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mhy729 (32.63)

America Invents Act -- good or bad for innovation?

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August 07, 2012 – Comments (0)

Yes, I know this is old news, but from a search of fool.com for "America Invents Act" I've found nothing save for an older post on the Fool Boards, which seems to have been ignored (no comments following OP).  That post is here:

http://boards.fool.com/ot-america-invents-act-29924660.aspx?sort=whole#29924660

[I posted a reply there, and what follows is a copy/paste of that.]

Ok, I know this is an old post, and the Act was signed into law even further back, but I'd say this is a rather significant occurrence in American patent law and deserves more discussion (I did a search for "America Invents Act" here at fool.com, and found next to nothing save for this post by jaagu). To start off, I stumbled upon the America Invents Act during a random web surfing session, and the description of a move "from a First-to-Invent system to a First-[Inventor]-to-File system" had me thinking right away that this change might disadvantage the "little guy" in favor of larger corporations with better access to capital and lawyers. I browsed through the Wikipedia entry on the "Leahy-Smith America Invents Act" and found a number of criticisms which seem to indicate that there are many others who share this concern. Some excerpts follow:

Opponents contend that a "first inventor-to-file" system favors larger firms with well-established internal patenting procedures, patent committees and in-house attorneys over small business inventors.

Canada changed from FTI to FTF in 1989 and experienced a measurable "adverse effect on domestic-oriented industries and skewed the ownership structure of patented inventions towards large corporations, away from independent inventors and small businesses."

Critics argue that the Act will prevent startup companies, a potent source of inventions, from raising capital and being able to commercialize their inventions. Typically, an inventor will have a sufficient conception of the invention and funding to file a patent application only after receiving investment capital. Before receiving investor funding, the inventor must have already conceived the invention, proven its functionality, and done sufficient market research to propose a detailed business plan. Investors will then scrutinize the business plan and evaluate competitive risk, which is inherently high for startup companies as new entrants into the market.[53] Opponents of the Bill contend that, if the bill becomes law, venture funding will be diverted to less risky investments.

There is a question of whether changing to FTF would be constitutional. Article I, Section 8 of the Constitution states: “To promote the Progress of ... useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their respective ... Discoveries.” The term "inventor" means "the first to invent." "To invent" means "to create something that has not existed before." Therefore, by the standard definitions of our language, adoption of FTF would require amending the constitution. All peer-reviewed papers published in scholarly journals have found this or similar problems.

That last entry is an interesting one. As noted by the OP, the "rest of the world" uses the First-to-File system. Because of the Section of the US Constitution referenced above, it would seem that the lawyers came up with "First-Inventor-to-File" to use in place of "First-to-File".

My entirely amateur opinion is that this Act may indeed simplify the patent granting procedure by avoiding the time/resources that would be necessary for determining which party has the stronger claim on any particular "simultaneous" invention, which I imagine is quite a big burden for the USPTO, but in turn may very well stifle innovation by weakening entrepreneurial inventorship. (As an aside, the "First-to-File" reminds me of the way things work re: getting credit in the academic research arena, where the first group to get published gets "bragging rights"...doesn't matter how much research/data you might have accumulated on some particular subject, if you aren't the first to successfully get published in a peer-reviewed journal, you don't get credit.) I haven't looked too much into the rest of the Act, and focused only on the First-to-Invent to First-to-File change, so yes this is a limited critique. Nevertheless, there was no doubt some lobbying going on with regards to this, and we all know that only the "big boys" had representation on that front, which can't be good for the "small fish". What do you think about the AIA? Anyone who views it favorably?

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