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News: Dr. Robert Rines Founder & Former President

Investor's Business Daily

May 1, 1995

SECTION: Executive Update; Regulation; Pg. A4

LENGTH: 1477 words

HEADLINE: Does Patent Law Sell Out Small Inventors?

BODY:

Many believe the new rules favor large multinationals and foreign concernsTed BunkerHas the Clinton administration bargained away the fruits of America's future Thomas Edisons and Edwin Lands?

a deal cut with Japan last year, the administration has pushed through some significant changes in patent law that are due to take effect in June.

The two most important changes make patents effective for 20 years from the date of first application rather than the current 17 years from the date of issue, and require publication 18 months after filing instead of on issue.

Critics of these changes claim they will make it much tougher for lone inventors to retain their intellectual property rights and profit by their inventions. And they say the changes favor large multinational companies with the financial muscle and legal expertise to take full advantage of the new system.

What's The Return?

Worse still, these critics contend, the new system will make it easier for foreign firms to gain access to American inventions, ultimately weakening the nation's international competitiveness.

And they contend America got precious little in return - an additional two months to translate their patent applications into Japanese, if they seek a patent there.

''I think where it's going to wreak havoc is with what we might call breakthrough inventions,'' said Robert Rines, an inventor and lawyer in New England.

Historically, Rines says, most ground-breaking innovations have come from individual inventors or small firms, not from large corporations.

''The problem for these small inventors,'' he said, ''is that they have a great deal of resistance from the patent office to giving them broad claims.'' Even after patents are granted, their owners often have to go to court to enforce their claims, and though relatively few seek foreign patents, some do - at considerable expense.

''If you're a small guy, you can't move without the whole world knowing about it in 48 hours,'' observed Salvatore J. Monte, president of Kenrich Petrochemicals Inc. in Bayonne, N.J.

Monte holds 26 patents on molecules he invented, including some used as binding agents in a wide range of materials.

Forced Disclosure

Monte says it can easily cost $35,000 to cover the costs of translating patent applications into all the appropriate languages to facilitate a global filing. Combined with filing and other fees, he says the total can surpass $250,000 -and that doesn't count the litigation expenses of protecting patent rights.

Rines points out that under the new publication rule, small inventors could be forced to disclose their ideas before they are legally protected. Rines says it is relatively common for the Patent and Trademarks Office to reject an inventor's initial application, forcing him to revise the ideas it contains and reapply.

While the U.S. system of awarding patents to the original inventor, not the first person to file, will remain in effect, Rines says the new publication requirement will make key concepts available to all before the inventor has a chance to refile and win protection.

''That's why the Japanese love it, and that's why the big companies love it, and that's why the little guys are deathly afraid of it,'' Rines said.

Rines and others who fault the changes have found a sympathetic audience from a diverse political and ideological spectrum on Capitol Hill.

In the House of Representatives, conservative Dana Rohrabacher, R-Calif., has filed a bill to address the main concerns of critics. More than 150 representatives support the bill, H.R. 359, including some liberal Democrats.

In the Senate, Majority Leader Robert Dole, R-Kan., began pressing the Clinton administration to change course on the patent issue last year.

'Submarine Patents'

Legislators would like to change the new rules to make patent terms run for 20 years from date of filing or 17 years from date of issue, whichever is longer. And they would drop the publication requirement, so that patent applications remain secret until a patent is granted.

But administration officials contend these changes would wash out a major achievement they say the new law would make: It would eliminate so-called ''submarine patents,'' or applications that are purposely dragged out by inventors, keeping them viable but secret sometimes for decades.

Patent Commissioner Bruce Lehman told a congressional hearing last summer that some inventors file patent applications at ''a very early stage in the development of a particular technology,'' which remain secret. As the technology begins to develop in the marketplace, Lehman said, ''the people who originally filed these early and often very uninformed patents, will begin to modify their claims . . .''

Once a long-pending patent does surface, the inventor enjoys potentially much more lucrative claims against established suppliers in well-developed markets.

The purported king of this technique, Jerome Lemelson, a lone inventor who holds 500 patents, won rights to a fundamental bar- code technology in 1992, 38 years after he originally filed the patent. Lemelson went on to extract some $500 million in settlements from several major automakers.

But in a recent interview with Business Week magazine, Lemelson, who is 71, rejected the contention that he purposely delayed the process. And independent research purports to show that Lemelson's actions delayed his application by a mere three years.

Others claim the issue of ''submarine'' patents is a straw dog designed to loosen patent protections critical to the prototypical underfunded, entrepreneurial American inventor.

In his testimony last summer, Lehman cited PTO figures that show 627 patent applications remained in the system for more than 20 years during the period from 1971 through 1993. But Paul Crilly, an aide to Rohrabacher, says his research found more than half were owned either by the government (254) or by a government contractor (74).

While 299 patent applications languished during the period, Crilly notes, 2.3 million more were either approved or denied. And Crilly adds that significant innovations often took many years to win approval: The laser took at least 20 years, and biotechnology inventions typically take 10.

Don Banner, a patent commissioner during the Carter administration, adds that the first several years after a patent is issued often hold little reward for breakthrough inventions because it takes time for industry to develop products from them.

For instance, Banner noted, Chester Carlson, the inventory of xerography, ''waited eight years for anyone to pick it up.''

The Waiting Game

Rines, who also teaches a graduate-level course on innovation at the Massachusetts Institute of Technology, says MIT students recently researched the issue and found it typically takes 10 to 12 years for a breakthrough innovation to win patent protection from the PTO, and has for at least the last 60 years.

It is creators of these inventions ''who are going to be worse off with the 20-year rule,'' Rines said.

But other analysts dispute that finding. Anthony Breitzman at CHI Research Inc. of Haddon Heights, N.J., examined the most highly cited half-dozen patents issued in the past 15 years and found that none took more than three years to issue.

Administration officials say that in any case, a provision in the revised law grants up to five years of patent extensions when bureaucratic procedures delay a patent. And they point out that the typical application is processed in just 19 months.

In the view of Larry Goffney, Lehman's acting deputy, retaining the 17-year protection from date of issue works against all Americans, including individual inventors.

U.S. Disadvantage

That's because almost every other nation adheres to the 20-year standard, and the 18-month publication schedule. So while American inventors and firms would remain in the dark, those who can scrutinize a Canadian or British patent journal, for example, gain an advantage with patents filed overseas.

Worse, Goffney says, is the fact that after 20 years from date of application, patents will expire in foreign markets while they could remain in force in the U.S. under the 1 7/20 approach.

''That would mean people in the U.S. would still be paying a royalty on something that the rest of the world is using free and clear,'' Goffney said. Which means, he added, ''It's the little guy that gets hurt.''

U.S. inventors who want to retain the present system, Goffney claims, are ''really trying to get a favor from the government, welfare for inventors.''

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