The Ominous Attack on American Inventors|
The high-priced lobbyists for the big multinationals
are crawling all over Capitol Hill this month to urge
passage of Senator Orrin Hatch's bill, S.507. It is called
the Omnibus Patent bill, but it ought to be called the
Ominous Patent bill because it would take away the
traditional rights of American inventors in order to
accommodate the multinationals and their foreign
This is a classic battle of giant U.S. corporations
versus the little guys. In this case, the little guys are the
independent inventors, who are the mainspring of
American progress and prosperity, plus the small
businessmen, who are the source of nearly all the new
jobs that are created.
S.507 was slightly amended before it came out of
Hatch's Judiciary Committee, as was its companion bill
H.R.400 before it passed the House last year, but both
bills are so totally bad that they cannot be amended to
make them acceptable. The bills' proponents arrogantly
continue to argue for the original purposes of the bills,
stating their intent to achieve them either by restoring
the deleted sections or by implementing them afterwards
by bureaucratic fiat.
At stake in S.507 is one of our most important
constitutional rights: the right of inventors to have, for
limited times, "the exclusive right to their . . .
discoveries," thus giving the inventor the time to perfect
his invention and raise the resources to market it. This
powerful incentive is unique to America, and is the chief
reason why America has produced ten times as many
significant inventions as the rest of the world combined.
Under our highly successful system, when the
inventor applies for a patent, his application is held in
total secrecy by the U.S. Patent Office until the patent is
issued. The patent then gives the inventor the legal
safeguard to protect his invention against those who
want to steal it or infringe it.
Publication of an inventor's application before the
patent is issued would serve the financial interests of the
multinational corporations, who could use their
enormous resources to bully the independent inventor
into making a cheap deal, or to invalidate his patent
application, or to steal his idea and beat him into
The Japanese, who don't invent anything but are
mighty clever copycats, have been trying for years to
break our system. They have been demanding that all
the details of every invention be made public 18 months
after the application is filed, regardless of whether or not
a patent is ever issued.
The American and Japanese systems are very
different. Japan's economy is based on a partnership
between government and the big corporations, and the
Japanese patent system operates to make sure that
industry controls and uses new innovations.
The U.S. system, on the other hand, favors private
property, individual innovation and ingenuity, and an
open door of opportunity for entrepreneurs. Our patent
system is the centerpiece of this system and is designed
to protect the rights of the individual inventors.
S.507 is a disgraceful attempt to codify a backroom
deal made by then-Secretary of Commerce Ron Brown
on August 16, 1994 with Japanese Ambassador
Takakazu Kuriyama promising that our patent law
would be changed to acquiesce in the Japanese
demands. Nobody denied this paper trail in the two
days of House debate last year.
S.507 also includes another Japanese demand, a
change in our reexamination process. The bill would
allow outside parties, both foreign and domestic, to
challenge all existing U.S. patents.
The main, indeed the only, argument for S.507 is
that we should "harmonize" our patent system with the
rest of the world, but that's a false description of this
bill. It does nothing to get U.S. patents recognized
worldwide; instead, it just diminishes the rights of U.S.
The text of S.507 makes clear why the multinational
corporations are lobbying so intensely for S.507. It
would transform the U.S. Patent Office into a private
corporation, whose board of directors must include
representatives of big corporations.
Patent Commissioner Bruce Lehman is lobbying for
S.507 because the private corporation status would
facilitate plans to build a $1.3 billion Patent and
Trademark Office headquarters in Virginia so lavish that
it has been dubbed the PTO Taj Mahal. Lehman has
shown his disdain for independent inventors by calling
them "weekend hobbyists."
Some might think that the importance of
independent inventors has diminished because of the
large research labs of multinational corporations. But a
Harvard study in the 1960s found that, of 703
innovations introduced after 1945, only 133 came out of
the laboratories of big corporations.
Another study in 1970 of 61 of the most significant
20th century inventions found that half of the inventions
had been produced by individuals. Business consultant
Paul Herbig states in his 1994 book, The Innovation
Matrix, that independent inventors tend to make the
most radical innovations in technology because they are
not held back by corporate group-think.
Nobel Laureates Denounce Patent Bill
Senator Orrin Hatch's Ominous Patent bill was
blasted at a national news conference in Boston on
September 11, 1997 by a distinguished group of 25
Nobel Laureates in economics, physics, chemistry and
medicine. Remarkably, the signers of this joint
statement include lifelong antagonists Milton Friedman
and Paul Samuelson.
