Patent changes may help state’s inventors
Leahy, Hatch push to reform to unstick long, expensive process that may be costing jobs
Source: Burlington Free Press
By Dan D'Ambrosio
June 12, 2011
Five years ago, electrical engineer Denis Place and two partners left Suss MicroTec AG, in Waterbury, a German-owned manufacturer of machines to make microchips, and formed their own company based on an idea they had for testing those chips.
Today, Suss MicroTec is gone, and Place and his partners, with a patent in hand for their testing process, have a new company in Winooski. It"s called SemiProbe, with eight employees, and big plans for the future.
"In terms of employees, over the next five years our expectation is to be at 60 to 75 people," said Steve Mank, SemiProbe"s chief operating officer.
If Mank is right - and Place, his boss, believes he is - SemiProbe will come close to replacing the 80 jobs Vermont lost last year when Suss MicroTec closed up shop after 20 years in the state and moved its manufacturing back to Germany and its marketing to California.
SemiProbe is one small example of why innovation and invention are critical to America"s economy, especially in hard times, when jobs are scarce.
"There"s something to be said for the fact that a poor economy pushes people to be much bigger risk takers," Mank said. "They say to themselves, 'It can"t get worse in corporate America, I"ve had this idea in my head for a long time, I need to go do it." I think that happens a lot."
Innovation also comes from corporate America, from companies such as IBM, whose microchip plant in Essex Junction is one of the most inventive of all of IBM"s facilities around the world.
Rick Kotulak, IBM"s site counsel at Essex Junction, said in March some 500 patents had come out of the Essex facility.
"Even per capita in IBM we do better than any other IBM site," Kotulak said. "There are a lot of really bright people here."
Although best known nationally for cows and ice cream, Vermont is fertile ground for inventors, and not just at IBM, said Janette Bombardier, IBM"s senior location executive.
"We"re the most innovative state in the country," Bombardier said.
Unfortunately that innovation runs into a three-year backlog of more than 700,000 patent applications currently clogging up the U.S. Patent Office, which is why Sen. Patrick Leahy, D-Vt., together with Sen. Orrin Hatch, R-Utah, is pushing for patent reform in Congress. The patent process is also expensive, said Place, who said his small company spent the national average of between $20,000 and $40,000 to get its patent. SemiProbe received the patent last year, after filing for it in 2006. Four years is not that long to wait, said Place, who said it can take twice that long to get a patent.
"The patent system is really due for an overhaul," Mank said. "It was never designed to take on the sheer volume of ideas that people try to patent, let alone the complexity. The whole thing become unmanageable and makes it really tough for small companies like ours starting out. Patents for start-ups are really important."
Leahy began his effort to reform the patent office six years ago, said Erica Chabot, spokeswoman for the Senate Judiciary Committee Leahy chairs. The last comprehensive reform of the office, Chabot said, was nearly 60 years ago.
"Imagine all the inventions and developments in the last 60 years, and we"re working with an outdated patent system," she said.
Changing the patent system
Leahy"s bill to reform the Patent and Trademark Office, co-sponsored by Hatch, is far-reaching, but has two main pillars, said Leahy spokesman David Carle. The first is to change from the "first-to-invent" system to a "first inventor-to-file" system, similar to the "first-to-file" system used by every other industrialized nation in the world.
Under the "first-to-file" system, the question of who deserves to own a patent is simplified, Leahy said. During a Senate debate in March, Leahy said the first-to-file system simplifies and adds objectivity to the process. "By contrast, our current, outdated method for determining the priority right to a patent is extraordinarily complex, subjective, time-intensive, and expensive," Leahy said during the debate.
Louis Foreman, founder and chief executive of Enventys, a product design and engineering firm in Charlotte, N.C., who has 10 patents to his name, explains the problem from an inventor"s perspective.
"Someone files for a patent and all of a sudden someone else jumps out and says, 'Aha, I invented it before you!"" Foreman said. "That leads to complex litigation, bogs down the courts and costs lots of money."
The second pillar of Leahy"s reform is to put the funding of the Patent and Trademark Office under its own control, rather than under the control of Congress, which has chronically underfunded the agency, said Aaron Cooper, Leahy"s counsel on patents and intellectual property.
