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OnLive CEO: New Patent Law 'Devastating To Ingenuity'
OnLive CEO: New Patent Law 'Devastating To Ingenuity' Exclusive
September 22, 2011 | By Kris Graft

President Barack Obama signed into law the America Invents Act, a new measure meant to reform the U.S. patent system and encourage innovation, entrepreneurship and help fuel the country's ailing job market.

But Steve Perlman, CEO of game streaming service OnLive, inventor of QuickTime and WebTV, and holder of over 100 patents told Gamasutra in a new feature that the act brings little reform, and actually will have a detrimental effect on innovation.

"This America Invents Act only impacts small entities such as individual inventors and startups. It has virtually no impact on large entities or so-called 'patent trolls,' and does nothing to keep patent disputes out of court or reduce patent litigation," Perlman said.

The reason for this, he said, is because the law brings the U.S. from a "first-to-invent" to a "first-to-file" patent system -- the latter of which is used by the U.S.'s major trade partners.

So instead of Joe Inventor and Jane Ingenious arguing in front of a court over who first conceived the idea for a new holographic social game that charges microtransactions via brainwaves, a court can actually look at the date to determine who filed for the patent first. Whoever filed first, wins (i.e., is granted the patent).

While this might streamline the patent process, Perlman argued that it favors major corporations over smaller, more innovative startups. He explained, "The act forces small entities to file far more patents far earlier in the development process prior to receiving the funding that would be needed to pay for such patents. And, even when such patents issue, it adds further cost because it makes it easier for larger entities to establish expensive barriers to small entities receiving patents."

In his personal campaign against the act, Perlman has noted in past letters to senators [PDF] that with his companies, it "typically costs us $20,000-$30,000 to obtain a commercial-grade patent." That's pricey for a startup with no dedicated legal team.

"It will have a devastating impact on ingenuity," Perlman argued. "The majority of patents are filed by small entities, and the vast majority of breakthrough ideas come from small entities. Large entities, by their nature, simply produce far fewer breakthrough ideas, and historically they have partnered, invested in or acquired small entities to drive innovation forward. This act will place an enormous damper on innovation."

The full feature is now live on Gamasutra.

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Eric Geer
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Wouldn't it be more proactive to reform the patent laws all together if you are looking for more innovation--If someone can do something better why not let them do so without having to deal with the law all together. Someone might have a good idea but another yet might have a great or incredible idea but won't follow through because impoving on an idea could also become infringing or more likely infringe entirely(generally smaller organizations or even individuals) and so they will avoid it all together.

To me the whole patent system is just a money maker for the less innovative--removing the system would keep people constantly thinking and improving- even more so to those that already have a hold on a great product.

Marc Schaerer
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Agreed, the US patent system as whole is that broken that it does not new additions but a ground up refresh to prevent super trolls like Apple from stalling whole markets alltogether with the sheer amount of money and missuse of legal loopholes

Evan Combs
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The first step in fixing the patent system is to have the patent office be fully funded by the government. Get rid the patent office's need to fund itself, and there is no longer a need to pay $20,000 to $30,000 to file a patent. This also means they don't have the need to make everything patentable.

Jeremy Reaban
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Government funded? Taking money out of taxpayer's pockets (literally at gunpoint, I might add - go ask Wesley Snipes) to help giant corporations is never a good idea.

Robert Schmidt
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@Jeremy Reaban, "literally at gunpoint" please lookup the word, "literally". Perhaps the US should register as a charity and instead of taxes just pass the collection plate. Would that fulfill your right wing utiopian dreams?

Evan Combs
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No what we have right now helps giant corporations, and hurts the little guys. Making it viable for just anyone to submit a patent benefits the little guy.

Luke Shorts
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"there is no longer a need to pay $20,000 to $30,000 to file a patent"

Where do you get your figures from? Have a look here:

and please tell me how you can get to the amount you cite.

"The first step in fixing the patent system is to have the patent office be fully funded by the government"

The USPTO is currently fully funded by the government. Before the America Invents Act, the amount of money it received was actually completely independent from the sum of fees collected (which was much higher than the funding the office received). One of the effects of the new law - here I am simplifying a bit - is that the office will receive (pending Congress approval) funding from the fees it collects, and hopefully this money will be used to hire more examiners and reduce the procedural delays.

"This also means they don't have the need to make everything patentable"

The patent office simply evaluates a patent application in accordance to the law. If "everything is patentable" in the US, you have to thank a number of court decisions in the 90's and the Congress for not modifying the (admittedly broad) letter of the law in order to clarify the boundaries of patentability.

Michael Joseph
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Most patents in software at least are not a product of lengthy R&D. A lot of it is just obvious as evident by software engineers time and time again independantly coming up with similar solutions to similar problems.

