ATLANTA, Oct. 1, 2007 (PRIME NEWSWIRE) -- Recent developments in Washington have created "land mines" which make it more difficult and expensive for entrepreneurs, small businesses, and individual inventors to patent technology, say attorneys at Morris, Manning & Martin, LLP.
Patents enable innovators to document their inventions and to prevent others from stealing their technology. Patents allowed for Alexander Graham Bell's company to become AT&T, and Thomas Edison's to become GE. Recent changes by Congress, the U.S. Patent and Trademark Office (USPTO) and US Supreme Court are making it more difficult, and potentially costly, for companies and innovators to effectively protect their new technology developments. While the Congressional action has received news coverage, most people are unaware of the chilling effect of the combined impact of the three divisions of government.
"It's like in baseball -- three strikes and you're out," says intellectual property attorney John Harris. "There have been two strikes right down the middle -- the Supreme Court opinion and the USPTO rulemaking. If the third strike occurs and Congress passes the current version of the reform bill, many participants in the patent system will be struck out," he adds.
First, the Supreme Court's KSR v. Teleflex ruling earlier this year raised the bar for obtaining patents in general -- making it more difficult for inventors to show that their new technology improvements are worthy of patent protection.
More recently, in widely-criticized final rules released in late August, the USPTO effectively limited the number of patent applications that an applicant can file for related inventions.
"Complex software and hardware systems typically involve many related innovations," Harris says. "Protecting the key features and aspects of a complex system will now be more difficult and will require more careful planning."
The new regulations not only limit the number of patent applications that can be filed, but also limit the number of claims that can be presented for examination in any one application or family of related applications. Although applicants are "permitted" to pursue more claims, they can only do so by filing an "examination support document" or "ESD."
"An ESD is a poison pill for most companies," says intellectual property attorney Jack Todd. "An ESD shifts unacceptable costs, burden, and risk to a patent applicant and, because of the claim limits, has the practical effect of limiting the breadth of patent protection available to inventors." These new patent rules, which go into effect November 1, 2007, represent a significant change to many current USPTO policies and are already drastically affecting patent filing and prosecution strategies.
Additionally, earlier this month, the U.S. House passed potentially the most significant patent reform bill in 50 years. If enacted, this patent reform legislation would have an even greater impact on the overall patent system than the recent rule changes.
The House bill changes the patent system from one that favors the first to invent a technology with one that favors the first to file a patent application for that technology -- similar to what is done throughout the rest of the world.
"Of perhaps even greater significance is the provision in the proposed bill that would require an applicant to prepare and file an ESD with every patent application filed. This requirement, if enacted, would impose significant new costs on all patent applicants, but they would have a significant and disproportionately hard impact on entrepreneurs, small businesses, and universities," Todd explains. The House bill is being pushed by large technology companies that are tired of fighting off patent infringement claims from smaller companies. The House bill was opposed by small business and universities, as well as venture capital firms and other companies that invest in start-up businesses.
The House bill does have one provision that many are pleased with -- it would forbid businesses from patenting tax advice. "Patenting tax advice is a horrible idea," says tax attorney Chuck Beaudrot. "It puts ordinary taxpayers and their advisors at risk of inadvertently infringing patents in areas they have no realistic way of knowing are patented."
The Senate may debate its version of the bill later this fall and the President has indicated a willingness to sign it into law.
Morris, Manning & Martin, LLP, (www.mmmlaw.com) enjoys national prominence for its corporate finance, securities, litigation, technology, intellectual property, real estate and real estate capital markets, environmental, insurance and healthcare practices. The firm has offices in Atlanta, Washington, D.C., Charlotte, Raleigh-Durham and Princeton.