An Unlikely Group Fights Patent Reform
An unlikely coalition of small inventors, university scholars and economic nationalists--including Texas businessman Ross Perot--are waging a campaign to derail a controversial modernization of the nation’s two-century-old patent system.
The battle over overhauling the federal system that provides inventors legal protection for their ideas has significant implications for American competitiveness and innovation.
And like the controversy that surrounded the North American Free Trade Agreement, it spotlights an increasingly stark political division in Washington: those who see the U.S. economy in global terms and those who believe the nation’s economy can be managed largely in isolation.
Squaring off over the issue are independent inventors and some of the nation’s biggest corporations--including Intel Corp., AT&T; Corp., General Motors Corp. and Dow Chemical Corp. Also teaming up against patent reform is an unlikely coalition of political opposites, including Perot, liberal economist Paul Samuelson and conservative author Phyllis Schlafly, who condemns patent reform legislation as “the most dangerous bill in the current Congress.”
They are contesting two measures, one passed by the House last spring and a companion bill expected to go before the Senate early next year. The measures would speed disclosure of new ideas by requiring that patent applications, in most cases, be made public after 18 months as is done in Japan, Europe and most other foreign nations.
The bills would also make it easier to challenge patents and boost the ability of corporations to protect trade secrets. Finally, the measures would privatize the U.S. patent office, which was established by George Washington in 1790 and remains so antiquated that it takes an average of 21 months--and as long as 25 years--to issue new patents.
Opponents believe that putting patents on a fast track will expose small inventors to greater risk that their inventions will be stolen by big companies before their ideas receive full legal protection. They also say that making the patent office a government-owned corporation could subject patent examiners to greater industry pressure and compromise their ability to render impartial decisions.
“Early publication of patent applications makes independent inventors potentially the victims of large companies anywhere in the world,” said Steven Michael Shore, president of Alliance for American Innovation, a Washington-based group that represents thousands of small inventors. “How would you like to have to spend millions of dollars to litigate against a multinational corporation that has stolen your idea?”
In September, economist Samuelson and two dozen other Nobel laureates wrote a letter to Congress opposing patent reform, saying changing the nation’s patent laws would discourage small, independent inventors and stifle the American economy.
But big companies say it is they who have been victimized by a slow-moving and understaffed patent office, which still has not fully computerized its operations even though it has awarded more than $500 million in contracts over the last decade to modernize operations.
They say the current patent system encourages small inventors to string out the confidential patent review process until a manufacturer introduces an actual product that appears similar to the inventor’s idea. The small inventor then surfaces and threatens the manufacturer with an infringement suit over a patent application of which the maker had no prior knowledge.
A recent General Accounting Office study found that it took an average of 21 months and as long as 25 years to issue a patent in 1994, the latest year for which figures are available. Although that was an improvement over the average 26 months it took in 1982, critics say dramatic improvements are unlikely as the patent office--which received a record 211,000 patent applications last year--is swamped with a rising tide of submissions.
“To take two or three years to get a patent is a problem,” said Carl Silverman, director of intellectual property at the computer chip-making giant, Intel, which holds 1,500 patents. “We need to hasten the time from filing to issuance because some people ‘game’ the patent system for decades.”
Congress thought it had introduced an incentive to speed up the process two years ago when it amended the patent law to make patents valid for 20 years after the date of application rather than the previous standard of 17 years from the date a patent is issued. Lawmakers thought the change would spur inventors and examiners to work together on reviews in order to maximize the useful life of patent protection.
The change was made after a series of international negotiations involving U.S. Patent Commissioner Bruce Lehman; the late Ron Brown, former Commerce Secretary; and Japanese trade officials.
In exchange for Japan agreeing to publish patent applications in English, limit the ability of competitors to contest patents in Japan and make other reforms, the U.S. agreed to adjust the grant of patent protection in the United States to 20 years from filing, allow third parties greater leeway to contest patents and publish more information about patents before they are granted--in line with the practice of most other nations.
