The United States has always been a global incubator for research and technological innovation. But some worry that our system of granting patents is becoming too costly, cumbersome and litigious. A new, controversial law, the America Invents Act, proposes to streamline the process and change how patents are awarded. We examine the debate over reforming America’s patent system.

Guests

  • Glen Kotapish President, Inventors Network of the Capitol Area (INCA)
  • Louis Foreman CEO, Enventys
  • David Olson Assistant Professor, Boston College Law School
  • Adam Mossoff Professor of Law, George Mason University
  • Amy Schatz Technology Reporter, Wall Street Journal

Transcript

  • 13:20:03

    MR. KOJO NNAMDIThe last time Congress tried to change the American patent system was in 1952. Back then, the most high tech computer took up more than 1,000 square feet and weighed two tons. Today, some 60 years later, most people agree that system is showing its age. The average application takes almost three years from first filing to a final decision at the U.S. Patent office. There's a backlog of more than 1.2 million applications.

  • 13:20:29

    MR. KOJO NNAMDIAnd the entire patenting process is often bogged down in expensive, mind numbingly complex litigation. Last week, Congress approved the America Invents Act, a sweeping piece of legislation bound for President Obama's desk. Joining us to discuss it is Adam Mossoff. He's a professor of law at George Mason University. Adam, thank you for joining us.

  • 13:20:50

    MR. ADAM MOSSOFFThank you.

  • 13:20:51

    NNAMDIAlso with us, in studio, is Amy Schatz, technology reporter with The Wall Street Journal. Amy, good to see you again.

  • 13:20:57

    MS. AMY SCHATZThanks for having me on.

  • 13:20:58

    NNAMDIJoining us from studios in Boston, David Olson is a professor of law at Boston College Law School. David Olson, thank you for joining us.

  • 13:21:05

    MR. DAVID OLSONIt's my pleasure, thanks.

  • 13:21:06

    NNAMDIDavid, the last time Congress made a major change in the U.S. Patent system, was almost 60 years ago, back in 1952, why the long delay?

  • 13:21:15

    OLSONWell, I think there's a couple of reasons. First, the patent law worked pretty well for a long time until we've had, kind of, the advent of the information age. You know, the idea, I think, was if it's not broke, don't fix it. Now, we have a different situation where we have, kind of, a wider variety of innovation to which a one size fits all patent law has been trying to apply. And that's put stresses on the system, as you mentioned.

  • 13:21:38

    OLSONAnd so, we've had six years of attempts of patent reform and we've had different players from the high tech silicone chip software players wanting some very drastic reforms to the biotech drug industry entities who still like what the system is doing for them. So, I think, its, kind of, been inevitable that we'd come to this with changes in technology.

  • 13:22:01

    NNAMDIAmy Schatz, everyone seems to agree that the American Invents Act will profoundly impact the way patents are awarded. What does the act do?

  • 13:22:10

    SCHATZSo it makes a major change to the way patents are awarded because currently patents are awarded to the person who invents a new technology or something.

  • 13:22:19

    NNAMDIFirst to invent.

  • 13:22:20

    SCHATZFirst to invent. And now we're going to be moving to first to file. Which means, the first person who gets to the patent office and actually files the form, then gets the patent.

  • 13:22:28

    NNAMDIAnd, you know, Adam, people also seem to be agreed that -- to agree that this act will change the way that patents are contested and litigated and the way companies approach investment decisions, do you agree?

  • 13:22:42

    MOSSOFFOh yes, entirely. The act establishes massive changes to how patents will be secured, even after they're issued. It creates very muscular or what are called post-grant review procedures at the patent and trademark office which will create a cloud over the title of the patent which will impact the ability of patentees to obtain venture capital. And it'll impact the ability of people to take patents out into the world to commercialize them. Because the rights will be less secure.

  • 13:23:14

    NNAMDI800-433-8850 is the number to call if you'd like to join this conversation. Does the U.S. system for protecting innovation and intellectual property need to be reformed in the 21st century? 800-433-8850 or you might be an inventor, are you one? Have you ever tried to get a patent? Call us, tell us about your experience, 800-433-8850. Go to our website, kojoshow.org, join the conversation there, send us a tweet at kojoshow or email to kojo@wamu.org.

