2008 Small Business Outlook -
-- They Call This Intellectual Property?
--- Maureen Farrell, 03.10.08, 6:00 PM ET
-- The arduous road to patenting a great idea is getting even longer.
-- Last year, the U.S. Supreme Court raised the bar on what the law defines as the "standard of obviousness" in patent cases. In short, if a business or technique is so obvious that anyone could have invented it, it shouldn't merit a patent.
-- While stricter standards may ease some of the pressure on the increasingly swamped U.S. Patent and Trademark Office, the new regulations--and more being debated in the coming months--could add costs and complications down the road, too.
-- In Pictures: Six Preposterous Patents
-- "I've seen firsthand that more rejections are being issued, and it's harder to overcome them," says Stephen B. Maebius, an intellectual-property lawyer at Foley & Lardner in Washington, D.C. "It's going to be much more work to get these patents issued."
-- To get a patent approved, inventors must establish, among other things, that their invention or idea is not clearly manifest. Say you wanted to patent a peanut butter and jelly sandwich, minus the crust. Even a small child knows how to slice off unwanted bread crust, so patenting such a notion might seem preposterous. Many ideas passing as intellectual property are at least that obvious.
-- Last spring, in the case of KSR v. Teleflex, the Supreme Court fortified the legal definition of "obviousness." Before KSR, people could get away with patenting products that combined pieces of "prior art"--inventions already in the public domain. According to the ruling, which came down in May 2007, such simple reconstitution is considered too "obvious" to be worthy of a patent. By November, the USPTO issued the tougher guidelines..
-- Patent filing was already grueling enough, gobbling two to four years on average from the application date to the final issuance or rejection. Patents rarely sail through on the first attempt, and several rewrites (and product redesigns) are common. Under the new guidelines, each patent must be reviewed by another set of eyes before any decision is rendered.
-- The longer the process goes on, the higher the legal costs borne by entrepreneurs. Fees to the USPTO are only a small chunk. To pass muster with regulators, patent attorney fees can range from several thousand dollars to nearly $100,000 for each attempt, depending on the nature and complexity of the patent.
-- Given the length of time it takes to muddle through the filing process, the true impact of the new regulations may not be clear for years. One thing's for sure: The USPTO is buried. In the past 20 years, the number of applications jumped 300%, to 467,243.
-- Blame part of the pile-up on pesky filers of overly obvious patents. Remember that crustless PB&J? There's a patent for it--No. 6,004,596 to be exact (meaning some six million patents came on the books before it).
-- Issued in December 1999, the patent covers any peanut butter and jelly sandwich missing a crust because it had been removed with a circular cylinder with a crimped edge that supposedly locks in the peanut butter and jelly. (The language suggests putting the peanut butter on the bread and the jelly in between.) J.M. Smucker (nyse: SJM - news - people ) later bought the company of the inventors, who had branded the sandwiches "Uncrustables," and landed the patent too. When Gaylord, Mich.-based Albie's Foods began selling similar sandwiches, the jelly-maker tried to sue for patent infringement and applied for broader protection on crustless products, which a judge later denied. The USPTO is currently reexamining this one to see if it still passes the too-obvious test. (Albie's can still go crustless.)
-- It gets goofier. A 1998 patent court ruling declared "business methods" as patentable. That logic morphed into patents on the inherent properties of nature.
-- If you don't think you can secure rights to the laws of physics, look no further than patent No. 5,413,298, which outlines a new method of "swinging." To wit: A person, positioned on a standard swing suspended by two chains from a horizontal tree branch, swings from side to side by pulling on one string and then the other. Many, many children at playgrounds have likely infringed on this one.
-- If you can patent Newton's laws of motion, you might as well be able to corner the market for basic arithmetic. Patent No. 6,142,880, issued in November 2000, protects a "novel" method of adding up your bowling score in order to level the alley among players of different skill levels.
-- Perhaps the new regulations will clear out the flotsam at the patent office and speed things up. More likely, though, they will lead to more headaches for entrepreneurs.
-- One potential concern: defending patents already on the books. "Small firms have reason to worry that their patents are now invalid [because of the KSR ruling]," says Michael J. Meurer, a professor of patent law at the Boston University School of Law and author of the forthcoming book, Patent Failure: How Judges, Bureaucrats and Lawyers Put Innovation at Risk. Meurer figures that software and "business-method" patents are most likely to be challenged, whereas standards for biotech and pharmaceutical patents will largely remain unchanged.
-- Meanwhile, more tweaks to patent law could be on tap in Washington. Among them: changes that favor the first person to file a patent rather than the first to invent the device. (Under current U.S. law, an inventor who can prove he or she invented something before someone else filed a patent on it ultimately deserves the protection.) The new proposals also attempt to limit the damages for patent infringement.
-- The Senate is expected to vote on the legislation, already through the House of Representatives, in the coming months. Stay tuned.
