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america invents act, IP, Patent

Austan Goolsbee — Right Problem, Wrong Solution

I don’t know Austan Goolsbee, but I like him, mostly because he seems to get what’s wrong with the current patent system.  Back in March, while I was busily writing about how patent office delays might be responsible for small business failures, Austan was busily shooting a White House White Board video about the same thing.  Both Austan and I come to the same (inescapable) conclusion: by the time the patent office gets around to evaluating a company’s patent application, about 1/3 of them no longer exist.

Unfortunately, Austan also (incorrectly) claimed that passage of the America Invents Act will reduce patent pendency by 40%.  While that may have been possible before, the White House should take a long look at H.R. 1249, the latest incarnation of the reform package.  Far from providing the revolving fund, the bill passed by the Republican controlled House of Representatives amounts to little more than a $600M innovation tax that will be paid (initially) by inventors, and in the long run by Americans as a whole.  In its place are a fee hike and a designated slush fund controlled by the House Appropriations committee.

Austan praised the post-grant review procedures created by patent reform.  Unfortunately, like pendency, post-grant review adds increasing uncertainty venture-backed companies can ill afford.  An issued patent easily subject to additional, protracted bureaucratic red-tape at the behest of incumbent competitors offers little more protection than a mere pending application.

What’s more, the bill adds these new procedures without a guaranteed source of funding to carry them out.  Last month, Austan Goolsbee was ousted in favor of Alan Krueger, who doesn’t seem to have a publicly stated position on patent reform.

If the White House is serious about fixing the patent system, as opposed to be serious about looking like its serious about fixing the patent system, the President should veto this tax on innovation and insist that Congress vote on a bill that addresses patent office funding first, and addresses the remaining problems later.



3 thoughts on “Austan Goolsbee — Right Problem, Wrong Solution

  1. “patent reform”

    Just because they call it “reform” doesn’t mean it is.

    The patent bill is nothing less than another monumental federal giveaway for banks, huge multinationals, and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated the bill will help them steal our inventions. Who are the supporters of this bill working for??

    Patent reform is a fraud on America. This bill will not do what they claim it will. What it will do is help large multinational corporations maintain their monopolies by robbing and killing their small entity and startup competitors (so it will do exactly what the large multinationals paid for) and with them the jobs they would have created. The bill will make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. Yet small entities create the lion’s share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs. Those wishing to help in the fight to defeat this bill should contact us as below.

    Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Yet Congress has almost completely ignored the testimony of inventors. Congress tinkering with patent law while gagging inventors is like a surgeon operating before examining the patient.

    Please see http://truereform.piausa.org/default.html for a different/opposing view on patent reform.

    Posted by Ben Ford | September 7, 2011, 6:19 pm
  2. I think it’s important to keep in mind that there are myriad reasons why a startup might die in the 3-5 year period it takes the patent office to mail a first office action. Poor execution, bad product/market fit, premature scaling, or the scarcity of risk capital are just some of these. Not one has much to do with patent office delay. In consumer web and social media, for example, founders and early-stage investors simply care very little about patents. To be sure, some of that has to do with the difficulty of getting claims in these fields issued in a timely manner. But that’s an after thought. For better or worse, there’s a normative bias against patenting in general that pervades software development in these fields and that would exist even if the the patent office had the resources to turn around applications more quickly. In other words, I don’t think reducing patent delay is likely to materially impact the failure rate of startups in these areas.

    Posted by Jorge M. Torres (@jorgemtorres) | September 7, 2011, 8:42 pm
    • Jorge,

      Without a doubt, businesses fail for all sorts of reasons. It is nevertheless improper for the USPTO to sit on an application for as long as they do. Personally, if investors still perceive patents to be important, I think it would make a huge difference to know that a first office action is coming with in 6-9 months, and a final within12-18. Waiting over two and a half years for a first office action is ridiculous.

      Posted by Patrick | September 7, 2011, 9:55 pm

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