  • 13:23:44

    NNAMDIAmy Schatz, we've had you on to help unpack a whole bunch of dense policy issues, like net neutrality and other highly contentious public policy debates in Washington. But this one seems to be one of the more difficult ones. It carries a whole bunch of technical baggage. It also speaks to some pretty big philosophical questions, doesn't it?

  • 13:24:04

    SCHATZIt is. Of all the bills that I've looked at over the years, this is the one that was least decipherable for me. As I was going through it -- and it's really not for the faint of heart to try to get through these bills. I think one of the issues that you're seeing here is just that, there are major differences in the business community about whether this bill is good for small inventors and it's good for America.

  • 13:24:26

    SCHATZBut the broader issue here and one of the reasons why this seems to be moving through Congress this year, is just that, you know, you have White House support, you've got lawmakers who really want to encourage job creation and they think this is one of those bills that can do it.

  • 13:24:39

    NNAMDIAdam, we have this idea, maybe, mythic idea of the American inventor as a sort of tinker in a garage or a basement who goes out to create the next Microsoft or Apple. But it looks as if the American economy doesn't make stuff anymore and many of the patents we're talking about are for software or business processes, not some sort of device. What is your thinking about how this act will affect that process?

  • 13:25:06

    MOSSOFFI think that's a great question. I actually spend much of time as an academic researching the history of patent law as it's been construed and applied to inventors from 1790 up to today. And, actually, it is true as a historical matter, that the significant inventors who have benefited from the patent system have been small independent inventors.

  • 13:25:28

    MOSSOFFAnd the names are well known, Samuel Colt, the Pistol, Eli Whitney, there's Cyrus McCormick, the mechanized reaper, Charles Goodyear, vulcanized rubber, Morris, the telegraph, etcetera, etcetera. And, even to this day, there's a sense in which most inventions come from large corporations and massive industries. But at the same time, when you look at this software industry and the computer industry, most of these people started as independent inventors in their garage.

  • 13:26:03

    MOSSOFFAnd the names roll off our lips just as easily as the historic inventors, Steve Jobs, Bill Gates, Mark Zuckerberg, Michael Dell. So it's always a complex question as to where inventions coming from, but I do think that the source of invention remains, the individual inventor who comes up with some new idea, even the individual inventor who may receive support from a corporation or (word?) department.

  • 13:26:27

    NNAMDIDavid Olson, same question, in a way, to you. Who are the inventors today? Are they small guys or in-house corporate researchers?

  • 13:26:36

    OLSONWell, so the evidence shows that it's really -- we've really changed our economy. And most of the innovation that's actually commercialized and gets out there to the public and to other manufacturers, comes from big companies. There's no doubt about that. Having said that, there is still an area where we have disruptive technology or someone who kind of changes the model.

  • 13:26:58

    OLSONAnd that's more likely or often more likely to come from a smaller or startup kind of firm. Kind of, the conventional wisdom, is that the big firms are good at continuing to refine and make things bit better. But sometimes it'll be a startup that goes out and takes a bet on a whole new way of doing things. So that's kind of where we're at right now. We still get lots of individual inventors filing patents.

  • 13:27:22

    OLSONBut most of those are never commercialized. They never make it to market either because, you know, they aren't something that's economically feasible or they can never find the backers. And just one point, as to what Adam said, what we do have, software inventors who we know their names well, I think, it's worth pointing out that Bill Gates, you know, according to his story, anyway, or according to Steve Job's of the story, you know, stole Apple's technology to start Microsoft.

  • 13:27:51

    OLSONAnd that all got going before there were really strongly enforced software patents. So we also see a lot of innovation that's gone on without any need for patents for software or business methods or some of the things that some of the players, in the industry, are now worried about are being overly patented and overly litigated.

  • 13:28:09

    NNAMDIWell, before we get to the phones and more explicit opinions about this, Amy Schatz, suspend disbelief for a moment and suppose that I am an inventor whose had the next big idea for a gadget or software program. Would it be a gross simplification to say that the really difficult part comes after the idea?

