How the AIPA Changed Patent Law

A recent study of 1.8 million utility patents in the US found that inventors are not as stealthy with their IP as previous studies, and gut feelings, would suggest. The study discovered that since the year 2000 inventors actually chose to disclose information about their patents before they were approved. This finding also correlated with an increase in patent value.

The study assessed how patent secrecy rules have affected inventors since the year 2000; the year the American Inventors Protection Act (AIPA) stated that patent applications must be made public 18 months after the first filing. Before this act was passed a filing was secret until approval, which would take around three years.

As part of the AIPA congressional debate, inventors argued that the change in secrecy rules would harm small inventors and/or disrupt the spirit of US patents. So congress modified AIPA so that inventors could maintain the secrecy of their patent applications if they only filed for a patent in the US and not for parallel foreign patent protection. It was a substantial change that applied to nearly 50% of all patents granted in the US.

The study concentrated exclusively on utility patents – a category of patents that is typically associated with engineers. Utility patents deal with machines, processes, compositions, and manufactured articles. They also protect technologies such as drugs, medical devices, laptops and software. Utility patents are the most common patents filed in the US, with almost 570,000 patents filed in 2013.

The Popularity of the AIPA Secrecy Loophole

Stuart Graham, assistant professor in the Scheller College of Business.

“Do inventors really value the secrecy that economists assumed they did based on the prior literature? Our findings are that overwhelmingly, and in every category that we can test, inventors don’t, ” said Stuart Graham, former chief economist of the US Patent and Trademark Office (USPTO) and Assistant Professor at Georgia Tech.

Graham and his team were able to determine which inventors chose to use the AIPA secrecy loophole and how those patents differed to those that were released after 18 months. To do this researchers assessed the disclosure preferences of 1.8 million granted patents from 1995 to 2005, and they found that since 2000 about 85% of the patents filed disclosed information before approval.

“Overwhelmingly, those inventors patenting only in the U.S. are choosing 18 month disclosure,” said co-author Deepak Hegde, Assistant Professor at NYU Stern School of Business.

The study also found that small companies and individuals usually choose to disclose their patents, despite the arguments made at the AIPA debates. Graham noted that “Small U.S. inventors are not choosing the secrecy route … When they patent only in the U.S., they are choosing secrecy in only about 15% of the cases, not statistically different than the rate among all other types of inventors.”

Do Secrets Make Better Patents?

The AIPA debate also suggested that changes to secrecy would slow innovation in the US thanks to watered down patents. However, research now suggests that the value of patents released after 18 months is actually higher than the value of patents only released after they are granted.

According to Hegde, “When we examine indicators of patent value, we find consistent evidence that the least-valuable and least-impactful patents are those that opted for pre-grant secrecy.”

In fact, researchers suggest that as patent information is released earlier, other inventors can get a head start on related innovations that reference the patent; a process that can save valuable time and duplicate research spending.

As Graham said, “We have limited resources in our society that we can invest in innovation and invention … To the extent that we can more efficiently choose projects and avoid wasteful, redundant efforts, then that’s good for us as a society.”

For the next stage of their research, Graham and Hegde will look into why inventors decide to release their findings before a patent is granted. Current theories include:

Marking technology space territory to competitors
Earlier announcements to market or licensees
Sharing knowledge so IP’s can be referenced and linked earlier, increasing collaboration

“This study is a first window into what inventors are really doing. The next question is why are they doing it? … It remains for us to figure out why inventors seeking to maximize the value of their inventions are not particularly interested in pre-patent secrecy,” said Graham.

One area the study does not look into is whether the early release of patent secrecy leads to an increase in counterfeiting or intellectual property theft. That being said, would you feel comfortable releasing your patent IP early? Comment below.

Source Georgia Tech.