Israelis have more American patents, on a per-capita basis, than the citizens of any other country.
By BERNARD G. FRIEDERcapitol hill 88(photo credit: )
The United States Senate is expected to vote soon on legislation, the Patent Reform Act of 2007, which would change America's patent system significantly.
Because inventors, research organizations and startup ventures around the world rely on US patents to protect the output of their labor, changing the US patent system has global repercussions.
Here in Israel especially, US patent reform will have a profound effect.
Over the past 20 years, a significant proportion of the Israeli economy - and export growth - has been based on our patent-centric technology sector. From essentially a handful of companies, Israel has developed a world-renowned start-up culture and multi-billion venture capital investment engine. In fact, Israel is second only to California's Silicon Valley as a driver of global innovation.
On a per-capita basis, Israel has the largest number of biotech start-ups and is a world leader in developing revolutionary medical devices. Israeli brainpower is behind "Voice-over Internet Protocol," instant messaging, flash disks, and much more.
US PATENT filings have facilitated and protected these breakthroughs. Specifically, the number of US patent applications filed by Israeli inventors has grown from 632 in 1990 to 3,617 in 2007 - an almost 600-percent increase. In fact, Israelis have more American patents, on a per-capita basis, than the citizens of any other country.
But the changes in US patent law now under consideration by Congress would drastically weaken current protections. This is deeply problematic for Israeli start-ups and suppliers of venture capital, who rely on the US patent system.
THE PROPOSED changes would greatly increase the costs of securing a basic US patent and expand filing requirements and processing time, thereby reducing a patent's term of protection.
Also, a US patent would no longer be a secure asset since its validity could be challenged during the course of its effective life. There would be no closure. The potential for costly litigation would skyrocket and patent holders would be forced to "lawyer up" - to defend themselves against opportunistic plaintiffs.
Challenges could even be initiated by third parties and competitors from anywhere in the world so long as they employed the right lawyers.
Moreover, grounds for initiating and achieving a successful challenge would be significantly broadened. An established patent could be overturned on a technicality - even if the error was non-intentional and non-material to the issuing of that patent.
Calculation and allocation of damages would likewise be altered in ways that reduce compensation for those whose patents are violated. Deep-pocket challengers would be able to wear down smaller, financially vulnerable entrepreneurial companies, giving unfair advantage to the entrenched global companies over the upstart innovators.
OBVIOUSLY, this would directly harm Israel's economy. The reforms would also eliminate the current rule that allows patent seekers to exempt their applications from being published on the Internet for 18 months after they are filed at the patent office.
Israel does not publish patent applications unless a patent is granted. Rejected applications are destroyed, allowing inventors to protect their secrets or try again. But this proposed change would make the US system like that of many other countries. The effect of this publication system in other nations has been devastating. Israeli inventors working in Japan, for instance, regularly have their ideas stolen by intellectual property pirates based in Korea, Russia, and China, who only need to access the Japanese Patent Office's Web site to get all the information they need to reverse-engineer and plagiarize someone else's creation before a patent has been issued.
OF COURSE, not everything in this patent bill is bad. The term "inventor," for example, would be legally redefined to include co-inventors, better ensuring that everyone responsible for a patentable creation gets a fair share of the credit - and the benefits.
But many of the provisions jeopardize technological progress. That's why various US groups including the National Venture Capital Association; 14 labor unions; the American Bar Association; the National Association of Manufacturers; the Association of University Technology Managers; and the Biotechnology Industry Organization have come out against this legislation.
US patent reform is a global issue, and Israelis - individuals, associations, and government alike - ignore the bill's implications at our peril. We should be doing all we can to make US lawmakers aware of our concerns.
The writer served in the cabinet office of the British government as a technology specialist and has advised private firms in the US and the UK. He is currently working with several emerging intellectual-property-based companies in Tel Aviv.
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