Jurys Out on Patent Law Changes

Arkansas’ legacy of innovation remains alive and well in the state’s creative thinkers and problem solvers, who continue to develop new products and business methods that create jobs and fuel economic growth.

In recent years, Arkansans have filed patent applications for inventions as everyday as a golf cart bag strap sleeve and a decorative paper plate storage unit to the more technical such as new soybean varieties, logistics software and even a “missile-launching apparatus.”

Some inventors are entrepreneurs with a novel idea they hope will be a moneymaker. Others work for large employers like Wal-Mart Stores Inc., the University of Arkansas and Kennametal Inc.

Getting a patent is a notoriously lengthy process, often taking three to five years. Recent legislation was designed to shorten the wait, but local patent attorneys and inventors say it remains to be seen whether it will have the desired effect.

In September, President Obama signed the Leahy-Smith America Invents Act, amending federal patent law. Some call this the first real overhaul of the U.S. patent system since 1836.

The changes are being phased in, with some already in effect and others to come in the next year. The most significant involve a revised fee structure for patent filings and other services, and a move from the “first to invent” method of awarding a patent to a “first inventor to file” system.

Meredith Lowry, an attorney with the Fayetteville office of Keisling & Pieper PLC, said patent applications already in the pipeline won’t be affected by the new law.

“It’s the people who are filing who might see a change,” she said.

The U.S. Patent and Trademark Office is the government agency that grants patents, which give property rights to the inventor. This prohibits anyone else from making, using, importing or selling the invention in the United States for 20 years.

Patent office data for Arkansas from 2006 to 2010 show 598 utility patents, or patents for inventions, were granted during that period.

Pulaski County, with 154, topped the county-by-county list.

Washington County was next with 88, and Benton County ranked third with 64 patents.

 

Who’s on First

The switch to the “first to file” system, coming March 13, 2013, is already causing concern among local inventors, Lowry said.

Currently, the first person to invent an item or process is considered the patent owner, even if he wasn’t the first to file an application. Under the new system, the patent will go to the first person to file.

Lowry said her firm, which focuses on intellectual property matters, has gotten a number of calls about it.

“The mom-and-pop inventors who could be starting a business want to file sooner than they might have in the past,” she said, when they’d take more time for market research and other preliminary steps.

Clients are also concerned about the fee structure, which will raise fees for almost everyone, Lowry said.

The USPTO says the fee increases will allow the office to hire more examiners to process a backlog of about 680,000 patent applications.

A 15 percent surcharge on many patent fees took effect in September, but coming changes include the creation of a new fee category, called microentities, for some individual and small-business applicants.

Fees for services like filing, patent searches and examinations are determined mainly by the size of the applicant, with current categories for large and small entities.

The microentity category will give eligible applicants a 75 percent discount off most services, compared to the fees large applicants pay.

Attorney Mark Scalise of Springdale said the microentity category is “certainly going to work to the benefit of the sole inventor, so there’s no socioeconomic barrier to them.”

But, he added, many small inventors see the first-to-file change as a threat.

“There’s definitely the belief that it will benefit the larger corporations over the small inventor,” he said.

“The little person can’t always afford to file,” he said, “but the big corporations can, and that’s where the fear lies.”

 

‘Marathon’ Process

It’s said that necessity is the mother of invention, and Sandy Trexler of Springdale found that to be the case with her newly patented garment hanger.

The idea sprang from not having a good way to organize underwear, Trexler said.

“It’s always getting bunched in a drawer, I couldn’t find what I was looking for and I didn’t like that they were always disorganized,” she said.

 She had a friend build a wooden frame she could use, and though she felt it could be improved on, she also knew it had potential.
   Trexler, who has a doctorate in health science and does individual and group health and fitness consulting, took the idea to her financial partner, John Taylor. She said the savvy businessman helped her develop the product and even gave it its catchy name, the Thong Thang.

They worked with a designer at Bentonville Plastics to develop a prototype, and Lowry handled their patent application.

The Thong Thang is now being marketed online and soon in TV commercials.

Trexler’s application, filed April 15, 2011, was granted Feb. 7.

“When we filed our application, we were very prepared,” Trexler said. “That’s why we got it so quickly.”

But getting to that point took several years, she said, and the design and manufacture of a satisfactory prototype cost money.

“So even if you get a break as a first-time filer, you’ve made quite a substantial investment,” she said.

Rogers resident Scott Sebastian says he learned while getting a patent on his abdominal-strengthening machine that the process was “a marathon, not a sprint.”

The 42-year-old senior strategy manager at Wal-Mart Stores Inc. was granted a patent on Feb. 21, less than two years after applying.

But he came up with the idea about 10 years ago, and when he filed his application in June 2010, he’d already put lots of time and money into the project. He ended up paying nearly $11,000 to his attorney and the patent office by the time he received his patent.

“As a co-worker of mine who’s also working on an invention said, they’re expensive hobbies,” he joked.

Sebastian, quick to explain he’s not an engineer and “can’t draw a stick figure,” spent years building a working prototype of the machine he envisioned.

“I wanted to be able to work the upper and lower [abdominal muscles] and obliques all at the same time,” he said. On existing machines, “you could do either upper or lower, but not add the twist to do the obliques at the same time.”

He said he hopes his machine, which he’d like to license to an exercise equipment company, will be a commercial success, “but I also want it to help people get in shape and feel better about themselves.”

 

Pay to Play

As both Trexler and Sebastian found, getting legal help with the patent process is expensive but necessary for novice inventors.

Sebastian was pleased with his attorney, Stanley Baker of Fayetteville, and the legal fees came within 5 percent of the initial quote. Still, he said, paying the upfront retainer was “a punch to the kidneys.”

But he wouldn’t recommend a first-time inventor try to save money by filing a patent application himself.

“If you don’t follow the right process, don’t have the right drawings, don’t word it in just the right way, very minor things can cause problems,” he said.

Scalise, while acknowledging he’s got a stake in the issue, strongly agrees.

“If ever there was NOT a do-it-yourself process, this is it,” Scalise said.

“There’s no doubt about it, there’s just way too many pitfalls in this process, and once you take one misstep, it leads to more, and missteps can be very, very costly. It’s a hard process to negotiate, and once you get off the path, it’s very hard to get back on track.”

He added that only time will tell how the new law will actually affect inventors and the patent process.

“It’s tough to really know how it’s all going to play out, because as these are implemented and become relevant in litigation, there’ll be loopholes discovered or ways to manipulate the law,” he said.

“The proof will be in the pudding, when all of this is fully enforced. Everybody’s going to be learning as we move forward.”