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Patent-law overhaul is getting mixed reviews

By Hiawatha Bray
Globe Staff / September 12, 2011

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Proponents of a bill to amend the nation’s patent system, passed by the Senate Thursday, say it could spawn a wave of innovation, generate thousands of jobs, and reduce the time and resources spent on debilitating lawsuits. But some attorneys and academics in the Boston area, home to numerous technology companies, say the measure does not go far enough.

Many agree that the measure, previously passed by the House and now awaiting the president’s signature, is a step in the right direction.

“For an innovation-rich region like New England, this is a positive development,’’ said Christopher Anderson, president of the Massachusetts High Technology Council, an industry group. “It doesn’t cost the Treasury anything and improves . . . speed, efficiency, and transparency.’’

Critics, however, say it will take time for the benefits to be felt, and some argue that more sweeping changes are needed.

“It’s good, but it’s not good enough,’’ said Josh Lerner, a professor at Harvard Business School. “It’s a little disappointing.’’

The bill calls for a number of major changes. For the first time, the Patent and Trademark Office would issue a patent to the first party who files an application, instead of to the original inventor, which is often difficult to determine. This would bring US patent law into line with almost every other country’s, and is meant to reduce litigation that arises when a late patent filer claims to be the inventor.

Lerner likes the change. “Having a simpler and more transparent system is better than one where there’s protracted and costly litigation to figure out what’s going on,’’ he said.

But Steve Henry, an intellectual property attorney at Wolf, Greenfield & Sacks in Boston, said the new standard would put small businesses at a disadvantage, because they often lack the resources to file for patents as quickly as larger, richer rivals.

“I think the current law encourages investment in small businesses more than the new law does,’’ Henry said. “I think it could hurt.’’

The proposed law would also make it easier to challenge recently issued patents. Companies and individuals could appeal by arguing a patent should never have been issued, usually because a similar product or process already existed. “You don’t have to wait until you’re sued to say this is an invalid patent,’’ said Susan Montgomery, a professor of law at Northeastern University.

Unlike most other government agencies, the patent office is not funded by tax revenues, but by the millions of dollars it collects in application fees. Its coffers have routinely been raided by Congress and used to fund other government activities, however. Under the amendments, the patent office would place its revenues in escrow, though Congress could still use some of the cash. A proposal to give the agency total control of its revenue was voted down.

Still, analysts say, the new system will ensure that the patent office has enough money to hire more patent inspectors. That could reduce the backlog of more than one million pending applications and reduce the wait time for a patent, which now averages three years.

One proponent of changing the law, Democratic Senator Patrick Leahy of Vermont, has estimated it could lead to the creation of 200,000 jobs by encouraging the launching of new products. But Montgomery cast doubt on the bill’s near-term employment impact. “I don’t think it will bring immediate jobs,’’ she said.

Still, Montgomery predicted, the new law would encourage innovation and eventually benefit the economy. “I think there are real advantages for tech companies,’’ she said.

Hiawatha Bray can be reached at bray@globe.com.