In Canada, the Impact of America's New Patent Law Is Seen ...

In an article published in Monday?s New York Times and available now online, I wrote about a lawsuit that challenges the constitutionality of the nation?s new patent law, the America Invents Act.

Opponents of the law say it would hurt small inventors and American innovation. Supporters of the legislation, which passed by large majorities in both the House and the Senate, say the constitutional critique is misguided. They also assert that the fears of small inventors are greatly exaggerated, and that the new law will streamline the patent system and thus invigorate the nation?s innovation ecosystem as a whole.

Reasonable people ? and others ? can disagree. But a research paper scheduled for publication in the current volume of the Stanford Law Review takes a look at a similar law change in Canada in 1989 and analyzes the impact.

The research, by David S. Abrams, an economist at the University of Pennsylvania Law School, and R. Polk Wagner, a professor at the law school, concludes that patents awarded to individual inventors dropped by 15 percent after the legislative change in Canada.

?Our findings,? the authors write, ?do not augur well for small inventors in the United States.?

Under the new law, the United States, beginning in March of next year, would move from a first-to-invent system to first-to-file. Opponents of the law say the switch would favor large corporations, whose big legal staffs will likely win the paper chase to the patent office.

The American law is not a mirror image of the Canadian legislation. But the authors say they tried to factor those differences out, as well as economic cycles. In the years after 1989, through 1993, the share of Canadian patents granted to small inventors fell from 10.7 percent of all patents to 7.8 percent. In the United States, the comparable share slipped slightly from 17.4 percent to 16.5 percent.

America?s current patent system, according to Adam Mossoff, a professor at George Mason University School of Law, is intentionally biased toward small upstarts, the ?new innovators that disrupt and destroy existing companies and industries.?

There is debate among economists about the role of small inventors and companies in innovation and job growth. The drift of research is that a tiny percentage of fast-growing small companies that quickly become bigger companies ? sometimes called ?gazelles? ? account for most of the job generation and disruptive innovation.

The paper by the University of Pennsylvania professors has a provocative headline, ?Poisoning the Next Apple? How the America Invents Act Harms Inventors.? They write that the new law ?will surely simplify and streamline the patent system ? but at a cost.?

But the economic question is whether it will be a ?net? cost. Laws and regulations always have costs, but they can also bring benefits. The professors? research does not reach a conclusion on whether the new patent law will help or harm innovation in the economy over all.

?The bottom-line question is whether this will be good or bad for the nation,? Mr. Abrams said in an interview. ?I don?t think the answer is clear on that score.?

Source: http://bits.blogs.nytimes.com/2012/08/26/in-canada-the-impact-of-americas-new-patent-law-is-seen/

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