A legislative overhaul of the nation’s patent system, signed into law on Friday by President Barack Obama, could foster innovation and entrepreneurship at the University and throughout Michigan.
The America Invents Act will create a new, fast-track option to shorten the patent review process from three years to one year. This comes as a part of an effort to reduce the current backlog of 700,000 patent applications and synchronize the American patent system with systems in other countries. University experts said the new system will increase patent quality and minimize patent litigation, which could significantly aid entrepreneurs and small businesses.
The changes — which Obama praised in a Sept. 16 White House press release as “the most significant reform of the Patent Act since 1952” — were “overdue,” said Doug Neal, managing director of the University’s Center for Entrepreneurial Programs. Neal said the three-year wait time between patent filing and issuance was not reasonable amid today’s fast-changing innovations.
“That’s sort of a lifetime for entrepreneurs,” Neal said. “Everything is very urgent, and we’re dealing with real-time competitive issues and real-time innovation in customer needs … I can’t underscore enough the value of time to an entrepreneur.”
The reforms could also potentially spur job growth and innovation by discouraging patent litigation among inventors, Neal said. In the past, legal disputes over the rights to patents have inflicted a “big cost” on entrepreneurs and inventors, he said.
Prior to the reforms, two inventors who submitted similar patent applications at the same time would undergo litigation called patent interferences, said Rick Brandon, an associate general counsel in the University’s Office of Technology Transfer. But the interferences were often so costly — sometimes upwards of $200,000 — that one or both investors would concede the patent.
The new reforms resolve that dilemma through guaranteed one-year patent reviews and initiatives, strengthening the quality of the patents, Brandon said.
“I think that overall we’ll find that it gives a lot more predictability to patents,” he said. “And once you have more predictability in the patent system … it makes it just a little bit easier for folks to invest in businesses that are dependent upon technology and patent rights.”
University students and other young entrepreneurs could be among the beneficiaries of the probable uptick in investments, Brandon said.
“Because students are at least as likely to need outside money — outside investors — as any other business, I think it’s going to help them the same, if not more,” he said. “They may be even more sensitive to the need for predictability.”
But while Neal and Brandon expressed optimism that the act could benefit entrepreneurial University students, Erik Gordon, a clinical assistant professor in the Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies, said the bill would be of little benefit to the “little guys.” Instead, he said, it panders to the interests of large corporations.
By not mandating that applicants publicly disclose their applications until a year after they file for a patent, the act betrays entrepreneurs who may be working on inventions already submitted by corporations, Gordon said. He added that legal disputes over patent rights would favor large corporations over small businesses and entrepreneurs, which would hinder the growth of small companies and therefore limit job expansion.
Still, others touted the overhaul as an initiative that will encourage innovation and entrepreneurship at the University and in the region. In addition to the reforms of the patent system, the act calls for the building of the first satellite patent office in Detroit, a milestone that Brandon and Stephen Forrest, vice president of research at the University, called important to the state’s economic growth.
“University research is at the core of our nation’s competitiveness,” Forrest wrote in a Sept. 16 University press release. “This legislation clarifies and simplifies the process by which many of the most promising ideas arising in academia are transferred to the marketplace. It also provides for the opening of the first satellite office in Detroit, the heart of a region that manufactures products for America and the world.”