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Startups Push Congress to Maintain One-Year "Grace Period" for Patent Reform

By Peter Zura

A group of 100 startup companies sent a letter petitioning the U.S. Congress to support the current one-year grace period for filing a patent application.   Current reform measures directed to a "first-to-file" regime arguably weaken or eliminate any grace period for disclosed inventions.  That, according to the group, would be a really, really bad idea:

Without the grace period, the patent system would become far more expensive and less effective for small companies. It would create the need to ?race to the patent office? more frequently and at great expense before every new idea is fully developed or vetted. The pressure for more filings will affect all American inventors ? not only a few that end up in interferences under current law. Because filing decisions must be made based on information that will be preliminary and immature, the bill forces poor patenting decisions. Applicants will skip patent protection for some ultimately valuable inventions, and will bear great costs for applications for inventions that (with the additional information that is developed during the grace period year of current law) prove to be useless, and subsequently abandoned. The evidence for this high abandonment trend under systems having no grace period is readily available from European application statistics.

The proponents of S. 515 suggest that the harm of the weak grace period of proposed § 102(b) can be overcome if an inventor publishes a description of the invention, allowing filing within a year following such publication. Underlying this suggestion are two errors. First, no business willingly publishes complete technical disclosures that will tip-off all competitors to a company?s technological direction. We generally do not, and will not, publish our inventions right when we make them, some 2.5 years before the 18-month publication or 5-7 years before the patent grant. Confidentiality is crucial to small companies.

Second, even if we were to avail ourselves of such conditional grace period by publishing first before filing, we would instantly forfeit all foreign patent rights because such publication would be deemed prior art under foreign patent law. No patent attorney will advise their client to publish every good idea they conceive in order to gain the grace period of S. 515. The publication-conditioned ?grace period? in S. 515 is a useless construct proposed by parties intent on compelling American inventors to ?harmonize? de facto with national patent systems that lack grace periods. S. 515 forces U.S. inventors to make the ?Hobson?s Choice? of losing their foreign patent rights or losing the American grace period. It should be clear that the only way for American inventors to continue to benefit from a grace period and be able to obtain foreign patent rights, is to keep intact the current secret grace period that relies on invention date and a diligent reduction to practice.

Read the letter in its entirety here (link)

See EETimes, "Startups petition Congress on patent reform" (link)

See also David Boundy letter of February 1, 2010:

Under the amendment to 35 U.S.C. § 102 proposed in S.515, the one-year grace period becomes extremely fragile?every business must assume there is no grace period, and that an application must be filed before any discussion of the invention with any other investor or strategic partner. S.515?s weak grace period will impose huge costs on every innovator that cannot assemble all necessary financial, R&D, manufacturing and marketing resources within a single firm, or that has to do significant testing outside the firm. Independent inventors, startups, and university inventors will be forced to make ?use it or lose it? patent decisions about a year earlier than under current law, which in turn will require filing of many more patent applications. Each application drains many thousands of dollars of capital from productive uses to speculative patent filings, many of which will turn out to be useless. S.515 will strangle many companies in their cribs, by sucking capital out to the patent attorneys.

Full post as published by Two-Seventy-One Patent Blog on May 04, 2010 (boomark / email).