30 November 2014

‘Pro Bono’ Patent Assistance Program Makes No Sense

Asking for HandoutIn September 2011, the America Invents Act (‘AIA’) was signed into law in the United States.  The most significant legal reform implemented by this legislation was the switch from the long-standing US ‘first to invent’ priority system to a ‘first (inventor) to file’ system similar to that which exists throughout the rest of the world.  The AIA also introduced other legal and procedural changes, such as new mechanisms for third parties to challenge patents and applications, and the provision of a ‘fast track’ process enabling applicants to accelerate examination for a fee.

Aside from these changes to the patent laws and procedures themselves, the AIA package included further measures aimed at enhancing US innovation and competitiveness.  One such measure, set out in section 32 of the AIA, requires the USPTO to ‘work with and support intellectual property law associations across the country in the establishment of pro bono programs designed to assist financially under-resourced independent inventors and small businesses.’

The USPTO duly established its Patent Pro Bono Program, to provide free legal assistance to under-resourced inventors and small businesses interested in securing patent protection for their inventions.  As USPTO Deputy Director (and current Acting Director) Michelle K Lee explained in a recent blog post, the program also supports a White House executive action aiming to expand pro bono patent assistance to all 50 states.  Currently, patent pro bono assistance is available in Alaska, Arizona, California, Colorado, the District of Columbia, Hawaii, Idaho, Louisiana, Maryland, Massachusetts, Minnesota, Montana, Nevada, New York, North Carolina, Ohio, Oregon, South Carolina, Texas, Virginia, and Washington.

This all seems very admirable.  However, a recent article on waybetterpatents.com questions the effectiveness of the program, suggesting that the requirements that must be satisfied in order to qualify for pro bono patent assistance are set too high, and that those who might benefit most from the program are unlikely to qualify.

To my mind, however, the flaw in the Patent Pro Bono Program is far more fundamental than overly-restrictive qualifying requirements.  With all due respect to the efforts of the USPTO, and the well-meaning attorneys who are offering their services for free, I do not believe that providing free assistance to secure patent protection makes any sense at all.  In fact, it could even be harmful – to the patent system, and to small business and innovators more generally.

Pro Bono Work and IP Services

Just to be clear, I am not saying that there is no place for pro bono work in the field of intellectual property.  My employer, Watermark, has a strong program of corporate social responsibility, including the provision of pro bono services.  There can be a good case to be made for assisting charitable organisations, not-for-profit entities, and disadvantaged individuals, in dealing with legal disputes and infringement of rights such as trade marks and copyright, which may otherwise result in harm to their valuable reputations.

But I am hard-pressed to imagine a circumstance in which providing free services to assist someone in obtaining a patent would be a justifiable use of limited pro bono capacity.  There is a big difference between assisting an organisation in ensuring that it has freedom-to-operate, or to protect its reputation, and assisting it to secure market-exclusivity for a a product or service.

What’s Wrong With Free Patent Services?

The purpose of a patent is to bestow upon the inventor (or a subsequent owner) an exclusive right, i.e. the right to exclude others from making or using the patented invention.  Patents can be used to restrict competition in the market for the invention, and thus enhance profits, or they can be sold or licensed in exchange for payment or other consideration.

As such, the patent system is intended to ‘promote the progress of … the useful arts’ (as the US Constitution puts it) by providing a profit-based incentive for investment in research, development and commercialisation.  The stated rationale may be different in other countries, but the economic mechanism is the same throughout the world.

So here are some questions about the wisdom of pro bono patent services:
  1. Why should an inventor or business be provided with free assistance to obtain a property right which, if it is worth anything at all, ought to return far more than its cost in enhanced profits?
  2. If an invention is sufficiently valuable to warrant the investment of professional time in providing free services to secure a patent, why has the inventor been unable to find an investor willing to foot the bill in exchange for equity or other share in future success?
  3. Who are these inventors and small businesses that will somehow manage to raise the necessary funds to bring a new or improved product to market, but are unable to scrape together a few thousand dollars to kick-start the process of obtaining patent protection?
  4. Who is going to accept the blame if/when an inventor who has obtained pro bono assistance to secure a patent sells it to a patent troll, which then uses it to extort payments from other individuals and small businesses, thus stifling rather than promoting progress and innovation?
In my view, providing free patent services does an inventor or small business no favours.  Converting an innovative idea into a commercially successful product or service is generally risky, hard work, and potentially expensive.  Obtaining a patent (assuming that this is, in fact, the most appropriate course of action) is unlikely to be the most costly or difficult part of the process.  If the inventor cannot raise the funds for a patent application, it is highly unlikely that they will be able to build a successful business based on their idea.

Why Is Cost of Patenting Not the Issue?

While estimates vary, the broad answer to the question ‘what proportion of startup businesses fail?’ is ‘a lot’!  According to statistics sourced and published by statisticbrain.com:
  1. 44% of all startup businesses have failed within three years;
  2. failure rates are generally highest in technology industries, in which well under half survive beyond four years;
  3. even in the ‘safest’ fields (financial, insurance and real-estate services) 42% of all startup businesses fail within four years; and
  4. by year 10, only 29% of startups, across all industries, are still in business.
The three top causes of failure, accounting for nearly 90% of cases, are incompetence, inappropriate or insufficient managerial experience, and lack of experience in the relevant line of goods and services.

So while intellectual property might well be important to the success of a business, it does not rate at all among the reasons for failure, which are almost universally tied to human factors.

How to Help Entrepreneurs?

What prospective entrepreneurs need is mentoring, advice and support from people with experience in both success and failure of new ventures.  They can get this from investors who have been through the process before, and who are willing to take on a share of the risk, in exchange for a share of any returns.  Entrepreneurs may also be able to obtain support from properly-designed government programs, i.e. those that provide effective mentoring and business education, and which compel applicants to demonstrate sound management and planning in exchange for any grant funds.  Even then, the entrepreneur is most likely to experience failure before success.

What prospective entrepreneurs do not need is free services from patent practitioners who have little or no incentive to do anything more than the minimum necessary to prepare, file and prosecute a patent application, who have no skin in the game and no prospect of any return on this ‘investment’, and who are unlikely to take a great interest in the applicant’s business, or whether any patent that might ultimately be secured actually supports the business strategy (assuming that there even is one).

Conclusion – A Misconceived Program

While the ‘Patent Pro Bono Program’ may sound good from a political perspective, and has doubtless been implemented by the USPTO (and the attorneys providing the free services) in the utmost of good faith, I think it is fundamentally misconceived.

I do not entirely discount the possibility that there may be some circumstance (that I have failed to imagine) in which a case can be made for providing pro bono services for patent acquisition.  If you can think of one, why not let me know in comments below?


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