  • 13:28:31

    SCHATZWell, yeah, it does. Because, I mean, this is the American dream, right? You're sitting in your garage and you come with the next great thing and then you take it and you get a patent and you make a, you know, make billions of dollars. I mean, this is what everyone out there would love to do. The problem is, as soon as you invent that thing, then you have to get a patent attorney and then that's -- then you start racking up fees.

  • 13:28:48

    SCHATZAnd then you have to deal with trying to get an application to the patent office, try to get your application through the patent office. As you said, it can take upward of three years just to get the patent office to say whether your idea is unique and whether you can have a patent. And then after that, then someone's probably going to take you to court and say, oh, it's not yours anyway and I invented it first. And so it's kind of a nightmare out there for the little guy.

  • 13:29:10

    NNAMDIWhat does the difference between that process on the first to invent and the new law, first to file?

  • 13:29:16

    SCHATZI'm not really sure it changes that much. Clearly if you're the first person to get to the office and file your paperwork, you've got a, probably, better shot at it. But, maybe, the law professors can go into this more than I can but I'm not sure that it makes that big of a difference.

  • 13:29:31

    NNAMDILet's start with Adam Mossoff. You go into it a little more, please.

  • 13:29:34

    MOSSOFFSure. And also, I would just like to respond to Amy's point how it's difficult and complex. The patent system has always been difficult and complex. In fact, as I said, I've done a lot of research in the history. I've read all the patent cases from the 19th century and been immersed in these materials. And patentees have always had to get investors and financial support to get patents, to bring patent infringement lawsuits to their substantial numbers of patent infringement lawsuits, even in the antebellum era.

  • 13:29:59

    MOSSOFFBecause the patent system is about securing that innovation that is on the cusp of human knowledge. It's on the cusp of new products and new technology. And so, sure, sewing machines, mechanized reaper seem simple to us but back in the 1830s and 1840s, those were the iPods and iPads of their day. But to get into the first invent versus first to file issue. The United States historically has been a first to invent system.

  • 13:30:26

    MOSSOFFAnd it was, in fact, this was a unique approach taken by the Americans. In fact, they very explicitly saw themselves as breaking with English tradition and the English patent practice. In doing this, England was a first to file system, the United States, following the constitutional grant of authority to Congress in the Constitution which says that Congress can only secure the exclusive right to inventors, recognized that granting patents to first filers, for instance, importers of new technology, which was permitted in England at the time, recognized that that would probably be unconstitutional.

  • 13:30:57

    MOSSOFFAnd that the United States thus started with a first to invent system securing to inventors, the products of their labors, the fruits of their labors. And so historically, the United States has been accessible to inventors who have come up with something new. Economists have recognized and historians have long recognized that this actually has been keystone of the American successful patent system throughout the 19th century.

  • 13:31:24

    MOSSOFFAnd it remains so, I think, to this day. Now, first to file, puts the thumb in the favor of corporations who can more easily funded their patents, they're well funded patent divisions and win the race to file something at the patent office and thus will hamper small independent inventors.

  • 13:31:42

    NNAMDIYou testified against this when it was in legislation before the House.

  • 13:31:45

    MOSSOFFYes.

  • 13:31:46

    NNAMDIOkay. Let's turn to you now, David Olson, your view of first to file versus first to invent.

  • 13:31:54

    OLSONSo I actually agree with Amy. I think that it's not going to make much difference, if any, to the vast majority of people who will file patents. You know, if you're the first to invent, if you get to the patent office first, you're all set. Currently, our patent system, even though we call it first to invent, actually has certain technical rules so that you could actually be the first to come up with the invention but if you took a two week vacation in between when you drew it all up and when you actually made your working model, you might lose that right.

  • 13:32:25

    OLSONSomeone else could come along and then they could invent and get the patent unless that second person, after making, say, a working model, then, kind of, delay too long. In which case, the first person could kind of renew efforts and come back and get a patent. So we don't actually have a system that says, we will determine without fail who was the very first to come with this, you know, full invention and always grant the patent to that person.

  • 13:32:52

    OLSONIn fact, we have, as you always have to have when you secure property rights whether it be in real estate or, you know, in a car, in a dishwasher, when -- you know, someone finances you, you buy a dishwasher or refrigerator on credit, there have always been rules as to how one then perfects, as we call it, perfects their interest in that property right. And this is no different.

