Can patent reform create jobs? That’s what supporters of the America Invents Act, passed in the Senate last Thursday, claim. America’s patent system has long been criticized for stifling rather than promoting innovation and is blamed for the onset of today’s never-ending patent wars. In short, the need for change has been felt for a long time.
In 2010 the US Department of Commerce published a white paper highlighting the benefits of patent reform. The byline reads: “Patent Reform: Unleashing Innovation, Promoting Economic Growth And Producing High-Paying Jobs.” This seems highly optimistic, but the report uses empirical data to illustrate its thesis. For example, 2.5% of the nation’s average annual growth is from elements, such as capital investment, that are closely linked to innovation.
The report also argues that innovation not only creates jobs, but higher-paying ones to boot. This point hits home with more than just the IP crowd – creating new jobs has been foremost in Americans’ minds for a while now. So how exactly will patent reform champion America’s number one concern?
First of all, the Department of Commerce notes that in the computer, chemical and electronics industries the real compensation per employee increased by over 50% between 1990 and 2007. That is over two and a half times greater than the average compensation increase. Secondly, it is proven that startups with patents are more likely to find investors, so streamlining the process and cutting down on the patent office’s backlog of 750,000 patents may encourage venture capitalists to invest in more startups. Finally, the report supports the elimination of low-quality patents, meaning those that are too broad or unclear. It is the low-quality patents that spark most litigation and subsequently drive up product cost, so by dismissing low-quality patents there will be a lower rate of pricey litigation.
To recap: jobs will be created by supporting the creation of high-quality patents, therefore technical industries will continue to expand and have more access to capital and investors, in turn creating new jobs.
So after years of dead-end amendments, the Senate finally passed the America Invents Act with a vote of 89 to 9. Many are relieved, but still others are skeptical. One of the biggest changes is that America is no longer on a first-to-invent system but on a first-to-file system. This has the potential to favor large companies with tons of patent lawyers on hand versus small start-ups that don’t have the time or resources to devote to filing a patent at break-neck speed. Some critics say the bill will have a negative effect because everyone will be running to the patent office with a half-baked idea just to lay first claim.
These fears and criticisms are perfectly viable, but only time will tell if the act will truly reform the US patent system in the “right” way. With our current system deeply embroiled in patent litigation wars, it may take years to start approving enough high-quality patents to truly create the booming workforce the Department of Commerce speaks of.