Keep `First to File' Patent Rule Pending

Proposed changes in US patent laws would sacrifice inventiveness and innovation on the altar of international competitiveness

NEW Americans lose sleep worrying about the United States patent system. But among those who work closely with patents, there is a quiet riot over proposals to change the basis of intellectual property rights from the first inventor to the first to file on a patent for an invention, whether or not the first to file is the inventor. Those in control of the intellectual property rights for inventions control the industries the inventions launch. People who control important patents also bring wealth to the ir countries via licensing fees.

Backing "first to file" is the National Association of Manufacturers; the Intellectual Property Organization, or IPO, which represents large corporate patent holders; and an association of patent attorneys. Considerable pressure for this change also is coming from Europe and Japan, which connect patent harmonization issues to trade agreements such as GATT. They seek a greater share of the US market, the world's largest, by reducing the obstacles of competing US patents.

The first-to-invent camp is led by loosely organized independent inventors, university researchers engaged in technology transfer, and a minority of patent attorneys and scholars. They were encouraged that first-to-file momentum may have stalled on Feb. 9, in Boston, when the American Bar Association House of Delegates voted to reaffirm its opposition to first-to-file.

However, inventors remain concerned that well-heeled opponents will tip the scale their way in a Congress beholden to large campaign contributions. They also are alarmed by an IPO memo in December that encouraged members to influence Commerce Secretary Ron Brown by contacting partners of Mr. Brown's former law firm. The goal was to place first-to-file advocate Robert Armitage in the job of US Commissioner of Patents. Fast track for first-to-file

Indeed, the first-to-file track appeared well-greased last year. The Bush administration established an Advisory Commission on Patent Law Reform. Edward MacCordy, a commission member representing university researchers, resigned in disgust after he found the affair so "obviously orchestrated" he wasn't allowed to publish even a one-page dissent in the commission report.

When a bill to adopt the first-to-file system was proposed last August by Sen. Dennis DeConcini (D) of Arizona and Rep. William J. Hughes (D) of New Jersey, the hearings were held after three weeks, speed rarely seen, and were limited to invitees. Oddly, the commission and the hearings lacked people who actually invent things.

Speaking for NAM and UpJohn, patent attorney Mr. Armitage testified that first-to-file harmonization would greatly simplify US law and would affect only a small number of second-to-file inventors who might otherwise eventually prevail, after a costly legal contest, as the first to invent.

Harmonization, the argument goes, would make it easier for US companies seeking foreign markets to acquire foreign patents.

Since large corporations already operate internationally in a first-to-file world, what's the rush on the important domestic front? Mr. MacCordy, the former president of University Technology Managers, says US companies pushing first-to-file really seek "prior user" rights that negate the exclusive licensing rights now granted with a patent.

Under prior-use proposals from Armitage and others, companies that claim prior use of an idea before the patent was filed, or that made "substantial preparations for use," could continue use, manufacture, and sell the product without paying the patent-holder. Barrier to small investors

As former US Patent Commissioner Don Banner has put it, "How many small investors can lay everything on the line if a giant like GE could come forward later and say it already had the invention?" As it is, only 2 percent of all patents are successful enough to repay even the legal costs over the 17-year life of a patent.

Besides providing incentives to create, the patent system is designed to promote and share knowledge. Yet this benefit could be lost if a company could claim prior-use rights and then call the invention a trade secret.

When he hears first-to-file being promoted, Mr. Banner, a patent attorney in Washington, cocks his jaw like he's loading a gun. "Since the Constitution, the US system of rewarding the actual inventor with intellectual property rights has been the wellspring that sustained our country's economic growth.

"How much of a net job increase are large corporations generating? Zip. Their jobs are dropping like flies. It's entrepreneurs and the growth of small businesses that increase jobs in this country. More often than not, it's independent inventors that plant the seeds for new industries."

James Chandler, director of the Computer Law Program at George Washington Law Center, notes that first-to-invent was contemplated by our Constitution. Hence, "any system preserving the rights of someone who isn't the first to invent is of dubious constitutionality. This could take years to resolve. Patents granted in the interim could go up in smoke.

"The secret of success for any property system is the certainty of the means of acquisition and the security of possession. To interject uncertainty and insecurity at this time, during such keen competition, would be disastrous."

Mr. Chandler says he believes there is ample room for improvement in both the US and world systems, but that nothing is worth trading away the core concept of first-to-invent.

Dr. Irving Kayton, a professor emeritus of intellectual property at George Mason University's School of Law, says that American corporations who think their size and marketing apparatus will keep them out front in a world-wide first-to-file system will "rue the day the system switches. The Japanese, with 25,000 to 50,000 patent filers and computerized systems for the instant transmission of applications, are already set up to win any first-to-file competition. Why do you suppose multinationals and foreig n countries want to end our first-to-invent system, he asks, to preserve our intellectual property rights and help us compete?" License to co-opt?

US inventors fear first-to-file will bring forth the entrenched corporate culture, technology ripoffs, and lack of legal recourse for small operations for which Japan is known.

Mitsubishi, for example, is famed for keeping out competition by patent flooding with what Don Spero, the founder of Fusion Systems, calls "sashimi" patents - thinly-sliced variations that surround someone elses proprietary technology, thwarting the inventor's ability to develop his product. Large companies control the Japanese market by cross-licensing each other.

Jerry Lemelson, whose 500 patents include inventions central to modern assembly lines, says, "Our creative process includes sharing information and the chance to fully develop our inventions before we file.

"Imagine the effect on small inventors if suddenly ideas can be stolen and slipped to companies with the research facilities and legal resources to rush multiple filings on a wide range of applications. Consider the impact on university labs which, due to their open, academic nature, are far more exposed than corporate labs. If you think we're paranoid now, try us under first-to-file."

Because today's patents make tomorrow's jobs, the debate over patent policy is one Americans should wake up for.

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