Inventors
| Pressure
on the American Patent System |
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Part
4: Privatizing the PTO
by
Ronald
J. Riley
The upper management of the Patent
and Trademark Office is lobbying vigorously to become a corporation. The
purpose of HR.1659 (104th congress) was to privatize the PTO. HR.1659,
1732, 1733, & 2235 were all combined into HR.3460 in the 104th congress
at the last minute, and when it failed to pass they reintroduced it as
H.R. 400 / S. 507 in the 105th congress.
The PTO upper management presents
many reasons why this would be an improvement but the real reason is to
distance them from Congressional oversight. This attempt clearly violates
our constitution because the patent process is quasi-judicial.
Privatizing the patent office will
lead to ever higher costs. The patent office plans to spend $2 billion
to construct a new complex. An incorporated PTO will be as efficient and
accountable to Congress and the American public as our postal system, a
situation I hope doesn't happen.
No one would advocate privatizing
our Federal court system, and since the patent office serves a similar
function, it is not appropriate to privatize the PTO.
Sixty percent of the National Inventor
Hall of Fame inductees were selected for inventions that occurred while
they were independent inventors. Only 29% were corporate inventors, some
of whom are also independents who incorporated. Higher patent office fees
make it increasingly difficult for independent and small business inventors
to patent their inventions. Small entity inventors are the backbone of
job creation.
Stripping the patent examiners of
their civil service protection will make the whole patent system very susceptible
to outside influence. Current PTO management has been influenced more now
by large corporations than at any other time in our history. It is crucial
that we stop the outside influence. Loss of PTO employee civil service
protection will make the patent process very susceptible to outside influence.
This will cause patents to be granted that should not be issued, and cause
patents that should be granted to be denied.
Patents will be unenforceable for
anyone except the largest companies. Inventors like me will abandon innovation.
America's declining standard of living will accelerate.
One reason that America is the world's
biggest source of inventions is that we attract the best and brightest
from other countries. I suspect that America will stop being the beneficiary
of the brain drain and that we could even end up being an exporter.
LARGE CORPORATE
MOTIVES TO WEAKEN PATENTS
While inventors still face
many obstacles in defending their intellectual property rights, they have
made progress during the past ten years. The creation of a Court of Appeals
for the Federal Circuit (CAFC) resulted in effective enforcement of patents.
Prior to its creation, individual judges would only hear a few patent cases
in their careers. The CAFC heard many patent cases and recognized the pattern
of large corporate abuse of small entities, and their rulings reflected
that knowledge. Corporations that never recognized inventors’ rights started
losing large cases.
Patents were virtually unenforceable
for the small business from about 1940 through the mid 1980’s. After the
formation of the CAFC in 1981, patents again became enforceable. Corporate
downsizing created an incentive for many former corporate inventors to
become independent inventors. These new independent inventors started new
companies based on their inventions, and/or licensed the inventions to
other small businesses. The big guys found themselves on the outside looking
in. Big business needed the technology that these new companies were selling.
My experience is that eighty percent of those big companies follow their
well-established habit of simply appropriating the technology.
Unfortunately for them, CAFC
started handing out stunning awards, and because of the long delays in
patent litigation, the infringers are faced with huge liabilities. Recent
examples of such awards are:
-
1) Celeritas versus Rockwell,
$115 million in Celeritas’ favor.
-
2) Fonar versus GE, $98 million in Fonar’s
favor.
-
3) Hayworth versus Steelcase, $212 million
in Hayworth’s favor.
It is unfortunate
that many large companies would rather weaken patent law, which would sacrifice
all of America's long-term prosperity in order to gain a short-term advantage
against inventors. In actuality, big business should be viewing those inventors
as the business community's fountain of youth.
The inventor's progress
is alarming to those multinational businesses and governments that have
become accustomed to unlawfully appropriating individual's and small business's
intellectual property. They are spending large sums of money attempting
to gut our patent system, to render patents once again unenforceable so
that they can take the benefits of American ingenuity and the jobs for
their profit.
AN INVENTOR'S
VIEW OF MANY LARGE CORPORATE MANAGERS
Inventors have a unique perspective
about the management of many large corporations. Only one percent of independent
inventors achieve commercial success. Contrary to popular belief, modern
day inventors who are commercially successful spend five percent of their
time inventing and the other 95 percent enforcing their patent rights.
Many successful American corporate
inventors left large corporations because we were sick of short term goals,
and the profit every quarter at any cost mentality that is the norm in
many of today's corporations. Most inventors see this trend of management
mentality as a cancer that is destroying the infrastructure of America's
businesses.
Our corporate experience is one of
the reasons for our commercial success as an inventor. The key to that
success is our intimate understanding of what motivates many of today's
upper managers. To understand our success you must see the managers in
the same light as we do.
A CEO of an American subsidiary of
a multinational corporation told me that a settlement would lower his bonus
and that litigation was funded from a separate pot. He suggested that I
go ahead and sue them, that it would take at least three to four years
for the case to be decided, and that he could change jobs if I prevailed.
This CEO was more honest than most about his motives, but I am sure that
many others use the same reasoning process.
Many corporate managers are basically
like teenage boys. They have a strong urge to mark every tree in sight.
They are excessively aggressive and they often let their egos interfere
with good judgment. They are galled by the notion that inventors would
have the nerve to demand compensation for their creativity. These corporate
managers immediately set out to teach the upstarts a lesson and almost
always underestimate our abilities. Their attitude causes them to make
major errors of judgment that ultimately cost their companies dearly.
The fact of the matter is that there
are many similarities between teenagers and many of today's upper managers.
