attending a three-day seminar in March where we will be drilling down into this."