  • 13:33:15

    OLSONI think it will just streamline the process so that we know now, okay, whoever filed first, so long as they didn't steal the idea from someone else, gets the invention. And it'll also make a huge difference when it comes to litigation. Currently, in litigation, when someone sued for patent infringement and they're defending a case, they go out and they look all over the U.S. and say, was there someone out there who hadn’t commercialized this invention but had a similar or had the same invention or keeping it kind of private for the time being but not secret and can we say that they actually invented first?

  • 13:33:49

    OLSONAnd if so, then we can try to invalidate this patent. That all goes away once we go to first to file. If this person who had some sort of private use of the same invention hadn't filed, then the inventor is now safe and knows that it's -- that his or her or its patent is valid. So, I think, it's going to streamline the system a lot. But, I think, for the most -- for most inventors, it really isn't going to make a big difference.

  • 13:34:12

    OLSONAnd, I think, there's just no good evidence that it really puts the thumb on the scales in favor of big business. I mean, I know that's been said a lot. Certainly, some small businesses are worried about that. And that should, you know, they have probably thought hard about it. But I don't think there's good evidence of that. And there's not good evidence that small inventors are really disadvantages in other parts of the world.

  • 13:34:33

    NNAMDIWell, let's hear what Neil, in Silver Spring has to say about that. Neil, you're on the air. Go ahead, please.

  • 13:34:39

    NEILHi, Kojo. I'm glad you took my call. Listen, a couple issues. This legislation over the last six years has been pushed by the likes of Microsoft, Intel, IBM, Goldwin Sachs, they have -- this is after, I think, the fifth or sixth Congress, they have fine -- in failing, they finally convinced the Congress to pass this. The reason is, they have invested tens of millions of dollars, literally, tens of -- you know, probably $20 - $30 million in lobbying efforts have had hundreds, literally, hundreds of lobbyists pushing this legislation.

  • 13:35:25

    NNAMDIAnd, Neil, why do you think that is? Why do you think they see the bill as advantageous to them, the new act?

  • 13:35:31

    NEILOh, well, it -- first of all, the patent system right now is -- if you're a small inventor and have a good idea and let's say, you go and file your patent, it takes you three years to get that patent, at least. That's the good news. If it's worth anything and it's going to disrupt what Microsoft or Intel or there's a provision in this new bill -- it's only purpose is to protect Wall Street and the mega banks.

  • 13:36:05

    NEILIf your patent's worth anything, they can -- they'll spend, literally, millions, if not tens of millions of dollars in litigation. I'm going to send you an email here in about -- as soon as I get off the phone. There is an inventor, a small individual inventor, he has literally spent 15 years of his life with (unintelligible) ...

  • 13:36:30

    NNAMDIWell, you're getting us into some of the issues here. So go ahead and send that email to kojo@wamu.org. But, Amy Schatz, we might be thinking of computers or software, but as Neil is pointing out, some of the more bitterly contentious aspects of this patent fight, centered on things like financial services and big banks and licensing fees, correct?

  • 13:36:52

    SCHATZExactly. Because a lot of patents that have been given out in the last few years were for things called business processes. Like, it would be, like, the Amazon One Click button. That's a business process. And the provision that the caller was talking about involved financial service industries and something called Business Process Patents that only involved the financial services industries.

  • 13:37:13

    SCHATZAnd what both bills -- both the one in the house and in the senate, they had, sort of, a carve out in there that said that the patent office could go back and look at some of these Business Process Patents that involved the financial services industry and take a look at them and see, if in fact, those were valid patents. You didn't have that for any other industry except for financial services, which is why a lot of folks have said, wow, this is something that lawmakers gave to the big banks.

  • 13:37:38

    NNAMDIWell, by way of explanation and correct me if the explanation seems bias, big banks, for example, it's my understanding, are currently stuck paying licenses fees -- licensing fees to a small inventor in connection with, oh say, they're check imaging software. And apparently, they're not too happy about having to pay that fee, is that correct?

  • 13:37:58

    SCHATZThat's exactly what's going on. And they don't want to pay it anymore. And they're going to try to challenge their patent and they managed to get it into the legislation. And it's still there.

  • 13:38:06

    NNAMDIAnd, Adam, I see you nodding in agreement. That is what's going on?

