Patent (Reform) Pending?

Among the many critical events in the life of a new medical technology, the awarding of a patent is arguably at the top of the list in terms of commercial significance.  It is a seminal event that validates both the uniqueness and the practicality of the innovation.  Alongside demonstrable management expertise, at least some preliminary market research and the right VC phone numbers, a patent can start the whole funding and development ball rolling.

But now, the Patent Reform Act of 2007 (H.R. 1908, S. 1145)  is gaining momentum and may become reality.  And that may change the ball game considerably.

Some of the key elements of the legislation are below (drawn in part from Wikipedia):

  • Switch from first-to-invent to first-to-file
  • Defining “inventor” to include a joint inventor and coinventor.
  • Revising procedures for patent interference disputes.
  • Revising requirements for an inventor’s oath or declaration to allow substitute statements in specified circumstances (e.g., death or disability) and supplemental and corrected statements.
  • Allowing a third party assignee (other than the inventor) or a person with a proprietary interest to file a patent application.
  • Modifing provisions relating to damages for patent infringement to:
    1. require a court to conduct an analysis of a patent’s specific contribution over prior art;
    2. allow increased damages for willfull patent infringement; and
    3. expand the prior user defense.
  • Renaming the Board of Patent Appeals as the Patent Trial and Appeal Board. (Also, revising provisions relating to the Board’s composition, duties, and authorities).
  • Allowing a person who is not the patent owner to file a petition with the Board to cancel a patent as invalid (post-grant review). Would also set forth procedures for the consideration of such petitions, including provisions to prevent harassment of patent owners and abuse of process.
  • Allowing third parties to submit documents relevant to the examination of a patent application.
  • Revising venue requirements for civil patent actions against individuals and corporations to allow actions to be brought in the judicial district where either party resides (currently, where the defendant resides) or where the corporation has its principal place of business or was incorporated.
  • Banning tax planning patents.
  • Allow financial institutions to infringe patents on check collection systems.

The biggest concern I have, as I begin to preliminarily review this, is that the general thrust of the reform, while focusing on resolving specific deficiencies, has the definite potential to squeeze innovation.  For example, the switch from “first to invent” to “first to file” will give a distinct advantage to those inventors who have well-oiled patent filing capabilities.  Viewed simply (sometimes this is how one must do things), an inventor comes first, then the apparatus to file patents, pursue venture capital, hire management, etc.  So, the “first to file” change has implicitly deemphasized the value of the inventor.  Am I missing something?

Admittedly, I have an inherent bias toward small startup medtech innovators.  I simply believe that they are the source of an enormous number of ideas.  To restrict them in any way will do harm to medtech development.  And forcing inventors to file first and invent later not only puts the cart before the horse, but also requires the inventor to dilute his/her focus on inventing as the singlemost important activity.

The rest of the legislation strikes me as the net effect of too many cooks in the kitchen and a lot of tinkering with a system that has stood for some time as the lynchpin supporting the creation and protection of ideas not just for U.S. inventors, but worldwide, since U.S. patents carry so much weight outside the U.S.

The answers are not simple when it comes to legislation of this sort, since there are many competing stakeholders, and the whole patent/innovation/commercialization process has so many interdependencies that determine success and failure.  I don’t claim to have all the answers (beware of anyone who says they do), but in the interest of enacting “reform”, in an election year no less, we may seriously underestimate the implications of the legislation on those interdependencies.  I recognize the need for reform, but I am frankly sick of the incessant drumbeat, of demanding change for change’s sake.

See this additional perspective from ZDNet’s Dana Blankenhorn:

Big patent law reform on the way? by ZDNet‘s Dana Blankenhorn — Crouch writes that the court is asking some basic questions, including whether the State Street decision, which allowed business methods patents, should be overturned. That case is also used to justify software patents.

Stay tuned . . .

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