"The bill allows the Patent and Trademark Office to keep all the money it brings in," Cooper said. "The office is completely funded by fees."
Under the current system, the Patent Office forwards the fees it collects to the U.S. Treasury. Congress then doles the money back to the office through appropriations but inevitably keeps some of the money for other purposes. In 2010, for example, the Patent Office was appropriated a total of $2.01 billion dollars, but took in $53 million more than that in fees.
"They can"t improve systems or plan for the future if they don"t know they"ll be able to use the money they"re taking in," Cooper said of the Patent Office. "One thing that unites the patent community is they don"t mind paying, but they want to know the money they"re spending is used to review applications."
The American Invents Act of 2011 passed the Senate by a 95-5 vote, but now has to get through the House, where there is expected to be opposition. The House is in recess, but could take the bill up for debate when it returns to work Monday.
Foreman hopes the bill doesn"t fall in the House.
"People are just afraid of change," Foreman said. "We"ve had a patent system that has served us well but is broken and needs to be updated. We need to speed up the time to get a patent through the system. It"s now three years from when you file a patent. That"s too long. As a result there are businesses not getting funded, technology not getting launched, and jobs not being created, because there"s doubt whether or not a patent will ever issue."
Patents in the fast lane
The Patent Office is already showing some signs of improvement since the appointment in August 2009 of David Kappos as its new director. Kappos is a former intellectual property attorney for IBM. In 2010, the Patent Office granted a total of 244,358 patents, up 27.3 percent from 2009, when 191,933 patents were granted. By comparison, the number of patents granted in 2009 was up only 3.6 percent from 2008, when there were 185,244 patents granted.
Tom Ference, who is on the board of directors of InventVermont, a nonprofit formed to help Vermont inventors benefit from their inventions, attributes the nearly nine-fold increase in the number of patents issued in 2010 over 2009 to Kappos.
"He"s very much a business guy, and he knows the importance of intellectual property to business," Ference said. "He was brought in to run the Patent Office more like a business and he"s doing a good job."
Ference is not quite as sanguine about the proposed patent reform. For one thing, he doesn"t believe the cost of getting a patent will be significantly reduced by the reform, despite a provision that requires a 50 percent reduction in fees for small businesses, and that creates a new "micro-entity" designation for "truly small and independent inventors" who will receive a 75 percent reduction in fees.
Ference says that the bulk of the cost for getting a patent is not in the fees paid to the Patent Office, but in the ancillary work that goes into getting to the point of filing. He uses the example of a $22,000 fee to make his point."It turns out the fees paid to the Patent Office are around $2,000," Ference said. "The other $20,000 is not going to the Patent Office, it"s going to whoever is doing the process. Could be patent agents, patent lawyers, people doing searches, people doing artwork, all the parties working to help get the patent written and through the patent office. That"s probably not going to change any."
Ference is a patent agent, meaning he can help to write a patent and process it through the patent office, but he can"t practice law. Ference is also somewhat skeptical of the "first-inventor-to-file" provision of the reform.
"There is a portion of people who think it benefits large business because they have the resources to make things happen quicker than a small business of under 500 people," Ference said. "Some people also say it will hurt small business because they will feel compelled to file for a patent quicker and use up money they would need for other things like building the business."
Scott Costa, a research scientist at the University of Vermont, is about 90 percent of the way through the process of patenting a green technology he invented called MycoMax. Made from a byproduct of cheese production, MycoMax is a "fungal enhancer" that multiplies the effectiveness of biopesticides tenfold.
Costa has had success with his invention - the U.S. Forest Service tested it against hemlock woolly adelgid, an invasive species that kills hemlock. There have also been clinical trials in Vermont state parks. Costa is at that stage when he can"t quite launch his company, but he can see a promising vision on the horizon. The question is whether he can get there.
"We"re in the valley of death, and we have some people that are interested," Costa said. "It"s a matter of aligning that funding during these economic times. We have something unique in our country, our ability to innovate. Part of that comes from our freedom. It frees your mind. I really, truly believe that."
Contact Dan D"Ambrosio at 660-1841 or email@example.com or follow him on Twitter at www.twitter.com/dandambrosio.