Patent Reform a Letdown to Some in Tech

[Source: Politico, by Michelle Quinn, September 7, 2011]

Some tech constituencies in Silicon Valley have a curious reaction to the first patent reform overhaul in 60 years that Congress appears poised to send to the White House: ho-hum.
The America Invents Act, which the Senate began considering this week after a cloture vote, (and passed, read more here) will most likely be heralded as historic for updating patent laws and as a boon for innovators and job creators.

Yet reaction in the tech industry, which has been the main driver behind patent reform since 2005, is decidedly mixed, with some arguing that the bill will make it harder for small entrepreneurs. Others say that for better or worse, the reforms will encourage people to go to the Patent and Trademark Office sooner with their intellectual property. And most agree the legislation is unlikely to put an end to the patent wars roiling the tech industry, particularly relating to mobile phone innovations.

“Exhausted” is the word Mark Lemley, a law professor at Stanford University, used to describe the tech industry’s sentiment toward the bill. “Most of the significant bits of legislation have been whittled out of it,” he said. “Most of the things interesting to tech have been removed.”

The legislation is unlikely to improve litigation abuse, which was one of the main drivers for reform, he said.

Many tech companies support the bill. On Tuesday, a coalition including Adobe, Apple, Cisco, Dell, Google, Intel, Intuit, Micron, Oracle, RIM, SAP and Symantec sent a letter to Sens. Harry Reid and Mitch McConnell saying that it was time for “Congress to send a patent reform bill to the president for signature.”

“At the end of the process, this was an issue where the tech community came together in support of updating our patent system,” said Andy Halataei, a lobbyist with the Information Technology Industry Council, which represents 50 tech companies. “One thing that made it easier for patent issues was that the courts have dealt with some of the issues that they wanted to see changed.”

But some in the tech industry view the legislation as potentially harmful to small entrepreneurs and, at best, a missed opportunity to create real reform.

Specifically, they argue that by switching to a first-to-file patent system, rather than the current first-to-invent, big companies that can monitor the patent office daily with legal teams working on patent strategies are the ones that will benefit. Also, the ability to review or challenge a patent will be shortened, making it harder for small companies to challenge questionable patents.

Henry Nothhaft, a serial entrepreneur and author of “Great Again: Revitalizing America’s Entrepreneurial Leadership,” wrote in a Wall Street Journal opinion piece that the president should withdraw his support for the bill that puts “needs of big technology firms ahead of the real job creators — entrepreneurial start-ups.”

“The people we represent aren’t going to feel a difference on account of this bill,” said Julie Samuels, a staff attorney at Electronic Frontier Foundation, which advocates for small innovators and individuals. “These aren’t the kinds of people who have legal staff or follow what is happening in the patent office. The bill does not create opportunities for those people to have their voice heard.”

The bill does nothing, she said, about the patent troll issue, whereby people file patents just in order to sue people later. To that end, the EFF is holding an educational event this week for application developers called “Patent Trolls and You.”

“First-to-file is inherently biased on behalf of big corporations,” said Dennis Fernandez, a Silicon Valley patent attorney.

The logic of the bill is fatally flawed, said Gloria Archuleta, general counsel with MyLawsuit.com, a Silicon Valley start-up that matches consumers with lawyers. “I’m at a start-up now where we have to sit on IP because we don’t have the money to file,” she said. “Your patent portfolio maintenance is one of the most expensive parts of running a company.”

Lemley said the rhetoric on both sides of the legislation tends to be overblown. “It’s nonsense to say we’ll have thousands of new jobs because of this legislation,” he said. “It’s equally nonsense to say this is the destruction of the patent system as we know it. It makes changes that are significant to patent lawyers.”