Jan. 23, 2012
Law professor sees possible flaw in patent reforms
American patent law had become old and antiquated. Unchanged for more than 50 years, it was still the tool used to sort out patent protection for things like tablet computers, cell phones, and genetically engineered seeds that didn't even exist the last time it was reformed.
So last September, Congress passed the Leahy-Smith America Invents Act (AIA) to modernize the patent system in ways that politicians said would encourage innovation, job creation and economic growth. But University of Iowa law professor Jason Rantanen says the law contains a provision that could undo much of the law's improvements to the patent system.
The provision allows patent applicants to give incomplete or even false information during the application process, then go back and fix it if they're challenged later. In the meantime, though, Rantanen says the patent given to the applicant might keep potential competitors from the market, reducing innovation and competition.
The AIA made several changes to the U.S. patent system designed to speed up the application process, weed out bad patents, and give more legal protection to patent holders in an effort to encourage innovation in research and development. But Rantanen says the potential problems come from a supplemental examination process the law puts in place that protects patent holders who secured their patents by filing incomplete or even inaccurate patent applications. Before the AIA reforms, Rantanen says an applicant would likely face some kind of legal reprimand if he, for instance, withheld information important to the Patent Office's decision to grant a patent, then later sought to assert the patent.
But Rantanen says that with the AIA in place, the applicant can simply request a supplemental examination from the Patent Office when challenged, provide the information withheld earlier and be off the hook. This would be true, he said, even if the Patent Office would not have granted the patent in the first place if it had known all the relevant and accurate information.
"Even the use of false data to obtain the patent in the initial examination can be exonerated by filing a supplemental examination request should litigation appear on the horizon," says Rantanen, an intellectual property law expert. "In practical terms, the supplemental examination mechanism provides amnesty to issued patents that were obtained inequitably."
Rantanen says the provision is essentially a "get out of jail free card" for the holders of possibly ill-gotten patents. This despite the fact that patent amnesty has the potential to jeopardize American innovation, job creation and economic competitiveness by the increasing the cost of competition, making research and development more expensive, and making market entry more difficult and risky.
In the end, Rantanen says the process presents a risk of increasing the number of low-quality patents, or those patents that should never have been granted in the first place. Extensive economic research shows that low-quality patents drive up costs for competitors and increase the cost of R&D because future innovators may be forced to pay rent for weak patents.
Rantanen's paper, "Toward a System of Invention Registration: The Leahy-Smith America Invents Act," was co-authored by Lee Petherbridge, professor of law at Loyola Law School Los Angeles. Their paper was published in the Michigan Law Review First Impressions and is available online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1961173.
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