Pete Tormey moderates our Walnut Creek breakfasts; he is also a patent attorney at Antero & Tormey LLP. He offered his analysis of the new patent law update, the America Invents Act (HR 1249 112th Congress), concluding that it is an unfavorable development for bootstrappers.
Bootstrappers won’t like the recently enacted patent reform law. Called the America Invents Act, it is expected to be signed into law by President Obama soon. The law, which takes effect 18 months after signing, provides for a “first to file” patent system. Currently a patent is awarded to the first person to invent and reduce the invention to practice, even if they file up to a year after invention. With the new law the patent will be awarded to the first person to file for the patent and the one year grace period will be gone.
While this might seem like no big deal to a bootstrapper, it is a serious handicap. Today when I meet someone with a new idea but no money (i.e. a bootstrapper), I suggest they document their invention well, test market it and if it looks like a winner, file for patent protection. The current law allows me to argue the actual invention date and not the filing date for determining priority over other inventions. The bootstrapper gets a chance to gauge success before spending money on a patent.
Under the new law, if a person conceives an invention they must file soon. If they take the time to test the market, another inventor might file for the invention first. The inventor who takes the time to determine marketability might lose the race to the patent office.
While it is too early to know what the overall affect of a first-to-file system will be, the research indicates that smaller organizations will suffer from this new patent scheme. Bootstrappers will need to understand the risks of waiting to file for a patent and develop patent strategies, such as filing many provisional patent applications before market testing, to protect themselves. Either way the new law is another obstacle to getting a company off the ground.
Update: The America Invents Act was signed by President Obama on September 16 and effect March 16, 2013. Pete Tormey is speaking on “Minimizing the Impact of the New Patent Law” at the October 21 Bootstrapper Breakfast in San Francisco.
Pingback: Patent Reform Not for Startups | Carl's Dogma