Demand for Jobs Bolsters Patent Reform Effort

Today, the U.S. Senate begins debate on sweeping patent reform legislation that, supporters say, will speed innovation and help alleviate the nation's high unemployment.

In its current form, the Patent Reform Act of 2011 (S. 23) would give the U.S. Patent and Trademark Office more leeway in setting application fees and reinvesting surplus funds in new technology and personnel. The agency currently faces a backlog of 700 thousand applications -- each taking as long as three years to approve.

"With technology advancing as rapidly as it does today, your invention may not even be relevant by the time the patent actually issues," said Louis Foreman, founder and CEO of Enventys, a product design firm based in Charlotte, NC.

Inventors currently pay around $1000 to apply for a patent ($500 for individuals and small companies). USPTO officials say they want to reduce the already discounted fee for small entities to $250 to encourage more innovation.

Although the Patent Office has been completely fee-funded since 1990, Congress has diverted more than $800 million dollars in fee revenue from the USPTO to other federal programs.

"If we get patent reform legislation done and the USPTO is set free, deficit neutral, to go attack that backlog and put patents out so that Americans can create jobs, I believe that you are going to see at least hundreds of thousands and, over a period of years, literally millions of jobs created," said USPTO Director David Kappos.

Speed is not the only concern among inventors and entrepreneurs seeking patents.

"They also want certainty," Foreman said, "knowing that when their patent does issue that someone's not gonna jump out of the weeds and say, 'Aha! Here's a prior art reference that invalidates your application.'"

In its present form, the bill would award patents to the "first inventor to file" -- a contrast to the current U.S. system, which awards patents to the "first to invent." According to Kappos, this would make the application process more objective and level the playing field for small companies and individuals who can't afford costly legal disputes over which inventor was the first to develop a concept.

But critics fear the provision will force these small entities to waste time and money on filing patents preemptively before being able to discuss details of their inventions with potential investors and marketing partners, so as not to risk leaking ideas to competitors.

Last week nine trade groups, including the National Small Business Association and, wrote a letter to Senate Majority Leader Harry Reid, D-Nev., explaining that "the bill disadvantages companies that must seek outside financing and strategic partners, in favor of firms that can arrange all of their investment, testing, manufacturing and marketing internally."

Although similar efforts at patent reform failed to advance on Capitol Hill in 2005 and following years, the Patent Reform Act of 2011 enjoys renewed enthusiasm as part of the Obama administration's "Winning the Future" agenda -- promising more jobs through innovation.

"There is only one way you protect innovation and that is with patent protection," Kappos said.