These luminaries released an open letter to the U.S.
Senate that began unequivocally: "We urge the Senate
to oppose the passage of the pending U.S. Senate Bill
507." Their reason? "It will prove very damaging to
American small inventors and thereby discourage the
flow of new inventions that have contributed so much to
America's superior performance in the advancement of
science and technology."
If anybody understands the importance of innovation
and creativity to the unparalleled American
achievements, it is the Nobel Laureates. They stated
flatly that "S.507 could result in lasting harm to the
United States and the world." Their letter praised the
"wonderful institution that is represented by the
American patent system established in the Constitution
in 1787, which is based on the principle that the
inventor is given complete protection for a limited length
of time, after which the patent . . . becomes in the public
domain, and can be used by anyone, under competitive
conditions for the benefit of all final users."
The Nobel Laureates' letter brought out on the table
the fact that S.507 toadies to the "large multinational
corporations" at the expense of the constitutional rights
of independent inventors. Indeed, the chief advocates of
S.507 are the well-heeled lobbyists for the multinationals
who look upon independent inventors working in their
garages or bicycle shops as nuisances they would rather
not deal with.
Dr. Franco Modigliani, 1985 winner of the
Economics Nobel prize, emphasized, "It is against the
spirit of the U.S. patent system which is a great
economic and cultural invention." Dr. Dudley
Herschback, 1986 Laureate in chemistry, said that S.507
"would create total chaos and of course it is conducive
to fraud and deceit. This is a piracy bill."
Congressman Dana Rohrabacher (R-CA), the chief
opponent of patent-law revision in the House, has
received letters from foreign inventors who plead with
America not to "harmonize" our system by adopting the
patent system of other countries. Foreign inventors
know only too well that the patent systems of most
foreign countries are rigged in favor of powerful vested
interests and the politically well-connected and against
It is noteworthy that S.507's sponsor, Orrin Hatch,
is pushing another proposal to extend the term of
songwriters' copyright protection from 50 to 70 years
beyond the author's life. Hatch has a personal interest
in that bill; he holds the copyright on a compact disc of
religious songs he wrote. Senator Hatch wants to protect
the property rights of songwriters for 70 years, but strip
away the rights of inventors only 18 months after their
patent applications are filed, whether or not the patent is
Inventors' creations should have at least as much
protection as songwriters'!
Bond's Defense of Small Business
Senate Small Business Committee Chairman Kit
Bond is circulating a Dear Colleague letter pointing out
that, even as amended, S.507 will "jeopardize the value,
certainty and protection of the American patent,
threatening the ability of independent inventors and
small businesses to continue their incredible work."
Here is why:
Hatch's S.507 would greatly expand the
procedures for reexamination of all existing patents,
making it much easier for foreign and domestic
corporations to challenge a patent immediately and to
invalidate patents already issued. This would
dramatically decrease the existing rights of all current
U.S. patent holders. Challenging and defending a patent
are very expensive processes. Forcing the inventor to
defend his patent in a second examination puts a very
costly burden on inventors and small businesses and
would be a significant advantage to deep-pocket
corporations. As Senator Bond explains, this "will
destroy the certainty of a patent that is critical for the
small guy to attract investors."
S.507 would undercut our whole patent system
by creating a new defense for patent infringers called
"prior use." This would exempt from the payment of
royalties an infringer who asserts he was using the idea
before it was patented, thereby diluting the U.S. patent
holder's constitutional "exclusive right." Small
businesses that have spent time and money creating a
new idea and bringing it to market would thus have the
value of their patent dramatically reduced. The
advantage would shift to the big firms that poach on the
ideas of individuals, then use large legal resources to
avoid the patent process and the payment of royalties.
S.507 would change the patent office from a
government agency to a corporation with an outside
board of directors and employees excluded from civil
service. Orrin Hatch's big-business bias is painfully
obvious: the text of S.507 actually states that the
directors shall include "individuals" (in the plural) with
"achievement" in "corporate finance and management."
Hatch has now agreed to allow one member of the board
to be an independent inventor; but, as Bond points out,
no space is reserved for a small-business representative.
Hatch's gesture is tokenism, and it certainly does not
protect inventors' rights.
