After many years and many failed attempts, patent reform legislation is about to pass Congress and become law. (President Obama has signaled he will sign the current bill, which should make it out of Congress this week.) The good news: Washington, D.C. recognizes that the patent system is in dire need of reform. The bad news: the new law will do virtually nothing to fix many of the system’s fundamental problems.
To be certain, there are some big changes in the patent reform legislation. For example, the United States would begin the shift to a “first-to-file” system, where a patent is granted to the party who files her application first at the Patent Office. (Currently, we follow a “first-to-invent” regime, where a party who first invents and practices an invention gets rights to the patent.) There are also changes to the PTO’s funding and fee-setting authority. These latter changes are imperfect, since they continue to give Congress some ability to divert the PTO’s fees to other areas of the U.S. budget, which prevents the PTO from fully funding much-needed initiatives to improve patent quality.
The legislation also adds new procedures that allow parties to challenge patents. This sounds promising: more opportunities to challenge bad patents. In reality, though, these procedures offer few practical chances for ordinary people who don’t constantly monitor the Patent Office. Take, for example, two of the new ways third parties can get involved: pre-issuance submissions and post-grant reviews. Pre-issuance submissions will allow third parties to provide the PTO with potentially invalidating prior art, but only while a patent application is pending. And the post-grant review process will allow a third party to present legal challenges to a patent, but only in the first nine months after the patent issues. Of course, if a patent applicant or owner is careful not to publicize the patent until after the nine-month period expires, or if a third party simply doesn’t learn of the patent until later, these types of challenges will be virtually useless.
What is much worse, the legislation wholly fails to address many of the biggest problems plaguing the patent system, especially the problem of patent trolls. This is especially troubling now, as trolls are targeting small app developers, driving some of those developers out of the U.S. market entirely. The reform act also does nothing to limit patent damages by aligning them with any actual value of a patented invention. We hope legislators won’t treat the passage of patent reform legislation in 2011 as an excuse to ignore the growing troll problem, which stymies innovation, hurting individual inventors, small businesses, and our economy at large. Ironically enough, many in D.C. claim the new law will create jobs; we don’t see how, unless they mean more jobs for lawyers.
We’ll continue to urge D.C. and the courts to limit the trolls’ ability to prey on those innovating and helping to grow technology. In the meantime, if you are an app developer or other small innovator worried about Lodsys (or other patent trolls), please join us on September 9 for “Patent Trolls and You: EFF Virtual Boot Camp for App Developers.” We’ll be streaming an educational panel live and taking questions via Twitter and email. If you’d like to join us, please email email@example.com and include your name, email address, professional affiliation, and let us know if you’ve already heard from Lodsys.