Patent Bill Would Aid "Micro" Firms

The latest version of a bill designed to reform the nation's patent system includes a provision designed to aid the truly small inventor.

The bill, which is scheduled for potential changes and a vote by the Senate Judiciary Committee on Thursday morning, includes a definition for "micro entity" status. The language was added in a version of the bill submitted by panel Chairman Patrick Leahy of Vermont on June 21. It was adopted by unanimous consent.

Currently, the two statutes for patent applicants are for small and large entities, but the Patent and Trademark Office and others had expressed concern that hobbyists or tiny start-ups would be discouraged by the current patent application fee structure and related issues. Small entities, under current regulations, are businesses employing fewer than 500 employees.

The most recent version of the bill dubs a business a micro entity if it has fewer than five employees and has a gross annual income of no more than $100,000. The micro entity also cannot have been named on five or more previously filed patent applications. A firm can not consider itself a micro entity if it already has agreed to turn around and sell or license an invention to a large firm. However, the bill would enable a micro entity to turn around and sell its wares to another micro entity.

The "small business" definition, which gives a 50 percent reduction on patent fees, includes universities. Micro entities also would be able to receive the discount. By defining this category, lawmakers hope to take the "first step towards addressing the needs and concerns particular to those inventors," according to a summary of the bill from the Judiciary panel.

"There are a number of universities that are applying for hundreds of patents every year...and they may actually be bringing in more money off their patents than their athletics programs," said Jefferson Taylor, director of congressional relations at PTO. "This takes and puts the little guy -- the garage inventor -- in a different category."

Taylor said the PTO is "very happy" with the Senate bill and the PTO has "high hopes [the bill] will move on."

The PTO has been pressing that a patent modernization bill include a micro entity provision for years.

The Commerce Department, which oversees the PTO, had requested that the bill include a special category addressing very small businesses or inventors in a May 16 letter to Rep. Howard Berman, the California Democrat who chairs the House Judiciary subcommittee overseeing courts, the Internet and intellectual property issues. The House version of the patent modernization bill mirrors the Senate version.

By Sharon McLoone |  July 12, 2007; 9:38 AM ET Intellectual Property
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My Dear Sharon McLoone,

I find it outrageous how the real purpose of this "patent deform" gets distorted by the media

The problem we (small inventors) face every day is certainly not PTO fees (These fees are in fact quite affordable - you can see the current fee schedule here: )

Speaking for myself, I spent about 12 grand on patent attorney just to get my patent app filed.
What difference does it make for me if PTO saves me a few hundred bucks as a "micro entity" ?
None whatsoever.
The real problem is that I cannot afford to enforce my patent against large corporate infringer... the cost of a average patent lawsuit is now at about 2-3 mil.
Unless they (our beloved US government) do something about it this talk about "micro entities" and "helping small inventors" is just a lip service..
The current patent bill as it reads today will finish us all - there will be no more independent inventors left in this great country, we will be eliminated as a class..
The provision of "damage apportionment" in the current Patent Bill (in combination with the recent Supreme Court decision in EBay case) will sound the death knell for all of the small garage inventors and small startups alike.

But I guess this is what they wanted to accomplish in the first place...

Truly small inventor

Posted by: small inventor | July 12, 2007 12:52 PM

Small inventor, do you have a suggestion for what the government could do about the affordability of enforcement? When you say the current patent bill, do you mean the potential new one? (Sorry to be ignorant; I'm interested for my step-father's sake, not my own).

Posted by: ignorant but interested | July 13, 2007 10:46 AM

There is not much government can do to improve things: let's face it, litigation in this country is outrageuosly expensive...
However, the current "patent reform" of 2007 will go a long way towards destroying incentives for contingency litigation, and contingency litigation (or investor-funded litigation) is the ONLY way small guy can have his day in court...

The recent Supreme Court decision in Ebay case has already removed the threat of injunction posed by non-manufactoring patentees (small inventors, universities, R&D Labs etc)
Now they want to reduce damage awards to something below the customary royalty rate, while creating an oportunity for infringers to harrass patent holders througout the life of a patent.
Now, who is his right mind would invest any money into a patent litigation case if the best case outcome does not generate enough money even to cover the court expenses (and interest, of course, - remember patent cases take many many years to resolve)
There are many more lucrative ways to invest your money after all...
Like I said: Ebay decision + "damage apportionment" + legal uncertanty created by the "second window" = death of all independent inventors in USA
VC-funded tech startups will follow shortly...

Posted by: small inventor | July 13, 2007 1:32 PM

Ms. McLoone gives a good "Post-it Notes"(TM) summary of what is going on with The Patent Reform Bill of 2007. Good work, Ms. McLoone.

For more extensive coverage, read the patent weblogs, who everyday cover patent issues in depth. My weblog, The Patent Prospector, lists most patent weblogs.

There are several other fine patent weblogs. The most popular patent weblog is Patently-O, by Dennis Crouch. Another recommended blog is 271, by Peter Zura.

Posted by: Patent Hawk | July 14, 2007 2:09 AM

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