I think the one change I would have liked to see in the patent reform law is for the standard of what is / is not an obvious "invention" be determined by a jury of peers in the field and not based on the knowledge of the layman. I'm not sure how that would work logistically and how vulnerable to corruption it would be... but surely obviousness needs to be determined by people who actually know what they are talking about. Seems to me individual patent examiners have way too much power and the issue of corruption (bribes) already exists.

Luke Shorts
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"I think the one change I would have liked to see in the patent reform law is for the standard of what is / is not an obvious "invention" be determined by a jury of peers in the field and not based on the knowledge of the layman"

The standard for non-obviousness is NOT determined by the knowledge of the LAYMAN, but to "to a person having ordinary skill in the art to which said [of the patent application] subject matter pertains." In practice, patent examiners have a scientific background (a degree in engineering, physics, chemistry or other scientific discipline) and generally work on applications related to subjects they have studied. In infringement cases, where the evaluating authority is a judge, expert opinions are used in order for the judge to understand what the skilled person in that specific field knows.

Michael Joseph
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Thanks for the correction.

In practice it seems to me this process doesn't work well and too many obvious software patents are granted.

Jeffrey Crenshaw
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"In practice it seems to me this process doesn't work well and too many obvious software patents are granted."


Luke Shorts
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I can agree with you on that, but the underlying reason is more subtle and resides more in the way the various pieces of the patent system interact and are interpreted than in its single provisions.

In particular, to test the "non-obviousness" provision one has to analyse the features of a claim, finding differences with the prior art and figuring out if the missing features are anticipated somewhere else (I am summarizing a lot here); this makes it relatively easy in certain technical fields, such as computer science, to build a "legally non-obvious" claim, even if they feel obvious from a "gut feeling" perspective.

The only way out of this would be (in my opinion) having some restrictions on software as patentable subject - matter, but the letter of the law is broad, the courts are quite liberal in interpreting it, and there's strong lobbying against any legislative action (the America Invents Act iirc contains a couple of limitations, but are very narrow and they will impact a very small number of cases).

There are also some other contributing factors, such as the fact that the requirement of disclosure seems to get weaker every day, especially in certain fields, and that procedurally it is very difficult for the patent office to reject a patent application, but I think the main problem is the one above.

Paul Shirley
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One thing the change does is make creating valid prior art much easier. Just publish it before someone files a patent and the patent is dead, no 12 months window for costly litigation over who invented, litigation the patent filer will usually win simply because they prepared for the fight by keeping better records. And no US courts&companies blithely ignoring anything invented outside the US, that's now covered.

I have close to zero sympathy for those wishing to own software patents, if this makes it harder to lock up ideas, I say screw'em. If your invention is genuinely innovative enough to deserve a patent, taking time over filing won't be a problem, you won't be queue jumped and there's nothing to stop filing early anyway. If enough others can come up with the same idea that there's a race to patent then that patent is bogus and shouldn't exist - though the PTO will of course still screw up and award it.

The games industry has done very well from freely sharing innovation, profiting off lead times without tying up the ideas forever. If your business is hurt by the changes, your business is what's wrong.

Want to protect our industry? Publish quickly, publish often, publish where the PTO can't ignore it.

staff staffer
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“This is not a patent reform bill” Senator Maria Cantwell (D-WA) complained, despite other democrats praising the overhaul. “This is a big corporation patent giveaway that tramples on the right of small inventors.”

"patent reform"

Senator Cantwell is right. Just because they call it “reform” doesn’t mean it is. The agents of banks, huge multinationals, and China are at it again trying to brain wash America.

The patent bill is nothing less than another monumental federal giveaway for banks, huge multinationals, and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated the bill will help them steal our inventions. Who are the supporters of this bill working for??

Patent reform is a fraud on America. This bill will not do what they claim it will. What it will do is help large multinational corporations maintain their monopolies by robbing and killing their small entity and startup competitors (so it will do exactly what the large multinationals paid for) and with them the jobs they would have created. The bill will make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. Yet small entities create the lion's share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs. Those wishing to help fight this bill should contact us as below.

Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Congress tinkering with patent law while gagging inventors is like a surgeon operating before examining the patient.

Please see for a different/opposing view on patent reform.

Carson Gallo
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You know how I know The Patents system sucks...If The Guy who Patented The Theory of Relativity, you guessed it, Albert Einstein. Who worked as a Patton Clerk, didn't want to have anything to do with Pattening (Is that the past tense of Patten?) Policies after he left, then theres gotta be something wrong with the system.

Granted there was not as much Patton problems as we have today, and he was mainly a scientist, but still you would figure with him being a former employee, and he was a scientist, but with his fame, if he had a Theory for how The Patton system could work better, that would turn that theory into a law as fast as possible, which as of recently could be faster than the speed of light, ironically disproving his Theory of Relativity which I just mention, lol.

Craig Page
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I have just patented "ingenuity". Now pay up Steve! I see you've already invented a lot of things that violate my new patent.