Protecting, sourcing, and executing on innovation is essential to every business. Despite numerous technological advancements that have fundamentally changed the way patents are granted and companies secure capital, past legislation regarding these two key areas have failed to address new realities. Recently, two new bills have passed that aim to alter that perception and address a broader challenge, job creation and innovation in the US. The first-to-file law and a recently passed bill that changes regulations on funding may have significant impacts on innovation.
FIRST TO FILE LAW
In an effort to minimize the complexities and costs associated with protecting intellectual property, on September 16, 2011 President Obama signed into law the Leahy-Smith America Invents Act, overhauling the patent system that had not been changed for the past 60 years. According to the Committee on the Judiciary, "Our outdated patent system has been a barrier to innovation, unnecessarily delaying American inventors from marketing new products and creating jobs for American workers." President Obama saw this as an opportunity a speed up the patent process to new inventions can develop into businesses, provide employment, and therefore stimulate the economy.
Notable is how this law modifies the 'first-to-invent' system, which protects individual inventors who were the first to invent, but not necessarily the first to file a patent. Now, filing is the critical determining factor on who ultimately gets rights to a patent. For large and small organizations, the task of managing the pipeline of potential patenable ideas becomes much more important. Identifying and evaluating those innovations with a potential patentable value quickly, and filing as soon as possible, can make the difference between being granted the patent or not. In addition, rather than having to pay upwards to $400,000 in legal fees and lengthy proceedings proving who is first to invent, unrealistic to most independent inventors, the new provisional application costs a reasonable $110 and provides rights to an invention based on the filing date for up to year to protect against disputes.
CROWDFUNDING BILL
Crowdfunding, taking small amounts of money from many using the internet, is definitely on the rise. The concept is especially critical for small and start-up businesses who may find traditional bank-issued capital difficult to secure. The first crowdfunding legislation recently passed in the House, the Entrepreneur Access to Capital Act, which allows entrepreneurs to crowdsource investment capital of up to $2 million per year without having to file with the US Securities and Exchange Commission (SEC). This act shows legislation's recognition of the changing investment environment, as funding websites, such as Kickstarter, gain popularity and demonstrate success.
Despite their significance, these two pieces of legislation mean different things to different people. One is already law and affecting the way companies manage patents and giving inventors more opportunity to compete with large organizations. The other is pending further review and if passed, could launch a new framework for how investment is sourced and delivered to US businesses.
What do you think the risks, opportunities, and benefits are? Will these measures prove to help the job-creation and spur innovation in the US? Please feel free to share your opinions in the comments below.
Video on Crowdfunding Law






