Undermining job creation

Of all issues facing Congress in 2010, most Americans likely will watch the upcoming "jobs" bill with greatest interest. And nowhere will that interest be greater than in Nevada, where the poor economy has resulted in stalled development and hotels and casinos operating far below capacity.

But even as Congress considers legislation to spur jobs, another measure the so-called "Patent Reform Act" threatens simultaneously to undermine jobs. While this bill is touted as improving the patent system and the nation's economy, it is really just another effort "by big business for big business" to disadvantage small business, which makes up the majority of Nevada's economy and represent almost all of its future.

Here are two provisions from this ill- considered legislation:

* First to file. "First to file" would award the rights to an invention to whoever wins the race to the Patent and Trademark Office, even if that person did not invent the technology. This will favor big businesses with their greater resources and stables of patent lawyers. This also is contrary to the U.S. Constitution, which only grants Congress the authority to grant patents to "inventors." Congress should keep the existing "first to invent" system, awarding the rights to the true inventor even if he or she loses the foot race.

* Allowing an infringer to challenge a patent multiple times. Current law generally allows infringers to challenge the validity of a patent one time in Patent Office "reexamination proceedings" or in court. The proposed legislation would allow an infringer to challenge patent validity twice once before the Patent Office and then again in court. To do so, the infringer need only hold back an argument in reserve in the Patent Office proceeding and then when that proceeding is over bring the withheld argument in court. As a result, infringers can force patent holders to spend years in a first Patent Office proceeding (including by appeal to the courts of the outcome of the Patent Office proceeding) and then spend years more in the courts responding to additional attacks that the infringer held back in the Patent Office proceeding. Obviously, these types of serial patent validity challenges will be more costly for patent owners, devalue patents and diminish the incentive to invent, reduce the ability to procure funding for new technologies, and threaten the very existence of smaller entrepreneurs and companies. One California law firm already advertises itself as the "Patent Assassins" for its use of similar tactics. The proposed measure will allow them to assassinate even more patents, technologies, and small business patent owners in particular.

Both of our U.S. Senators have pledged their support for Nevada small businesses. In May 2009, Sen. Reid said "One of the most important things we can do to help Nevada's economy recover is support small business. These businesses are the primary creator of jobs and keep local economies growing. Their success reflects the entrepreneurial spirit that drives innovation and makes our state more competitive. Simply put, as small businesses go, so goes Nevada's economy."

Likewise, in November 2009, Senator Ensign said, "As a former small business owner, I know firsthand how difficult it is to start and grow a business. It is certainly more difficult in today's economic environment ... Too often in Washington, we see unintended consequences of bills that, while they have a valuable purpose, turn out to be overreaching in their application."

We are fortunate that our Senators understand the challenges of small business. Now it is important that they understand how S. 515 will hurt not only innovation in Nevada but the small businesses and the very job creation effort they want to help. If they are serious about jobs in Nevada, they will say no to the Patent Reform Act.

The authors

Authors and contributors to this column included:

* Timothy Casey, IP partner,

SilverSky Group, LLC

* Carell Ewing, CEO, Server

Technology, Inc.

* Brandon Ewing, president, Server

Technology, Inc.

* Robert C. Ryan, patent attorney

partner, Holland & Hart, LLP

* Patrick Johnston, CEO,

Dockon, Inc.