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Patent race: Patent rules switch from first-to-invent to first-to-file

Monday is the first day on which patents will be awarded to the first filer of the patent not the first person to come up with an idea. Many worry this will favor applicants with big money behind them.

Inventors walking into their labs or garages today are walking into a new world, now that significant changes to U.S. patent law have kicked in.    

The U.S. has long operated on a "first to invent” system. But as of Saturday, when the America Invents Act took effect, patents will now go to whoever is the "first to file."  And for many solo inventors, or ones who work at small companies, that shift is a big deal.

Take Ron Katznelson of Encinitas, CA.  He’s an electrical engineer and what you might call a "garage inventor," though he actually works from a room inside his house.

“I do have storage in the garage,” he jokes, for old scientific instruments used in previous inventions. They have lead to an impressive track record. Katznelson sold one of his last start-ups to Motorola. 

Katznelson says small business inventors like him are good at coming up with new ideas that push technology forward. But, without huge labs and armies of scientists, it also takes more time to refine and test those ideas, and figure out which one is worth a patent.

“The resources that we have as start-ups are much less than those that large companies have,” Katznelson says.  “They can take six months from conception to practice something that might take us two years.”

Until now, if Katznelson kept good records to prove he'd had an idea first, he would win the patent on it, even if a large company might be first to file the paper work at the patent office.

But under the new law, what matters is the date you file, says Colleen Chien, a professor of patent law at Santa Clara Law School in Silicon Valley.

“Now it really will be a race to the patent office, because if you don’t have your filing date in a timely manner, there’s a chance that your delay will cause you to lose out the rights,” Chien says.  She points out that Europe and much of the rest of the world have been on a first-to-file approach for a long time, so large multi-national companies in the U.S. are already used to the new system. But smaller companies will have to adjust. 

In the large majority of inventions, the new system will not likely make a difference in who will win the patent, says Rob Merges, a Professor of Intellectual Property Law at University of California, Berkeley.

“In most cases when you file first, you're the first to invent.” But, Merges says, “there are a few cases where that's not true.”

Small-business inventors like Ron Katznelson hope they won't become one of those cases. Beyond those individual concerns, Katznelson also worries that the new law could have a chilling effect on investment in small companies like his, for fear they are at a disadvantage in the patent filing process.    

“The old law protected the start-up way of doing business, the boot-strap way of doing business,” Katznelson says. “This will kill it.”

About the author

Krissy Clark is the senior reporter for Marketplace’s Wealth & Poverty Desk.

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