Prior to Memorial Day recess, the Judiciary Committee reported out S 507, the
"Omnibus Patent Act of 1997". This legislation proposes significant changes to our patent laws, a system which has been in place and largely unchanged for over two-hundred years. Based upon the constitutionally guaranteed right of an inventor to have exclusive but temporary rights to his or her invention, our patent system has been a monumental success. The United States became and has remained the most prolific source of new ideas and technology in the world. But the most unique aspect of our system is that it has stimulated creativity in every segment of society, our greatest inventors are found in large corporations, small companies, start-up firms, universities, garages and basements. Proponents of the bill urge their changes to "harmonize" our
patent laws with Japan, Europe and the rest of the world. Our system, however, is superior and harmonization threatens to supplant ours with inferior policy -- at great expense to the core of our inventor community.
The American patent process has two important goals, to create the proper
incentives to invent, and to disseminate inventions widely for the benefit of the public. In exchange for a patent and the exclusive rights it holds, the inventor is required to share his knowledge with the public, including to best way to make and use the invention. Prior to the issuance of a patent, that information is held in secret at the Patent and Trademark Office (PTO). This secrecy is perhaps the cornerstone of our patent system; it permits inventors a period to attract investors or lay a foundation for market share gain, which is particularly important to small businesses and independent inventors who are often undercapitalized or just plain broke. Rolling-out products is
a costly undertaking, but a patent's protection coupled with its exclusive rights creates the opportunity to speculate on an idea. This promise of reward motivates our inventors to pour sweat, energy and ingenuity into ideas.
The system is a success. The United States is an inventor without rival. Our
competitors are often simply commercializers, waiting around for American ideas to take to market. Furthermore, small companies, universities and independent inventors have played a major role in this success. We have a very strong independent inventor community, while our competitors have weak or no such communities. The United States has 175 of the world's Nobel laureates in science and technology; Japan, by comparison, has just five. We are the world's most important high-tech and bio-tech market, industries that include many small businesses. In fact, the majority of patents issued by the PTO are to small businesses and independent inventors.
Several flaws in the legislation were corrected at the committee mark-up, but problems remain in the bill that jeopardize the value, certainty and protection of the American patent, threatening the ability of independent inventors and small businesses to continue their incredible work. Below are a few issues of concern:
- Patent re-examination - The legislation proposes to expand the procedures for re-examination of a patent. Re-examination is the process by which a party may challenge the issuance of a patent. The legislation expands those eligible to challenge to patent while decreasing the rights of the patent holder. Given the tremendous legal expense required to defend a patent, the new procedures are an easy target for abuse and may become a tremendous burden on inventors and small businesses. Finally, it will destroy the certainty of a patent that is critical for the small guy to attract investors.
- Domestic Prior Use Exemption - The bill creates a defense for patent infringers. A claim that one was employing an idea before it was patented, the infringer will be exempt from the payment of royalties. Small businesses that have spent time and money creating an idea and bringing it to market could have the value of their patent dramatically reduced by one claiming to have had the idea first despite the fact that it was unpatented. Disproving such a claim in court or administratively is a very expensive legal process and a bar to the small guy seeking his just reward. In other words, it could immunize firms with vast legal resources from paying royalties. Additionally, not only is this contrary to our tradition of honoring the first to invent, it encourages inventors to keep their ideas secret rather than sharing them with the public.
- Patent Office Board - The legislation proposes to create an outside board to govern the patent office. The legislation reserves only one space for independent inventors and no spaces for small businesses, This does not represent the small business patent applicants and is not representative of the broad range of patent applicants as a whole.
- Early Publication - The original legislation required all patent applications to be published eighteen months after filing it with the PTO, doing away with the crucial period of secrecy. This requirement was rolled back in the committee mark-up, but is cherished by many proponents of the change. Publication would open up the ideas of American inventors to theft, while forcing small businesses and inventors to engage in expensive litigation to recoup their investment.
It is obvious that the changes proposed by S 507 may have enormous
consequences. It is vital that the supporting arguments be made before the full Senate and that this legislation be scrutinized by every member of Congress. My review has revealed several flaws that are a threat to American innovation, entrepreneurship and job growth. I will be engaged in efforts to correct these problems with the bill. If you to join me in this effort or want further information, please contact me or Jack Bartling of my staff at 4-8488.
Christopher S. Bond