The bill would even allow corporations to influence
the patent office through "gifts" (a.k.a. bribes). Hatch
bragged in his press release that he "accommodated the
Administration" by "fend[ing] off the unjustified but
politically appealing attacks on the corporation's gift
S.507 as originally introduced would have
eliminated our traditional rule that all patent applications
remain secret unless and until a patent is actually issued.
Although the amended S.507 now includes a limited
exception for U.S. inventors willing to forgo applying
for a foreign patent, early publication was and is the
primary goal of the extraordinary lobbying effort to
change our patent system being made by the Japanese,
the multinationals and the Clinton Administration.
Senator Bond accurately points out that the initial
secrecy about an invention is "the cornerstone of our
patent system" because it preserves the property right of
the inventor until he gets his legal rights recognized in a
patent. Publication of the details of an invention before
a patent is issued would set it up to be stolen by
infringers and copycats all over the world who are, as
Bond says, just "waiting around for American ideas to
take to market."
Even if S.507 is amended to mitigate some of its
most disastrous features, the game plan of the foreigners
and multinationals is to use the newly created
corporation, with a board dominated by big-corporation
types, to accomplish the original goal through
regulations that never go through Congress.
Senator Bond says that S.507's changes in our
patent system would have "enormous consequences."
Indeed, they would. The consequences are all bad.
S.507 has no redeeming value.
Anti-American and Ugly Arguments
The patent bill (S.507 in the Senate and H.R.400 in
the House) is not a controversy between Republicans
and Democrats, or between conservatives and liberals.
It is an epic battle that pits the multinationals (their
lobbyists and the politicians to whom they make
financial contributions), plus those involved in shady
Asian trade deals made by Ron Brown, against the
independent inventors who are responsible for the
marvelous scientific discoveries that have made the
American standard of living the envy of the world.
The chief, in fact the only, argument advanced in
behalf of S.507 is "harmonization" to serve the global
economy. That argument is not only anti-American, it
is downright false. "Harmonization" might make a little
sense if it meant that American patents would be
recognized worldwide, like the recent harmonization of
copyright laws, which gives American authors copyright
protection throughout the world. S.507 doesn't do that;
instead, it just reduces the rights of U.S. inventors, who
still have to apply in foreign countries in order to protect
their patents overseas.
Independent American inventors seldom file
overseas because it's far too expensive and far too
difficult to enforce a patent. In Japan, filing would
expose them to patent piracy of their technology through
"patent flooding," i.e., inundating the Japanese Patent
Office with hundreds of unworthy patent applications
using minuscule modifications of the American
invention, followed by bullying tactics to get cross-licensing agreements. S.507 does nothing to protect
U.S. inventors from these typical Japanese patent
abuses, plus inordinate delays and a judicial system
rigged against independent innovation.
Unable to present any sound arguments for changing
our fantastically successful patent system that is the key
to more than 90% of the world's inventions, the Clinton
Administration is using James Carville-style tactics
against independent inventors. Patent Commissioner
Bruce Lehman, a Clinton appointee and Friend of Bill,
called those who oppose the patent bill "in the Timothy
McVeigh category" and on "the lunatic fringe."
Lehman displayed his personal bias in favor of the
big corporations when he expressed disdain for
independent inventors who just invent but don't
manufacture products, i.e., are independent of big
corporations. Many of America's greatest inventors
didn't manufacture products; they just invented all those
wonderful things such as electric lights. The Founding
Fathers were farsighted enough to establish a system that
promotes that kind of individual ingenuity. S.507 would
There is no reason to change our superior patent
system when 90% of the world's patents are American.
No reason, that is, unless the purpose of S.507 is to
appease the Japanese and favor the multinationals that
contribute generously to the reelection campaigns of
Members of Congress.
Rep. Roscoe Bartlett, a Member of Congress who is
a real inventor holding 20 patents, said it best: "Don't
vote to give away our secrets to every copycat around
A BAD PATENT BILL. "The Senate is considering a
misguided bill to recast the patent laws in ways that would
threaten small inventors and dampen the innovative spirit that
helps sustain America's economy. . . . The Senate bill would
weaken patent protection for small inventors by requiring
inventors who file for both American and foreign patents to
publish their secrets 18 months after filing rather than when the
patent is issued. . . . The economy thrives on independent
initiative. Small inventors need iron-clad patent protection so that
they are not forced into a legal scrum with financial giants. The
House of Representatives and the Senate Judiciary Committee
approved the patent bill without hearing the country's leading
economists and scientists make their case."