They both frequently have a poorly developed sense of right and wrong and
are often dishonest. They both allow excessive aggressiveness to get in
the way of rational decisions. Both are impulsive. Both are motivated by
short-term gains. Both feel they should not be held accountable for their
actions. Both mask feelings of inadequacy with bluster. Both are prone
to ignore problems hoping they will just go away.
Many of America's largest corporations
are lumbering dinosaurs that fail to nurture creativity and act like schoolyard
bullies. Many conduct smear campaigns against America's most prolific inventors
while attempting to steal their work though litigation. They simultaneously
attempt to weaken our patent laws, thereby aiding foreign interests who
want to take advantage of American's creativity. This is one more sign
of short-term goals on the part of our largest businesses. What multinationals
fail to realize is that they need independent inventors. We are the source
of new ideas that sustain all businesses.
IMPACT ON
AMERICA
This is not an abstract problem that
only affects inventors. The issue affects every citizen of our country.
Loss of the economic benefits of Yankee ingenuity will cost Americans decent
paying jobs and will doom our children to a much lower standard of living.
America's economic might is a direct
result of our producing more inventors per capita than any other country
in the world. Our culture is known for producing independent thinkers.
Other cultures have studied our educational system in the hope of learning
how to produce inventors.
A healthy economy is dependent on
a diverse mix of both startup companies and large businesses. If we allow
laws to be changed that benefit large companies at the expense of small
companies, which are the source of 75% of innovation, we will have far
fewer startups and fewer inventions.
Large companies have become very
short sighted in the last ten to fifteen years. Their quest for ever-higher
short-term gains has radically altered business practices. All of us know
persons who have been displaced from jobs by downsizing. Many people are
not aware that Research and Development staff persons are being let go
in greater numbers than many other groups. This is a result of large companies
only funding small improvements that will give them an immediate return
on their investment.
The Wall Street Journal published
Corporate Research: How Much Is It Worth? Top Labs Shift Goals To Fast
Payoffs by Gautam Naik on 5-22-95. The article tracks R&D spending
from 1990 to 1994 at AT&T, GE, IBM, Kodak, Texaco, and Xerox. The article
describes how total R&D spending at these companies has been cut from
11.3 billion in 1990 to 8.45 billion in 1994. The picture is even worse
if we look at peak spending in the 1990 to 1994 time frame and compare
it to the spending in 1994 in which case spending dropped from 12.19 billion
to 8.45 billion, or a 31% drop. The article states "the biggest U.S. corporations
have cut back sharply on research into "basic science" -- the exploration
of how nature works at a fundamental level -- to pursue short-term goals
and to commercialize products more quickly. Corporate labs, home to 75%
of the nation's scientists and researchers, are replacing a cherished culture
of independence with a results-oriented approach." the article says "Already,
U.S. companies are falling behind."
Dr. Albert Link, an economics professor
at the University of North Carolina at Greensboro warns "It's a short-term
response aimed at keeping stockholders happy. Without question this will
hurt American competitiveness."
These trends are causing many inventors
to form small companies to develop ideas for which large companies are
not willing to make a long-term investment to commercialize. Large companies
problem is that they want to be able to take advantage of the small companies
work without fairly compensating them.
Everyone understands that a farmer
who consumes his seed corn is foolish. Small companies seed the market.
If multinational companies are successful in crippling the patent system,
all Americans will suffer a decreased standard of living.
CONCLUSIONS
I have been an inventor for ten years,
the last six full time. The actions of the current Administration and the
upper management of our Patent & Trademark Office (PTO) appall me.
The PTO is a classic example of a bureaucracy that is out of touch with
the realities of the marketplace and the needs of inventors.
Their actions during the last few
years have been extremely damaging to innovators. PTO management is motivated
by their desire to increase their authority over clients, their budget,
and to avoid accountability for their own deficiencies. In combination
with political pressure by lobbyists (that are paid by multinational corporations)
and foreign governments, the PTO has been convinced to back measures that
will allow foreign interests to take our inventions and the jobs and profits
that those inventions create.
A coalition of inventors joined with
the Alliance for American Innovation to oppose vigorously the changes to
our patent laws. Multinational corporations, foreign governments, and their
lobbyists or agents are promoting those changes. Inventors fighting to
preserve our patent system include numerous members of both the National
Inventors Hall of Fame and the American College of Physician Inventors,
several Nobel Laureates, and thousands of other inventors who recognize
that we must stand up to preserve our patent system. Several inventors
attended GATT hearings, and numerous members (including myself), have lobbied
in Washington against changes to American patent law that will damage American
innovation.
I urge all persons who have an interest
in these issues to contact the Alliance for American Innovation. Please
encourage family, friends, and business associates to call and write their
representatives. It is especially important that inventors and companies
who depend on innovation, to personally contact their representatives and
also representatives of any other area upon which their activities have
an economic impact. If you are not from their district, make sure you identify
how you impact their area.
Also, contact Joseph Papovitch (fax
202 395-3911) or Tom Robertson (fax 202 395-3639) at the office of the
United States Trade Representative that has been assigned by the Clinton
Administration to review inventors' concerns about our patent office's
policies. Please urge them to support the Alliance's efforts to protect
our patent system.
All concerned parties should write
President Clinton and their congressional representatives to support Congressman
Dana Rohrabacher's bill as it is designed to repair the damage caused by
the unnecessary provisions in GATT's enabling legislation that harm our
ability to create desperately needed new jobs. Please oppose H.R. 400 /
S. 507.
For more information contact:
Steven Shore, President
Alliance for American Innovation
1100 Connecticut Ave. NW, Suite
1200
Washington, DC 20036-4101
(202) 467-5805, Fax (202) 467-5591
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