New Patent Law Only Makes Life Harder for Startups and Universities

Let me introduce you to my lobbyist. Image by David Saracino

President Obama signed a bill on Friday that was supposed to be a sweeping reform of America’s badly broken patent system. But the legislation that went into effect won’t do much to change the landscape, currently dominated by large corporations and IP hoarding patent trolls. In fact, the new law will make life much harder for the startups and universities who generate so much innovation.

“For the little guys, the young companies and the universities, this is a sea change, probably the biggest shift in 100 years,” James Mullen, a patent partner at Morrison and Foerster told Betabeat by phone. “The law now honors first to file, instead of first to invent.” That means the race will be won not by the creators, but by the lawyers, and the patent trolls that can afford to hire swarms of them to file patents.

The bill does try to cut back on bad patents by creating a post grant review, a nine month window in which a weak or repetitive patent can be challenged. But again, this favors larger, more established firms, who have the resources to scan through hundreds of new filings and keep tabs on all their competitors.

And the overworked patent office won’t be getting any relief thanks to this new bill. “The original legislation would have provided the patent office with all its user fees. Over the years the patent office has had hundreds of millions of dollars in revenue that it generates directed away from their office and into the general coffers. When people say this bill has been watered down, this is the portion that best fits that description,” said Mr. Mullen.

In 2010, according to USTPO, $200 million in fees collected were diverted away from the patent office. In 2011 this number is expected to grow to $300 million.

There is a nice round-up of the major changes in the new law on Chris Dixon’s blog. Mr. Dixon, who has been fierce critic of the current patent system, also felt this new legislation would favor coporations over startups. “My (non-expert) analysis:  seems to me this doesn’t fix any of the very serious problems in our current patent system,” he wrote. “First-to-file seems to reward companies with the resources to file many patents.  The post grant review seems to imply you should to monitor every patent issued and challenge them within 9 months. I don’t see how any organization without massive resources could do this.” New Patent Law Only Makes Life Harder for Startups and Universities