Commentary: Patent reform could stifle start-ups
By Valerie Gaydos,
Invention is a cornerstone of the American dream. But the actions of Congress in the name of “patent reform” will end this pathway to success by making fundamental adverse changes to a 220-year-old system that made the United States economy the world leader in innovation.
Legislation currently being whisked through Congress would be particularly disastrous in the Washington metro region, which houses world-class research institutions and some of the nation’s most innovative start-ups.
Despite the good intention of reducing a backlog of more than 1.2 million patent applications awaiting examination, the proposed legislation is fraught with serious consequences, many of which would stifle innovation, increase expenses for start-ups and increase the risk of being a start-up. This proposed reform would instead exacerbate the patent backlog, make it harder for early-stage companies to raise capital and will ultimately cost jobs instead of creating them.
One of the bill’s more egregious provisions lies within the proposed change from the current system known as “First to Invent” (FTI), which gives individual inventors the power to protect their inventions recorded in logbooks, to “First to File” (FTF), which will give those of greater financial means the power to race to the U.S. Patent Office and trample underfunded inventors.
Under FTF, start-ups would need to file multiple patents along the invention process to be fully protected. And, because many inventions go through several iterations with multiple technologies, FTF can be financially disastrous to the “little guy” (and his investors) because patents of average complexity can cost upwards of $10,000 each. Currently, laboratory logbooks, establishing dates for prototypes, are used to prove the date of invention should a challenge arise.
To make matters worse, the proposed legislation would abolish the current 18- month grace period. Currently, the American grace period allows inventors to freely publish or sell an invention — which often is the only source of revenue to fuel their business — for up to 18 months without losing patent rights.
Congress has shown that it is so eager to bypass the garage inventor and small entrepreneur that Senate Bill 23 passed with breakneck speed, while H.R. 1249 passed in the House Judiciary Committee by a vote of 32 to 3 on the very day the bill was introduced. Additionally, it should be noted that other countries, such as Japan, the United Kingdom and Germany, are actually amending their laws to be more like the United States.
Our patent system, created by Thomas Jefferson, may well be unique, but the genius of our system is that it provides an advantage to the garage inventor. The backlog in the Patent and Trademark Office means that inventors are inventing, investors are investing, but the government is failing to keep up with the inventors’ filings. There are other, more effective means to ease the backlog of patents awaiting examination and to improve our patent system. Emulating less-innovative countries under the banner of “harmonization” should not be the objective.
Supporting the uniquely American garage inventors and entrepreneurs and the jobs they create should be the goal of patent reform.
Valerie Gaydos is an angel investor and founder of Baltimore-based Capital Growth Inc., which was one of the first online and entrepreneur affordable searchable databases for angel venture news.