Intellectual Property Law Update

Today’s Wall Street Journal reports two new developments in U.S. IP law.

First, on Saturday March 16, the U.S. Patent and Trademark Office (PTO) is dramatically changing its patent system, from a “first to invent” to a “first to file.”* Under the old first-to-invent system, if you could document that you were the first person to come up with an idea, you got the rights to that idea–even if someone else had filed a patent for that idea first. So what’s wrong with that? It sounds logical: if you thought of it first, it shouldn’t matter that you didn’t run to the PTO before everyone else.

There are two problems: First, every other country in the world uses a first-to-file system, which means if you filed first for the patent on the idea, it’s yours, no matter who can prove they really thought of it two years before you did (from their lab notebooks or whatever). In an increasingly international economy, having our patent system align with the rest of the world is a big deal.

Second, under first-to-invent, imagine how complex the court cases get, when some inventor somewhere says that they actually thought of that idea five years ago. Then, lawyers are poring over old lab notebooks and reading hundreds of emails. It might sound simple: All you have to do is find the email that contains the idea on a certain date–but in fact, it always takes a lot of complex interpretation. Was this lab notebook sketch really evidence of the idea? Usually, it’s close but not quite exactly the idea that’s in the patent. Many inventors think their idea really was this idea, but everyone thinks their idea has a broader scope than it really does under patent law. Companies have been spending billions defending themselves against patent lawsuits, and this change is intended to reduce the litigation.

The second article** talks about copyright protection on sound recordings. The Library of Congress wants to convert their old (and decaying) sound recordings to digital, and then make these digital versions available to their patrons. And it turns out, that’s illegal for something like 177 years after the recording was originally made. The copyright protection even for the oldest recordings, made when the technology was first invented back in the 19th century, will not end until 2067 at the earliest. In Europe, in contrast, sound recordings enter the public domain 50 years after their initial release.

The more I learn about IP law, the more I realize it’s a huge complicated mess. I’ve been impressed with my IP law colleagues, negotiating complex issues at the intersection of law, economy, and psychology of creativity (hence my involvement with the issue). But as I concluded back in 2007 in my book Group Genius, patent and copyright regimes today are too restrictive, and this is reducing societal innovation.

*Ashby Jones, “Inventors race to file patents.” WSJ March 15, 2013, p. B6

**Terry Teachout, “Copyright protection that serves to destroy.” WSJ March 15, 2013, p. D6

U.S. Senate Debates Patent Reform

I probably could have thought up a more exciting title for this blog post! It’s hard to make patent reform sound exciting (apologies to my law colleagues who study intellectual property!). But getting it right is absolutely critical to a country’s innovation.

This past Monday (February 28, 2011) the U.S. Senate began debate on a patent reform bill that would change the patent system from the current “first to invent” system to a “first to file” system. First to file is the way just about every other country does it; what it means is that whoever files the patent first gets the rights. In contrast, First to invent means that filing for the patent first doesn’t guarantee that you’re the owner; someone can challenge your patent by claiming that they actually had the idea first. Then, in a long (and expensive) court trial, that person has to present documentation that proves they had the idea before anybody else.

The basic issues seem to be:

1. First to file is a lot clearer and simpler. No more long legal battles where the court has to pore over lab notebooks and listen to technical arguments about whether this or that sketch is “really” the idea represented in the patent being challenged. Patent disputes would largely disappear from the courts.

2. First to file seems to favor big corporations, who can afford to have patent lawyers on staff who can file patents almost immediately after their researchers come up with something new. The independent inventors can’t file as quickly because they have to find a patent lawyer, bring them up to speed on their technology, etc. And it costs $4,000 to file a patent (although there is a $110 “provisional application” that would still establish priority).

The bill has already been unanimously approved by the Senate Judiciary Committee and appears to have bipartisan support in both houses of Congress.

So which system will foster greater innovation? In recent decades, the U.S. has been the most innovative country, so defenders of the current system can argue “if it ain’t broke, don’t fix it.” But many other countries are also innovative, even with a first to file system. So much of U.S. innovation comes from small startup companies, that I have to admit I’m nervous about shifting to a system that could disadvantage those small startups vis-a-vis the big corporations. The key, for me, is to make sure a first to file system doesn’t end up favoring big corporations at the expense of small entrepreneurial startups.