Tuesday, September 20, 2011

Innovators Beware: The Rules Are a Changin’

By Evan D. Robertson, Project Associate.

Anyone who keeps tabs on the technology sector or simply inputs the words “patent lawsuit” into their favorite search engine will discover a recent proliferation of patent lawsuits, especially related to mobile computing. A tiff between Apple and Samsung left the Galaxy Tab (a rival to Apple’s I-Pad) banned in Europe (a recent ruling limited the ban to Germany). A now infamous company, Lodsys, has filedinfringement complaints against numerous mobile app (application) developers claiming that Lodsys owns the exclusive rights to in-app purchase technology. Among all this, Google is not-so-quietlypurchasing patents in bulk from IBM and in its recent acquisition of Motorola Mobility. Needless to say, these lawsuits along with the commoditization of patents lead one to ask: Is the current patent system impeding innovation?

Enter the United States Government. President Obama signed the Leahy-Smith America Invents Act (AIA) into law on September 16th, 2011. The law makes a number of game changing reforms to the current patent system. Arguably the most important, is the switch from “first to invent” to “first to file.” Under the “first to invent” system, an inventor need only be the first to create an innovation in order to claim ownership of the intellectual property. Under the new law, whoever is the first to file a patent for the innovation will be granted ownership rights, regardless of who invented first. The law also places new rules for when an inventor can file invalidating prior art (essentially proving that a patent isn’t original). AIA allows an inventor to file a competing claim while the patent is pending. Third parties can also present legal challenges to a patent for nine months after it is issued. Both changes will have important ramifications for the incentives that guide companies to file, what information they freely reveal to the public, and, ultimately, who will win in the innovation economy. 

Consequently, the new law opens up opportunities for those interested in supporting their innovation economy, especially if their local innovation economy is driven by small to medium sized businesses or single inventors. One opportunity is simply to inform local innovators about the law, the new rules for obtaining a patent, and how/when to file a competing claim. Since the law awards a patent based on who files first, local economies could establish networks that streamline the patent process allowing would-be patent holders to file more quickly. This network could include engineers, technology professionals, and lawyers. Finally, developing a process for tracking new patent filings could provide local inventors with valuable information, especially if a patent is filed for an invention they have already created. With the ink still drying on the Leahy-Smith Act, it is still too early to predict how the innovation economy will react in the coming years. A Brookings' Policy Brief on the subject alludes to the uncertainty surrounding the law as well as the new incentives to innovate. Local innovation-based economies would do well to anticipate the altering landscape of innovation in America.