The 1994 pact with Japan went largely unnoticed until the fall of 1995, when Rep. Dana Rohrabacher (R-Calif.) seized upon it.
Championing an issue most lawmakers viewed as too arcane to matter to voters, Rohrabacher became a crusader for independent inventors, saying the notion of individual American inventiveness was being undermined by international commercial interests.
Telling the House Judiciary Committee in November 1995 that the U.S. agreement with Japan represented “criminal naivete,” Rohrabacher added, “We have an un-elected official, Patent Commissioner Bruce Lehman, making deals with the Japanese which will diminish the rights of the American people.”
But patent examiners said the reforms made so far have had little impact. That’s largely because markets move so swiftly today that the useful commercial life of a patent is only two to five years, not 20. So delays of three to five years may not matter to some inventors, as long as their new product is timed to hit shelves at times of potential peak demand.
“Some applicants get real hyped up about getting a patent; others are in no rush,” said one patent examiner, who declined to be named. “They know the average life span of a patent is not 20 years but in the first five years, when most of the money comes in. So they want to cash in on their patent during the prime of the technology.”
For that reason, some applicants deliberately seek to delay their patent award--usually by filing minor revisions--until technological progress appears to signal that a market for the idea has arrived.
A study by the 21st Century Patent Coalition, for example, found that the number of patents issued that had been pending at least 15 years has risen from an average of less than 10 a year before 1984 to nearly 50 in 1996.
Among the most tenacious and infamous for allegedly employing this tactic was Jerome H. Lemelson, a soft-spoken engineer and philanthropist who during his lifetime forced more than a dozen big corporations to pay him more than $500 million to keep him from filing patent infringement lawsuits against them.
Lemelson, who died last month of liver cancer, never manufactured a product and seldom made a prototype. But his collection of engineering blueprints and 500 patents provided ample fodder for his lawyers to create a massive litigation legacy that remains a lightning rod for proponents of patent reform today.
“It’s an extortion scheme, pure and simple,” Bruce A. Lehman, commissioner of the U.S. Patent & Trademark Office, said of efforts to delay patent reviews until an actual product emerges in the marketplace. “I don’t believe Lemelson ever opened a factory to produce a product. . . . The Lemelsons of the world and their lawyers are engaged in a huge litigation scheme which does not serve the system.”
Lemelson’s wife, Dorothy, could not be reached for comment.
But Lester C. Thurow, chairman of the Lemelson-MIT Awards program at the Massachusetts Institute of Technology, said Lemelson was responsible for a number of important inventions, including ones relating to the drive mechanism in audiocassette recorders, machine vision and bar code technologies.
Independent inventors like Lemelson, he added, “are important to this country’s future. They have the freedom to try risky new solutions, unlike their peers in industry.”
Independent inventors--who tend to be a cantankerous, politically disconnected lot--insist that the abuses of the system cited by patent-reform advocates are relatively few. They and their sympathizers argue that it is far more common for small inventors to be shortchanged by the patent system than it is for big companies to suffer.
In an interview that aired on CNN last month, Perot accused Congress and big business of “sneaking through a bill that will destroy the patent system” and leave small inventors vulnerable to having their ideas stolen by “countries all over the world.” Perot said the odds that a small inventor can prevail against such bigger competitors “is zero.”
Still, not all small inventors oppose patent reform.
Indeed, some independent inventors, such as software executive Eric Riff, say the new measures will help speed products to market. The overhaul, he said, will especially benefit the nation’s important high-tech industry, where new ideas can often become old hat before patent examiners can issue an inventor a patent.
“I doubt seriously that most of the people who opposed it have really studied it,” said Riff, who is president of PowerQuest Corp., an Orem, Utah, software company. “They seem to only remember the things that appear to be negative. It already is hard under current law for a little company to deal with a big company that wants to stomp all over it. But I think the little guy will have a much better chance at getting a revenue stream from his patent” under patent reform.
