How many times have you heard U.S. political, business, and economic leaders say that America will always be more competitive than other countries because it is more innovative? Most recently, it was none other than President Obama who emphasized in his State of the Union message that America must "win the future" by out-innovating other countries.
In fact, America already out-invents other countries by at least two to one, in no small measure, because of its flexible, inventor-friendly patent system. So, you may be surprised to learn that a bill likely to cut the heart out of our innovative, entrepreneurial culture is presently rolling through Congress toward the president's desk. Moreover, it seems likely to get his signature unless someone in the White House wakes up quickly to the true nature of what is afoot.
The ironically titled America Invents Act (previously the Patent Reform Act of 2011) is being pushed hard by a group of U.S. multinational companies whom -- surprise -- the act would greatly favor at the expense of individual inventors and small start-up companies, the very people we have in mind when we speak of American entrepreneurialism. Under the guise of simplification and harmonization with international practice, a key provision of the act that deals with the fundamental question of whether a patent is awarded based on who is first to invent or on who is first to file for a patent for the invention would be altered.
An integral part of U.S. patent law since 1839 has been the first to invent provision. Under it, an inventor has a grace period between the time of actual invention and the time he/she must file for a patent. If another person/corporation files for a patent on the same invention before the original inventor, that inventor still has the right to the patent if he/she can demonstrate original invention. This is very helpful to individual inventors and small companies because it gives them time to test the viability and commercial potential of their inventions. It also protects them from those big corporations or others who might hear of their invention and rush to be first to patent it. This "first to invent" provision is one major reason why Americans have become known as such prolific inventors. It is, of course, precisely this key provision that would be altered by the perverse international "harmonization" provisions of the new act. Most countries grant patents to those who first file their applications for patents on new inventions regardless of whether they were actually the original inventors. This is obviously a bureaucratically simpler procedure and also one that obviously favors big companies with platoons of scientists and lawyers who can scan the horizon for news of new inventions and then quickly file patent applications. This is the approach that the new act would impose on U.S. patent application procedures.
Even more perversely and more inexplicably the bill would place American inventors at a great disadvantage to foreign inventors. For example, take the following situation. A German inventor files for a patent in Europe and then, under a bi-lateral treaty, a bit later for the same patent in the United States. Shortly afterward, an American files for a U.S. patent on a similar (not identical) invention. Under the proposed new legislation, the German application would be considered prior art that would block issuance of a U.S. patent to the American applicant. But the reverse situation would not block issuance of a European patent to the German applicant.
Space does not permit me to present a comprehensive exposition of all the perverse elements of this bill, but suffice it to say that the America Invents Act might better be called the Prevent American Invention Act. If the Congress wants to preserve American entrepreneurialism an innovation, it should vote this act down. And if President Obama really wants America to "win the future" he must pressure Congress to vote it down and veto it if Congress adopts it.
Clyde Prestowitz is the president of the Economic Strategy Institute and writes on the global economy for FP.