  • 13:38:09

    MOSSOFFYes. I mean, and this endemic about the whole bill is that it's about protecting entrenched corporate interests from competition from upstart disruptive inventors. In fact, earlier patent reform bills that were introduced to Congress that directed to this check cashing technology, actually just explicitly said, if you have a patent on a check cashing technology, this patent is unenforceable. And the -- I actually was contacted by the Congressional budget office at the time and asked about that provision.

  • 13:38:38

    MOSSOFFBecause I actually do research under the takings clause and it says -- and applied to patents and I told them that this was probably a taking and the CBO ended up scoring that provision at costing the U.S. government of over a billion dollars in potential liability as -- for eviscerating the property rights. And what they've found in this case, is that they can just bury those same property rights under a whole series of additional regulatory procedures.

  • 13:39:00

    MOSSOFFBut it's probably still a taking, given that the provenance of this and the fact the intent by banks to remove this liability.

  • 13:39:07

    NNAMDIJust to be clear about this. Here, if we're talking about banks and financial services software, what would change under first to invent over first to file that would enable the banks in this bill not to have to pay that small inventor who invented their check imaging software?

  • 13:39:25

    MOSSOFFYes, this is actually not part of the first to invent versus first to file issue.

  • 13:39:29

    NNAMDIThought not.

  • 13:39:29

    MOSSOFFThis is a separate section of the bill that was passed, section 18, which establishes additional procedures for invalidating business method patents that apply specifically only to the financial services industry. This was basically a gift to the banking industry by Senator Schumer and others.

  • 13:39:49

    NNAMDIBefore we get to David on that, Amy, this bill passed by a large bipartisan majority in the senate this month. A vote of 95 to five. But the run up to the house vote was much more contentious because of issues like this, right?

  • 13:40:02

    SCHATZIt was. It was contentious about this banking provision which some lawmakers were quite upset about and tried to defeat, and also there was a big issue about how the patent office would be funded because the patent office likes to keep all of the fees that it takes because it's a self-funding agency.

  • 13:40:19

    SCHATZBut currently it requires -- basically, it collects these fees, but Congress has to set its budget and the patent office wants to just be able to take its fees and go on its merry way, and some congressional appropriators decided that they didn't really like that. And so there was a big fight about that too. But, you know, in the end, this thing still passed the House 304 to 117. You had, you know, almost two-thirds of both parties voting for it. So it has wide bipartisan support in both Houses.

  • 13:40:45

    NNAMDIAnd the compromise apparently is that the patent office will be allowed to keep its fees to the extent that it has to budget itself, and anything in excess will be placed into some kind of special fund.

  • 13:40:56

    SCHATZRight. Because I think the concern was that the patent office would take in all these fees and then congressional appropriators would take it and use it for something else, and...

  • 13:41:03

    NNAMDIWhich is what they've been doing in the past.

  • 13:41:05

    SCHATZWhich is what they've done in the past, let's face. And so at least they now have it so that it goes into a special fund and it can only be used for the patent office.

  • 13:41:13

    NNAMDIDavid Olson, before we go to break, care to comment on the financial services controversy?

  • 13:41:19

    OLSONSure. You know, it's interesting, what this provision of the bill does is it lets financial services products -- patents be reexamined by the patent office. But it's interesting to know that those re-exams are often not that successful as far as actually killing a patent, so Mr. Claudio Ballard of Data Treasury who's extracted $400 million in settlements and payments from all these banks may be able to keep doing what he's doing.

  • 13:41:42

    OLSONIn some ways this is almost like the classic lobbying shake down where they may have put this into the bill, and the banking industry may have done a lot of lobbying to get it, but it may not give them much relief or result.

  • 13:41:55

    NNAMDIGot to take a short break. When we come back, we'll talk to a few inventors themselves. The number of course is 800-433-8850, 800-433-8850, or you can go to our website kojoshow.org. Be sure to tune in tomorrow at noon. Our guest will be David Campos. He is director of the U.S. Patent and Trademark Office. He will be in studio and taking your calls, emails and tweets starting at 12:00. Right now we're gonna take a short break. I'm Kojo Nnamdi.

