RUMBLE AT THE PATENT OFFICESmall inventors say proposed changes would favor Big Business
Patents provide the fuel of interest to the fire of genius, as Abraham Lincoln said. But these days, patent law is providing fuel for something else--a pitched battle over intellectual property. Congress is in the midst of altering U.S. patent law, and depending on whom you ask, the changes will either bolster the U.S. industry's technological edge or kill off innovation. The likely outcome is a compromise that will change the U.S. patent system in a way that helps most companies. The new bills ''will create a more efficient patent system,'' says Senate Judiciary Committee Chairman Orrin G. Hatch (R-Utah).
In one corner is a small band of independent inventors and their congressional supporters. In their view, American corporations once habitually stole outside innovators' ideas and infringed their patents, safe in the knowledge that many courts wouldn't uphold the patents. That began to change after the U.S. Court of Appeals for the Federal Circuit was created in 1982 for patent cases. Now, companies are being hit with major damages. Earlier this year, an appeals court upheld $103 million in awards to magnetic resonance imaging pioneer Raymond V. Damadian and his company Fonar Corp. in a suit against General Electric Co. Last December, Haworth Inc., a Michigan office-furniture maker, won $211.5 million in damages from industry giant Steelcase Inc. over patents dating back to the 1970s.
Large companies are fighting back by trying to change the patent laws, small inventors charge. ''They want to return to the good old days of stealing everything,'' complains Grand Blanc (Mich.) inventor Ronald J. Riley. He and other small inventors claim that two industry-backed bills in Congress would do just that. The bills propose to turn the U.S. Patent & Trademark Office (PTO) into a semi-autonomous government corporation still linked to the Commerce Dept. but freed from some bureaucratic rules. But less government oversight would allow big companies to exert undue influence over patent decisions, small inventors argue. Another provision would require that all patent applications be published 18 months after filing instead of keeping them secret until the patents are actually granted--a process that sometimes takes years. The change, small inventors fear, would enable companies to steal their ideas or develop alternative technologies that circumvent the patents.
SUBMARINES. A third proposal would give anyone the right to challenge patents. Companies could ask the patent office to reexamine patents it granted to others--and then participate in the review. Beverly Selby, executive director of an alliance of independent inventors, warns that the provision will allow Big Business to quash small inventors.
Preposterous, retort the bills' backers--which include a big chunk of U.S. industry. PTO Commissioner Bruce A. Lehman says the changes are vital. Turning the patent office into a government corporation would free it from government rules on everything from hiring to printing. Michael Kirk, head of the American Intellectual Property Law Assn., says the change would enable the office to issue better patents faster. And allowing third parties to participate in patent reexaminations would be a cheap, effective way to weed out bad patents.
Even more important, Lehman argues, is the requirement that patents be published 18 months after they're filed. That would solve the problem of ''submarine patents,'' applications that lurk submerged in the patent office for years. When these patents are finally issued, the inventors can use them to sue companies that unknowingly infringed. ''It's a method to extort money out of people who got there before you did and who don't know about your patent,'' charges Lehman. Publishing applications after 18 months would force these patents to the surface far earlier.
Submarine patents are rare, however. And the 1994 General Agreement on Tariffs & Trade (GATT) largely solved the problem by changing the term of patents from 17 years after they are granted to 20 years after filing. So while the submarine patent controversy inspires the most overheated rhetoric, the real question surrounding the 18-month publication term is more subtle. Europe and Japan already have 18-month publication, and U.S. companies want reciprocity. If they have to publish applications elsewhere within 18 months, then foreign companies should meet the same requirement when filing in the U.S., the argument goes. In addition, companies want to avoid sudden surprises from domestic inventors with newly issued patents. Biotech powerhouse Genentech Inc. recently found it had wasted considerable time and money on a research project after a competitor was awarded a patent on the idea. Much of that waste would have been avoided if the patent application had been published earlier.
OPEN INVITATION? But independent inventors like Riley say publishing at 18 months is an open invitation to others to pilfer the idea--and engineering around an invention is hardly different from stealing it. ''Inventors have a tendency to be paranoid, but not without reason,'' he says. ''Eighty percent of my cash flow comes from [awards and settlements from] disreputable companies.'' That's not a view shared in industry. Developing new technology that skirts others' patents is just seen as good business and a legitimate spur to innovation, company insiders say. ''You're supposed to invent around earlier ideas,'' argues a key congressional staffer.
Who will win this fight? When the battle started more than two years ago, no one gave small inventors much of a chance. In April, however, Representative Marcy Kaptur (D-Ohio) pushed through a last-minute amendment on their behalf striking down the reexamination provisions of the House bill and exempting small companies and individual inventors from 18-month publication. ''The Kaptur amendment tilted the playing field back a bit towards the small inventor,'' says former PTO Commissioner Donald W. Banner.
Now the action shifts to the Senate Judiciary Committee, where Jon Kyle (R-Ariz.) is the small inventors' great hope. Congressional sources predict, however, that the Senate won't stray as far from the original industry-backed provisions. While that could make things more difficult later this summer when the two bodies reconcile the bills, chances are good that Big Business will get much of what it wants. But there will be plenty more fire before this debate is over.
By John Carey in Washington, with Otis Port in New York
Updated July 8, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.