From The New York Times, October 17, 1997
DON'T UNDERMINE THE FOUNDATION OF
AMERICAN TECHNICAL SUCCESS. "In a few places in
our Constitution, the political genius of the Founding Fathers was
matched by their economic dexterity. . . . James Madison and the
other framers created the mother of invention, a national patent
system. . . . Americans have a majority of the world's Nobel
laureates in science. Of the people enshrined in the Inventor's
Hall of Fame, 91% did their work in the U.S. Our patent system
has produced 10 times as many significant inventions as the rest
of the world combined. . . .
"A good deal of the patent agenda [of pending bills] was
literally made in Japan. In 1994 Japanese trade diplomats
snookered the Commerce Department in talks aimed at creating
a single world patent system. Ignoring the lessons of American
innovation, the Commerce Department agreed to change the
system that has served the U.S. so well and make it more like the
one that well serves big Japanese companies. . . . James Chandler
of the National Intellectual Property Law Institute expects a
simple effect on small inventors: `If Mitsubishi, with gross
revenues greater than the country of Sweden, comes in under
expanded re-examination and says an inventor doesn't deserve the
patents, what do you think a lawyer will advise the inventor of
limited means? Take whatever peanuts they offer and be
satisfied.' . . .
"Publication at 18 months, long before many of the most
original ideas pass muster with patent examiners, would
effectively legalize industrial espionage, especially against those
who can afford only to file and enforce U.S. patents. . . . They
learn the lessons taught at the Tonya Harding Business School.
The goals are to maintain market share by keeping down
competitors. . . . The pending patent proposals in Congress will
destroy the balance between large and small interests that is at the
heart of the U.S. patent system. Small entities contribute a large
share of patents and most breakthrough discoveries. . . .
"The U.S. should not allow Japan to negotiate and legislate
the American patent system out of existence."
From Barron's, August 4, 1997
An Open Letter to the U.S. Senate
by 25 Nobel Laureates
September 11, 1997
We urge the Senate to oppose the passage of the pending U.S. Senate Bill S.507.... We believe that S.507 could result in lasting harm to the United States and the world.
First, it will prove very damaging to American small inventors and thereby discourage the flow of new inventions that have contributed so much to America's superior performance in the advancement of science and technology. It will do so by curtailing the protection they obtain through patents relative to the large multinational corporations.
Second, the principle of prior user rights saps the very spirit of that wonderful institution that is represented by the American patent system established in the Constitution in 1787, which is based on the principle that the inventor is given complete protection but for a limited length of time, after which the patent, fully disclosed in the application and published at the time of issue, becomes in the public domain, and can be used by anyone, under competitive conditions for the benefit of all final users. . . .
Sidney Altman, (1989, Chemistry) Yale
Herbert C. Brown, (1979, Chemistry) Purdue
Robert F. Curl, (1996, Chemistry) Rice
Gertrude Elion, (1988, Medicine) Wellcome Research Laboratories
Jerome Friedman, (1990, Physics) MIT
Milton Friedman, (1976, Economics) Univ. of Chicago
John C. Harsanyi, (1994, Economics) University of California at Berkeley
Herbert Hauptman, (1985, Chemistry) Hauptman- Woodward Medical Research Institute
Dudley Herschbach, (1986, Chemistry) Harvard
Roald Hoffman, (1981, Chemistry) Cornell
Henry Kendall, (1990, Physics) MIT
Har Gobind Khorana, (1968, Medicine) MIT
David M. Lee, (1996, Physics) Cornell
Merton Miller, (1990, Economics) University of Chicago
Franco Modigliani, (1985, Economics) MIT
Mario Molina, (1995, Chemistry) MIT
Daniel Nathans, (1978, Medicine) Johns Hopkins
Douglass North, (1993, Economics) Washington University
Paul Samuelson, (1970, Economics) MIT
William Sharpe, (1990, Economics) Stanford
Clifford Shull, (1994, Physics) MIT
Herbert A. Simon, (1978, Economics) Carnegie-Mellon
Richard Smalley, (1996, Chemistry) Rice
Robert Solow, (1987, Economics) MIT
James Tobin, (1981, Economics) Yale