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America Invents: What The New Patent Law Means For Games

September 22, 2011 Article Start Previous Page 2 of 3 Next

And what's more is that the new law will do little to curb lawsuits filed by "non-practicing entities" that generate revenue by formulating or acquiring patents just for the sake of royalties or litigation, he said.

"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 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."

"Large entities already incur such costs in filing patents and have the resources to cover them, and so-called 'trolls' file patent lawsuits after patents have already issued, so the bill has next to no impact on them," he told us. "The act will have no impact on reducing litigation."

Perlman made the oft-heard argument that innovation comes from the fringe; from the small, agile businesses and inventors who aren't tied down by bureaucracy inherent in large business. And if small entities are discouraged or somehow de facto blocked from filing patents, you leave innovation in the hands of giants who are either more interested in -- or solely capable of -- litigation, acquisition and royalty consumption, rather than innovation, ingenuity, entrepreneurship and therefore, job creation.

"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."

Perlman noted the rather shocking fact that small inventors and business were "shut out of the process [of considering the act], while large entities who literally spent hundreds of millions of influence dollars both lobbying and elsewhere were invited to testify and also were the only voices considered."

"As a result, we have a bill that is grossly skewed toward their interest at the expense of inventors and startups. This bill has nothing to do with invention. It is merely a testament to influence, ignorance, and indifference."

Indeed, the biggest names in technology backed the act as part of the lobbying group Coalition for Patent Fairness. The group includes massive corporations such as Adobe, Apple, Cisco, Dell, and Google -- all companies with the resources to file fast (i.e. first) and often.

"The Coalition for Patent Fairness congratulates President Obama on the signing of the Leahy-Smith America Invents Act," the group said on passage of the bill. "This bill is an important step forward for the nation's patent system and represents consensus among many key stakeholders and broad support across various industries."

Steve S. Chang, an attorney who specializes in the games industry at law firm Banner & Witcoff, concurred that "a first-to-file system can create somewhat of a 'race' to the PTO [Patent Trade Office] among inventors, and this kind of system will be easier to handle for larger game companies that have the budget to file quickly. Smaller developers might lack the resources to immediately file applications for the various concepts they invent, so they could lose out on this race in some situations."

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