President Obama's jobs speech of Thursday signalled the massive reform of US patent law to spur innovation and jobs. It's intriguing that lots of main stream media is criticizing the law given that it was passed in a bipartisan fashion (for a change 89 for and 9 against in the Senate). The mere fact of such huge bipartisan support (see text of America Invents Act 2011 here) means that it's useful to figure out how exactly the new law will work – at least ideally- and how it might create jobs:
- How does innovation create jobs ? : Here is a popular older post on the music industry and the summary from the new law about job creation. Innovation or ideas of themselves sound cool but do not create jobs. Search any idea on Google or Yahoo and you'll find hundreds of pages of ideas in the form of blogs,forum opinions,websites etc. Go to Google Scholar and look at again many pages of serious academic work that are all potentially patentable i.e. they are new because if they were not academics will not let them get published through the peer-review process. Despite these "new" ideas the problem is that ideas are difficult to commercialize,build a revenue stream unless you have the rest of the "operating" organizations abilities. You might have the most divine recipe for cookies from your grandma but putting them out large scale needs a cookie company who is able to organize the ingredients (supply chain for sugar, flour,packaging etc.) the production including large stainless mixing vats, ovens and the huge amount of marketing and distribution.
- Large operating companies are necessary: Large companies that are able to manufacture and put the idea to market are necessary. And they are willing to pay big money for patents. Recall the recent Motorola acquisition by Google.
- First to invent or first to file: In the US the earlier law was in favor of first to invent. So an entrepreneur might be able to invent something and someone else might patent first. Now a big company might buy the patent only to face later legal challenge. A bit like buying a house or car and then discovering that a bank or lender comes up with a claim. That is why in house purchases you need to buy title insurance. Till now companies had no way of buying title insurance when buying a patent from an inventer. The new law will give ownership to the "first to file". So when a big company buys a patent from a small company who are much better at inventing stuff, they will know that other claimants to the patent will not emerge later when millions have been spent on manufacturing.advertising and marketing.
There will be the usual implementation issues with the new law. Perhaps patent attorneys will come up with online patent filing software at very low cost for inventors and the USPTO will come up with faster online processing of applications. In any case companies who already have a market will feel more confident of acquiring "clear title" patents. Since inventors are looking for markets and do not necessarily want to get into the cookie making (or rather sausage making) innovation should get spurred as the patent filing process becomes more digital and less expensive.
Once a big pharmaceutical company( like Eli Lilly) buys a patent with serious money from a start-up biotech, they are more likely to create a new product line enabling employment across the supply chain.
Disclaimer: This blogger is not a patent attorney and the post above is not intended to be legal advice.