What Is Going On With Patents & Why Should I Care? A Brief Overview

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What Is Going On With Patents & Why Should I Care? A Brief Overview

Jun 23, 2011

Posted by Mike Beene - Patent law is suddenly in the news. We all know that if you invent something you better protect it with a patent if you want to make money from your idea. And for the very small business, many of the inventions affected today are the very ones that allow competition with big corporations, such as methods of data processing and information gathering. Based upon questions I get, that is about the end of our collective knowledge. Let’s fix that now. Invention has been too important to our country, economy and lifestyle and it is crucial to our future. Congress is currently considering the first major patent law change in 60 years.

To understand where we are we need to look back. Our founding fathers thought enough of invention that they gave Congress the 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”(Art. I, Sec. 8, cl. 8, U.S. Constitution). A “patent” is a government grant to an inventor. The first patent law was enacted by Congress in 1790 and signed into law by President Washington.

The current patent act provides that “whoever invents or discovers new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof, may obtain a patent.”(Patent Act Sec.101). To obtain a patent, an idea must be novel (sec.102), nonobvious (sec. 103) and fully and particularly described (sec. 112). Patent litigation is a huge industry, and the courts have consistently held that the laws of nature cannot be patented, nor can an abstract idea.

So, I can’t patent gravity (natural phenomenon), or my golf grip or putting stroke (abstract idea). But can I patent a method of doing business? Maybe. In 1998, a federal court held that some business methods were patentable. The best example is the 2010 Supreme Court case which examined how to determine if a business method patent is available. The inventor sought a patent for a procedure to protect against risk fluctuation for buyers and sellers of commodities in the energy market. The patent examiner rejected the application as an abstract formula not to be performed on a machine. While refusing a patent that this was just an abstract idea, the court confirmed that business methods are patentable if they meet the basic tests of the statute. The types of method patents that affect us all include computerized postage meters, data processing systems and electronic commerce systems.

Is it a good idea for major changes to occur in this law? As the bill works its way through Congress, there are many groups and individuals who traditionally are on the same side of an issue on opposite sides of this one. Let’s look at a few key provisions and the arguments for and against:

  • The proposed bill would change our system from a first date invented to a first inventor to file. We have used the first to invent for 200 years, but the rest of the world uses first to file. Proponents believe falling in line with the rest of the world will simplify international disputes. They also argue that patent litigation will decrease because the only real question is if the first to file misappropriated the idea from the challenger. Those against argue that the finding of misappropriation would not give the patent to the true inventor, but just cancel it. Their biggest concern seems to be that the new system would hurt the small inventor by making it dangerous to pursue the capital necessary to get the invention in patentable form. Under the current first to invent law, an inventor has one year to file after the invention and thus can safely pursue financing and other help without risk. However, for many the reduction in litigation costs perhaps offsets the risk.
  • Another area of debate is the treatment of business method patents in the proposed law. The bill proposes that there be a ten year period in which currently granted financial business method patents (such as data processing systems) could be revoked. Critics argue this is a bailout to banks and will retroactively protect them from some existing patent exposure. The courts have recently changed the standards for business method patents, and proponents argue that patents which were improperly granted over the last few years can be corrected and thus the economy will be positively influenced and needless litigation avoided.
  • One area holding the bill up is that it would allow the Patent Office to keep all filing fees. Proponents believe the Patent Office would be more efficient with this funding and get backlogged applications decided. Many in Congress are concerned that this clause would remove the Patent Office from the Congressional appropriations process and thus from Congressional oversight.

If this piques your interest there is myriad information out there. Hopefully you will read it with some big picture understanding.

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Courtesy of NASE.org