MIT Technology Review

Tuesday, September 13, 2011

How Congress Just Failed to Fix America's Broken Patent System

The first thing you need to know about the U.S. patent system is that it has a backlog of more than 700,000 patents.

The second thing you need to know is that the U.S. Patent and Trademark Office has been so neglected for so many years--essentially robbed of funds by Congress, which reappropriated portions of the agency's budget for other purposes--that the organization tasked with protecting America's technological and scientific assets labors with too few staff and a "20-year old technology infrastructure that does not even remotely enable it to take advantage of modern information technology."

And the most important thing you need to know about the U.S. patent system is that the America Invents Act just passed by Congress doesn't fix any of this. Nor does it touch the larger issue of whether or not it's wise to allow inventors to patent business processes and software and then sue the hell out of each other in a cage match that is essentially a tax on innovation.

The major opportunity in this act, aside from the elimination of software patents, was to free the USPTO from the congressional appropriations process, whereby Congress exercises control over the agency's budget. The USPTO doesn't use taxpayer money--it's funded by application fees--and yet it still has to ask Congress for permission to access those funds, giving that body an opportunity to reappropriate them for any other purpose.

Giving the USPTO self-determination over its own budget would have at least allowed it to tackle that 700,000+ backlog of patents. That provision of the bill, which originally appeared in the Senate version, was blocked by House Budget Committee Chairman Rep. Paul Ryan (R-WI) and Appropriations Committee Chairman Hal Rogers (R-KY), who appear to have been confused about the source of the USPTO's funds. (i.e., not taxpayer dollars.)

The news isn't all bad, however. The act does expand the "prior use" defense of intellectual property to a wider array of patents. In other words, if I can prove I was doing something before someone got a patent on it, I might be exempt from their suing me for doing it. It's not clear yet how this will play out in the software patent wars; this may be a weak defense and it will take years of case law to sort it out.

A second thing the act does is eliminate the ability of parties to file suits that can name multiple defendants. In other words, if I have a generic patent on, say, virtual keyboards, I can't simply file a single suit that names every phone maker in existence. This is a favorite tactic of patent trolls. The fact that the courts have been flooded with suits of this kind in advance of the signing of the act is a sure sign that the trolls realized they wouldn't be able to continue this abusive practice after the act became law.