By Greg Mayer
Small Times Guest Columnist
Oct. 3, 2005 – Three aspects of H.R. 2795 — the House bill on patent reform — are particularly troubling to independent inventors and small businesses: the change to a first-to-file system, the limitations on patent holders seeking an injunction against an infringer and the new post-grant opposition proceedings.
First, the bill contains provisions that make a fundamental change to our country’s patent system, to take it from the present “first-to-invent” system to a “first-to-file” system.
This is likely to favor large corporate interests. Being able to quickly file well-drafted patent applications is a luxury that independent inventors and small businesses are not positioned to afford. One of the arguments for going to a first-to-file system is that, on balance, the present interference process — where disputes over who is first to invent a given invention are currently resolved — do not favor large corporations.
However, the current first-to-invent scheme supplies many ways besides the interference process for a first inventor to prove that he or she is entitled to a patent. For example, an inventor may in many cases prove he or she was the first inventor by providing additional facts supporting an earlier invention date. Interferences — the process by which one party challenges a patent — are only declared in a very small number of cases relative to the volume of patents issued every year. Accordingly, the statistics often cited in support of changing to a “first-to-file” system are of questionable significance.
Regardless of statistics, there is also a fundamental question of whether going to a first-to-file system comports with the Constitution’s statement in Article 1, Section 8, Clause 8, that “The Congress shall have Power ¿ to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
It would seem that there is at least a plausible argument that an exclusive right to an inventor’s discovery necessarily requires that the inventor is the first to invent, since an “inventor” is commonly defined as “one who produces something new” (both in our era and in the 1780s) and “discovery” implies that the inventor has found something not found before.
A second important aspect of the patent reform proposals embodied in H.R. 2795 has to do with the limitations of a patent holder’s right to obtain a permanent injunction to stop infringing activity after infringement has been found by a federal court.
Changes originally proposed in H.R. 2795 were decidedly slanted toward large corporate interests. Currently, the threat of an injunction is the most powerful ammunition that a small patent holder has when faced with infringement by a large corporation.
A weakening of the right of a patent holder to obtain a permanent injunction is likely to result in a reduction in the number of patent disputes that are resolved by a negotiated settlement. Corporate infringers may simply budget for the costs of patent litigation and the possibility of paying damages if unsuccessful in the patent litigation.
In addition, this aspect of patent reform would also face strong opposition based on constitutional grounds, as a diminished right to an injunction may not provide inventors with “an exclusive” right to their discoveries. It was a positive step that these changes were removed from a late-July revision of H.R. 2795 but it remains to be seen whether they will resurface.
A third aspect of H.R. 2795 that may favor large corporate interests is the provision creating a post-grant opposition proceeding. Although post-grant opposition proceedings are likely to cost much less than patent litigation in federal district court, the difference between spending hundreds of thousands of dollars versus millions of dollars is meaningless to small entities and small individual inventors who can ill-afford either such ranges of expenses.
However, to a corporation such savings are significant and make patent opposition proceedings much more attractive than litigating over validity issues in federal district courts.
Independent inventors groups, such as The Professional Inventors Alliance USA, have voiced strong opposition to H.R. 2795, based in part on the aspects of the legislation noted above. In view of the foregoing, it is unlikely that H.R. 2795 will become law in its present form.