  • 13:44:13

    NNAMDIWelcome back to our conversation on innovation and patent reform. We're talking with Amy Schatz, technology reporter for the Wall Street Journal. David Olson is a professor of law at Boston College Law School, and Adam Mossoff is a professor of law at George Mason University. Joining us now by telephone is Louis Foreman. He is the CEO of Enventys, a design and engineering firm. He holds ten registered U.S. patents.

  • 13:44:37

    NNAMDIHis firm has developed and filed more than 500. He is author of the book, "The Independent Investors Handbook." Louis Foreman, thank you for joining us.

  • 13:44:46

    MR. LOUIS FOREMANOh, it's my pleasure. I'm glad to be here with you.

  • 13:44:47

    NNAMDIAs I mentioned, you hold ten patents. Walk us through how the process works for individuals who have a novel idea or a new innovation.

  • 13:44:55

    FOREMANWell, today, you know, under the current situation, there's a lot of uncertainty in whether or not a patent will issue, and how long a patent will take to actually issue. Current pendency is running about 34 months. And so one of the great things about patent reform is it will enable to system to go faster, allowing the U.S. Patent Office access to fees that are generated by the user community.

  • 13:45:20

    FOREMANBut more importantly, it will create certainty associated with that patent. So if you wake up and have a great idea, and you do a search to determine the novelty of that invention, as long as you publish your invention, and then therefore in the expanded grace period file a patent with 12 months, you know that someone can't jump out in front of you and claim that they invented it first.

  • 13:45:44

    NNAMDIOne of the make-or-break moments for investors is whether they can -- for inventors is whether they can attract investors to make their product viable. I've seen some concerns raised that the current system and the current backlog creates uncertainty that makes it hard to attract funding. But on the other hand, others have argued that the new changes would create a different kind of uncertainty. What do you say, Louis?

  • 13:46:07

    FOREMANWell, you're right. Under the current scenario, entrepreneurs and inventors are almost put on ice. Because it's almost three years before a patent will be issued, and then even after you get that patent, the patent could be challenged for the life of the patent, many investors, private equity, venture capital, aren't willing to put the dollar behind these inventors because they're not sure whether or not that patent is ever gonna issue.

  • 13:46:32

    FOREMANUnder the current reform legislation, what there will be is greater certainty. There won't be this challenge for the life of the patent, and you'll also know that as long as you have filed for a patent, you don't have to worry about these interference proceedings that occur where someone claims that they invented it first.

  • 13:46:52

    NNAMDIAdam Mossoff?

  • 13:46:53

    MOSSOFFI actually disagree that there's gonna be greater certainty. The bill actually establishes lots of procedures and new rights that create even more uncertainty. It creates prior user rights, which is exactly unclear as to their scope and as to how that will impact inventors. As I said it creates new post-grant review procedures for any issue in patentability that anyone can bring to the patent office.

  • 13:47:17

    MOSSOFFIt creates a new prohibition against derivation for first filers. It creates a whole host of new procedures and new rights and new terms that have no subtle meaning yet in patent law, and there's gonna be substantial uncertainties that are going to impact both people going to the patent office, as well as people who receive patents and are trying to go out into the world in commercialize them.

  • 13:47:37

    NNAMDIAmy Schatz, is it correct therefore to say there is great uncertainty about the uncertainty?

  • 13:47:41

    SCHATZThere's great uncertainty about the uncertainty, yes. And I'm sure the lawyers will be happy to step in and take part. I mean, I think broadly what the patent office was trying to do with this legislation, and they've been pushing it all along, is just to sort of improve their operations so that they don't have this enormous backlog. They have 700,000 applications that are backlogged at that agency.

  • 13:48:01

    SCHATZThey're trying to improve that, and they're also trying to improve the broader process so that, you know, the U.S. Patent Office actually churns out better patents.

  • 13:48:09

    NNAMDILouis, you also created a PBS showed called "Everyday Edisons." I'm curious whether it's possible to give us a snapshot of what innovation and invention looks like these days. Are we still talking about the aforementioned basement tinkerers, or are we talking about new financial service software?

