"Will Congress Slam Small Inventors?"

Alexander Poltorak was quoted in "Will Congress Slam Small Inventors?", a Fortune Small Business article later republished on CNNMoney.com, June 18, 2007 (excerpt):

...The problem is that in the guise of addressing common concerns, the legislation favors corporate interests over independent inventors. It starts by replacing the uniquely American "first to invent" rule with "first to file," which is used in Europe and Japan. First to invent gives you time to fully develop a concept and still be confident of winning a patent, if you can prove you hatched the idea first. By contrast, first to file "would create a race to the courthouse that big companies with their legions of staff experts will always win," says Alexander Poltorak, CEO of General Patent (patentclaim.com), a Suffern, N.Y., patent-enforcement firm.

Adopting the foreign model moves U.S. policy in the wrong direction, says Jere Glover, executive director of the Small Business Technology Coalition, which opposes the bill. "Our patent laws make America stand out as pro-inventor and pro-entrepreneur," he says.

Today a new patent is presumed valid if it goes unchallenged for 12 months. The bill would broaden post-grant review and allow challenges at any time through a new administrative procedure at the PTO. It's designed to cut legal bills by avoiding court but would multiply challenges and raise costs for patent owners, says Bryan Lord, general counsel of AmberWave Systems Corp. (amberwave.com), a Salem, N.H., semiconductor-materials startup. His legal bills would rise "substantially," he predicts.

How the courts compute damages in infringement cases would also change. Payments would be based on the economic value of the patented invention, not of the overall product-no matter how critical that part is. Had that rule been in place in February when Microsoft was assessed $1.52 billion in damages (based on total sales of computers with infringing code), the award would have been vastly reduced. The legislation also raises the bar for a patent holder to prove willful patent violation, which since 1800 has triggered treble damages-a deterrent to infringers. With shrinking penalties, there is less incentive to agree to licensing patents and more temptation to cheat. "In effect, the new rules would lower costs for big companies like Microsoft and Intel and reduce their risk of being socked with major judgments," says Poltorak.

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