[A few updates below.]
Congressman Lamar Smith of (R-Texas) has just introduced the Patent Reform Act of 2005. It is the most significant change to the U.S. patent laws since the 1952 Patent Act, and it will have a major impact on how patents are examined, issued, and enforced. Because patent law is a very much inside-baseball game, however, I fear that a lot of the nuances in the debate will be lost on the general public. My goal on this blog is to de-mystify the debate as much as possible, and to give our readership my best view on what patent reform means in a practical sense.
Here are the broad outlines of the proposed reform:
- What it means: The U.S. is, at present, the only (?*) nation in the world to award patents to the first person to "invent" a patent's claimed invention, rather than the first person to file a patent application.
- Why there's a move to change: The U.S.'s first to invent rule is enormously complex, generates substantial litigation and complexity, and is out of step with the rest of the world. Determining who is the first to invent a particular matter is extraordinarily difficult, and the applicable rules are Byzantine even by the standards of patent law. A first-to-file rule -- based on what application gets to the Patent Office first -- is simpler, cleaner, and much more efficient. Moreover, a first-to-file rule will be accompanied by a change in the definition of "prior art," in order to protect an inventor who is beaten to the Patent Office. [UPDATE: On reflection, that last sentence is a misleading oversimplification. A change to the "first to file" rule will indeed require a change in the definition of "prior art," but the safe harbor that I describe also requires a change in the concept of "intervening rights" (whether or not expressed in such term).]
- Who are the winners? The system, the Courts, the Patent Office -- a first-to-file is much cheaper, easier, and simpler. The fast (read: the folks who have the money to patent early and often). Multinationals: No more bizarre US-only rules.
- Who are the losers? The little guy, who doesn't have the resources to file a lot of patent applications.
- What's likely to surprise you? The debate is going to be contentious, and it probably won't break down along party lines: Pro-business Democrats and Republicans (full disclosure: this includes me) will be on one side of the aisle; Democrats and Republicans who favor the little guy will be on the other. The last time this change was debated (in 1999), it caused Phyllis Schafly to lose her few remaining senses. (How else to describe a screed that begins "All the bad deals made by the late Secretary of Commerce Ron Brown, unfortunately, did not die with him in his tragic plane crash"?). Oh, and the first-to-file rule might be unConstitutional.
What else? Read on below the fold.
- What it means: A patent applicant owes a "duty of candor" to the Patent Office -- that is, she cannot (inter alia) lie to the Patent Office regarding her invention or knowingly conceal prior art. If a patent applicant violates her duty of candor, it's called "inequitable conduct" and can render a patent "unenforceable". Under the current system, inequitable conduct is an affirmative defense in patent litigation; i.e., a defendant charged with infringement will defend against the charge by asserting applicant's inequitable conduct. (For those lawyers who must know, the consensus view is that inequitable conduct must be plead to Rule 9(b)'s standards, because it's essentially a charge of fraud on the Patent Office.) The new patent act proposes to largely eliminate the inequitable conduct defense, re-create the Patent Office's fraud squad, and have virtually all charges of inequitable conduct be investigated internally rather than through the court system.
- Why there's a move to change: The defense of inequitable conduct gets raised all the time in all kinds of inappropriate circumstances because, well, lawyers are like that. We're "give an inch, take a mile" kinda folks. And lawyers who prosecute patents aren't very happy to be accused of fraud by overzealous litigators.
- Who are the winners? Patentees and patent lawyers. Courts, who won't have to hear all these inequitable conduct defenses. (More inside baseball: Because inequitable conduct is a creature of equity, it's decided by the judge, not a jury -- which means, each time it's plead, it's another thing for our harried judiciary to decide).
- Who are the losers? Defendants accused of patent infringement. Possibly the public purse, depending on how the fraud squad is set up and funded (it's possible that the fraud squad can be funded by the savings that result from changing over to the "first-to-file" rule).
- What's likely to surprise you? This one's pretty likely to pass: Patentees like it and patent lawyers like it.
- What it means: In certain circumstances, a patentee can get damages based on a product that incorporates a patented article or feature, even though the patented article or feature is only a small part of the product. This possibility has led to some disproportionate damage awards on some (ahem) fairly crappy patents.
- Why there's a move to change: Big damages on a small improvement or feature doesn't sit well with manufacturers, who feel (sometimes rightly) that they have been Shanghaied by "patent trolls."
- Who are the winners? Defendants.
- Who are the losers? Patentees and the few "plaintiffs" patent litigation boutiques, which operate on commission (you know who you are).
- What's likely to surprise you? Think of this as tort reform for techies.
- What it means: All of these changes are designed to shift some power from patentees to accused infringers; they all grow out of a general sense that that the balance of power has drifted too far to the patent holder in the last few years.
- Why there's a move to change: See above.
- Who are the winners? Defendants.
- Who are the losers? Patent holders.
- What it means: A continuation patent application is an application that is directed to the same invention that is disclosed in an earlier application, and thus is accorded the earlier application's filing date for the purposes of determining its patentability over prior art. (Variations are "continuation in part" applications, which add new matter to the earlier application's disclosure, and "divisional" applications.)
- Why there's a move to change: I'm not certain, but I suspect that it comes down to a single name: Lemelson. (I may post more after I have a chance to reflect on it.)
- What it means: These changes are all designed to make it more difficult to get a patent by allowing competitors, third parties, etc., to tell the Patent Office that the claimed invention is not patentable. Consider it a backlash to the software-patent-daze, when folks seemed to be getting patents on old art.
*Indeed, I think that the U.S. has been alone in its allegiance to the "first-to-invent" rule since the Philippines changed to a "first-to-file" system in the mid-1980s.