The following is an April 6, 2011 press release provided by Edge Communications:
In a sharply-worded letter to leaders of both houses of Congress, a coalition of start-up entrepreneurs, faculty and independent inventors and technical professionals has called on lawmakers to reject or substantially modify the America Invents Act, now pending in the House of Representatives as H.R. 1249, addressing reform of the U.S. patent system.
“The bill contains troubling provisions pertaining to matters that are critical to small businesses,” the coalition wrote. “The current proposals will inflict substantial harm on our members, who need strong reliable patents to build our businesses and create jobs. The proposed Act has several features that will increase our costs sharply and reduce our access to the patent system, increase the Patent Office’s delay and backlog, and decrease our ability to enforce our patents. By making patents less certain, and adding costs and delay, the bill impairs our members’ ability to raise capital.”
The nine members of the coalition include: American Innovators for Patent Reform (http://www.aminn.org/patent-legislation); CONNECT (www.connect.org); IEEE-USA (http://www.ieeeusa.org/policy/policy/2011/021511a.pdf); IP Advocate (www.ipadvocate.org); the National Association of Patent Practitioners (https://www.napp.org/resources/NAPP-PartialOppTo2009SenateBill.pdf); the National Congress of Inventor Organizations (http://www.nationalcongressofinventororganizations.org); the National Small Business Association (http://www.nsba.biz/docs/patent_reform.pdf); the Professional Inventors Alliance USA (www.piausa.org, http://truereform.piausa.org); and the U.S. Business and Industry Council (www.americaneconomicalert.org).
“America’s patent system has always focused on the needs of inventors, integrating the patent application process within their normal course of research and development,” the group said. “For nearly two centuries, it has demonstrated its singular ability to foster and grow the country’s small-business inventors, to help America achieve its status as the global leader in technological innovation and job creation. Changing U.S. patent law to be like the less-successful patent systems of the rest of the world cannot be regarded as positive ‘reform.’”
Among the coalition’s key concerns:
The weakening of the grace period, as part of the “first inventor to file” section of the bill, raises risk of loss of patent rights by its constituencies, as it impedes the important process of incubating and vetting inventions. This provision is mismatched to the American startup and venture capital process, and will impair the ability of inventors to create the startups that are responsible for all net job growth for the last 30 years.
Increased filings driven by the Act’s “use it or lose it” grace period rules and by post-grant review will further burden the U.S. Patent & Trademark Office (PTO) at a time when its backlogs are unacceptable.
So-called post-grant review. By making patent rights less secure, and allowing infringers multiple bites at the apple, this provision will hamper startups’ access to capital, and their ability to create companies and jobs.
Rehabilitation of the Patent Office by ending “the tax on innovation,” the diversion into the general fund of patent application user fees … is an essential step in bringing down the huge backlog of unexamined applications, in which new jobs are buried. The group urges Congress to shift its attention away from the broad and technically difficult America Invents Act, and instead pass a streamlined, targeted bill that focuses only on long-term PTO funding.
Reconsideration of the Act Deemed Vital to Startups
As Bruce E. Hayden, chair of the IEEE-USA Intellectual Property Committee, noted in a separate letter to Sen. Patrick Leahy (D-VT), “two recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau tell us that ‘startups aren’t everything when it comes to job growth. They’re the only thing.’ Startups are responsible for all net job creation since 1977 and the U.S. patent system is key to startup formation. Investors depend on strong patent protection for assurance that ‘the next big thing’ will generate profits for the innovator who turns a raw idea into a marketable product, and that large competitors will not appropriate those ideas.”
Writing to California Sens. Boxer and Feinstein, prolific inventor and patent-holder Steve Perlman, President and CEO, OnLive, Inc., took strenuous exception to [the bill’s] disposal of “First-to-Invent” provisions. “S.23 [the Senate version of H.R. 1249] proposes the U.S. switch to an obtuse ‘First-Inventor-To-File’ concept which is ‘First-to-File’ muddled with an immensely complex set of priority rules unlike any patent priority system ever used before in any country,” he noted. “It is far worse for small entities than conventional ‘First-to-File’ because of the highly complex and obscure priority rules. Switching to ‘First-to-File’ would be bad enough… but switching to a completely different system introduces immense complexity and risk… and the overwhelming consensus [among legal scholars] is that changing U.S. law to ‘First-(Inventor)-to-File’ is unconstitutional.”
Venture capitalist and inventor Gary Lauder, addressing the issue, put it this way: “When I talk with fellow Silicon Valley entrepreneurs, inventors and investors about patent reform, the universal response is ‘What's that?’ They are unaware that the patent landscape -- which has helped make the USA into the most innovative country on the planet -- is about to tilt in favor of the large companies that have representation in Washington.
“It is extremely hard to succeed as an inventor and entrepreneur, but America has created the most fertile ground in the world for doing so,” Lauder observed. “Maintaining that fertility enables Schumpeter's ‘creative destruction’ to reshape our world for the better. Patents confer power to the otherwise powerless... We should do all we can to increase the chances of their success. All of the companies that are advocating for patent reform were once start-ups.”