The America Invents Act

The America Invents Act

“Patent reform is an important part of making America more competitive in the global market over the long-term, helping turn more inventors into successful entrepreneurs and promoting American innovation. It will create jobs in Delaware and throughout the U.S.”

– Senator Chris Coons, Delaware

Bright Idea - Patent - InventorAs of last Thursday, June 23, 2011, the patent reform bill was passed. (The recorded vote is here.)

Microsoft and Apple were started by “garage” inventors. Today both are huge corporations employing thousands of people. And they, of course, got patents.

What’s this got to do with it?

An analysis of multiple studies conducted in 2008 and 2010 on the relationship between innovation, entrepreneurship and patents revealed some interesting data. It seems that start-up companies with one or more successful patent applications — regardless of industry, financing stage or other factors —

  • Are more likely to have a significantly higher probability of completing an IPO (initial public offering)
  • Have a significantly lower probability of failure
  • Will obtain more venture capital funding in terms of dollars
  • Will obtain funding from more venture capitalists
  • Will have a longer incubation period (Note: Incubation is the time between when a patent is procured and it’s proven and ready to market. A longer incubation period means more time to get it right.)

This six-year-old effort to reform patent laws is in answer to the many differences that were still standing between the U.S. and the patent laws of the rest of the world — and the fact that there had not been comprehensive reform in 60 years.

Still, not everyone was in agreement with what was in this bill. (Imagine that.)

One of the controversial changes was the “first-(inventor)-to-file” system, which was a dramatic change from the original “first-to-invent.”

According to a report in the Wall Street Journal, a beltway lobby group called the National Small Business Association, as well as a coalition of business and trade groups, “urged lawmakers to reconsider the first-to-file provision, calling it a legal flaw.”

Basically this provision implies that an inventor may win the race to create an invention but still lose the race to file the corresponding patent application and the right to patent it.

Perhaps Steve Perlman, President and CEO of OnLive, Inc., explained the difference in the simplest terms. “To preserve defensible priority, every one of [his] 100 inventions would have to be filed as a patent immediately upon conception (which is why inventors throughout the world refer to ‘First-to-File’ as ‘Race-to-the-patent-office’).” He continued to say, If “First-(Inventor)-To-File” is made into law, it most certainly will face constitutional challenges. The plain language of the Constitution grants patents to first inventors, not first filers.”

It will be interesting to see how this plays out!

Do we have any inventors out there?

What are your thoughts?


  • Deb
    Posted at 23:19h, 29 June Reply

    I don’t know much about patents, I’m not an inventor, but it doesn’t seem right to change it to first to file. An inventor friend of mine says that when he seeks venture capital for an invention he needs to explain the concept pretty thoroughly and that investors usually don’t want to sign non-disclosures just to talk about a deal. That could get pretty sticky.

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