  • 13:48:24

    FOREMANWell, on the TV show "Everyday Edisons," we travel the country. And last season we looked at 15,000 ideas from ordinary people who have extraordinary ideas. But what we recognize from "Everyday Edison" and Edison Nation is that the average person doesn't have the time, the expertise, or the financial resources to turn their idea into something. They don't want to assume that risk.

  • 13:48:48

    FOREMANAnd so to be able to attract whether it be investment from private equity or from friends and family, there needs to be greater certainty associated with the likelihood of whether or not a patent's going to issue or not. And so we see innovation in all walks of life. That's what's great about our country, is that we are innovators. It's in our DNA. But we need to create a system or improve a system that provides those assurances for the individuals to go out there and start companies and create jobs.

  • 13:49:21

    NNAMDIWell, let's see what's happening in this area. Joining us now by phone is Glen Kotapish. He is president of the Inventors Network of the Capitol Area. He helps work with and advise small inventors about the entire patenting process. Glen, thank you for joining us.

  • 13:49:37

    MR. GLEN KOTAPISHKojo, thanks for having me.

  • 13:49:38

    NNAMDIGlen, the Inventors Network of the Capitol Area is a peer network of tinkerers and inventors. Tell us about the local scene.

  • 13:49:46

    KOTAPISHSure. Well, we have inventors who are aspiring, such as myself. I am a co-inventor on something that I'm still working on, and I have a whole bunch of kayak add-ons I'm working on. People in our inventors group, they're beginners like myself. There's others who have prototyped and sold their inventions and have had made more than six figures on their investment.

  • 13:50:13

    NNAMDII'd imagine that in a region with so many defense contractors and scientific agencies, there are a lot of very creative people with unique ideas in this area.

  • 13:50:23

    KOTAPISHSure. We get a variety of people, low tech, high tech, consumer products, pharmaceutical. It's a pretty wide gamut of ideas.

  • 13:50:32

    NNAMDIYou're an inventor. You're also an instructor in this process, but you have also worked on new inventions from within a company. How different is that experience, the experience working independently versus within a corporation?

  • 13:50:46

    KOTAPISHWell, a lot of companies have this idea of not invented here. And historically, inventors have kind of been seen as an outsider, and they need help understanding the language of how businesses work. What's a reasonable royalty for something if I license my idea? Businesses have to make money, so I think it's important to educate inventors as to businesses have a different model, they need assurances that if I come with an idea that they're not working on that as well.

  • 13:51:23

    KOTAPISHWith our without a non-disclosure agreement, there has to have some kind of agreement and trust formed. So if the inventor goes to X company, and they happen to be working on it, the -- doesn't have this appearance that the inventor's idea was stolen. So that's one thing. And a manager at a business has his job on the line where as an inventor, he has his idea of the line, and, you know, there's a lot at risk if a manager says yes to someone.

  • 13:51:52

    NNAMDIBottom line, what's your view of the new legislation, Glen?

  • 13:51:57

    KOTAPISHWell, I think there is a lot of uncertainty in it. Some people, you know, you've heard different views already on the show. And I think any time there's a major overhaul of law it's, you know, the lawyers, the courts will work out the fine print later, and it will remain to be seen. I think what should have done earlier, much earlier, not had been done at all is a fee diversion of user fees. The Patent Office would not have been experiencing a huge backlog.

  • 13:52:28

    KOTAPISHSo it would have been very simple for Congress to have had a very simple patent reform in the sense of ending fee diversion, which most people agree on. Appropriations may have a different idea, and judiciary may have a different idea of what that looks like, and I think we wouldn't be in the mess we have today. And then on top of it we have all this reinterpretation of current law and reinventing of the law, where the main problem was fee diversion to begin with.

  • 13:52:55

    NNAMDIAllow me to go to Ron in San Diego, Ca. who has been waiting on the phone for a while. Ron, you are on the air. It's my understanding that you too are an inventor?

  • 13:53:06

    RONThat's correct. I have 23 U.S. patents, and been involved in these discussions on the patent reform. I just want to make a comment, and thank you for having me on the show. David Olson's comment regarding the merits of the first to file as proponents argue that it is eliminating the evidentiary burdens and complexities of determining prior inventors. That is a disingenuous rationale that was advanced by first to file proponents.

  • 13:53:37

    RONThe bill maintains the need to make the factual determinations as to public use and offers for sale of the inventions, and actually introduces prior user right. Prior user right will impose many of the same evidentiary burdens and complexities for determining whether somebody has a right to assert prior user defense of the same nature and same characteristics as what is done in interference proceedings.

  • 13:54:03

    RONSo I think the purpose of that is far from introducing lower complexities, but there are other purposes in that is to essentially weaken the grace period for small businesses and start ups that rely on that system much more than large entities who can reduce the practice must faster and get their invention filed faster.

  • 13:54:27

    NNAMDIDavid Olson, care to respond?

  • 13:54:29

    OLSONSure. It's true that we still have to make determinations if we're saying, you know, were you really first to file, or had somebody else put it on sale in the U.S. or put it in public use. We have to determine well, was this a sale or not. But the courts have done a good job of working that out, and we've got pretty clear rules on that. So I don't see it as a problem.

  • 13:54:47

    OLSONAs far as prior user rights go, even if there's some complexity there, it won't invalidate a patent, it will only give a certain prior user the right to keep using that generally probably gonna be a process. And of course inventors are still going to get a one-year grace period. They have one year after they first disclose their invention to file a patent.

  • 13:55:04

    OLSONThe one thing that changes is, if someone else, you know, put something on sale, the patent -- the inventor can't come along then six months later and file a patent and say, oh, but actually, I invented it, you know, two years ago and now we'll go through this difficult scenario of trying to prove up whether that was true or not.

  • 13:55:25

    NNAMDIAmy Schatz -- go ahead please, David.

  • 13:55:27

    OLSONI'm sorry. I just -- one other comment I wanted to make is, we've talked a lot about the American dream of inventing and then commercializing and getting rich. That's one American dream. Another part of the dream, or another dream is the free market where people are free to see what consumers want, to go out and see that somebody else is in a certain business, building a certain product, to think I can do that better.

  • 13:55:51

    OLSONI'm gonna set up shop next door or across the street. I'm gonna compete with you. Consumers are gonna benefit from more variety, lower prices. And so it's important to keep in mind that the free market has made this economy great, and that when we give out patents, and if we give them out too freely for business methods, one one-click ordering for financial products, what we actually do is undermine that competition that's always been key to our market.

  • 13:56:16

    NNAMDIAdam Mossoff, I'd like to hear your comment because we've had discussions on this conversation before about scientists and inventors who are really building on other people's work.

  • 13:56:25

    MOSSOFFOh, yes. And that's a standard in the history of innovation is that people build upon the work of people who came before them. And it's always an interesting complex issue as to determine who -- what is the particular inventor's contribution. But the point of the American patent system from its very foundations in the constitution and the very patent act of 1790 was to secure patents as properties, and to see these as property rights that are consistent with a vibrant growing free market, protecting to inventors the fruits of their intellectual labors in the same way that the property systems have long protected people to the fruits of their physical labors in turning land into productive commodities.

  • 13:57:05

    MOSSOFFAnd the patent system has succeeded. America is to this day still the most innovative country in the world. We issue the most patents, and the cries for greater certainty and for better working of the patent system -- or, I mean, the patent office would -- are legitimate. And so insofar as there are problems at the patent office, give the patent office more funding, but that doesn't justify upending the entire patent system and turning it on its head and throwing out hundreds of years of successful doctrines.

  • 13:57:40

    NNAMDII'm afraid we're almost out of time. Amy Schatz, one of the ironies, or one of the realities of this conversation is that both sides seem to think that they are speaking for the little guy.

  • 13:57:48

    SCHATZThey do. And there seems to be a real split amongst the little guys out there. I mean, some really like this legislation and some really don't. I've heard from small inventors (unintelligible) on both sides, and it remains to be seen.

  • 13:58:00

    NNAMDIAmy Schatz is technology reporter for the Wall Street Journal. David Olson is a professor of law at Boston College Law School. Adam Mossoff is a professor of law at George Mason University. Louis Foreman is the CEO of Enventys, a design and engineering firms. He holds ten registered patents. He is author of "The Independent Inventor's Handbook." And Glen Kotapish is president of the Inventors Network of the Capitol Area. Thank you all for joining us, and thank you all for listening. I'm Kojo Nnamdi.

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