Ideas are the capital of the engineering world. And like any other asset, ideas can be stolen. To protect their intellectual property, engineers and other inventors rely on patents. But precisely who is granted a patent and the protection that patent provides could change substantially in the United States if the sweeping reforms in the Patent Reform Act of 2005 are passed into law.

The proposed legislation was unveiled in June by Rep. Lamar Smith, R-Texas. "The Patent Reform Act of 2005 will improve the quality of patents issued by the [U. S.] Patent & Trademark Office (USPTO) and will reform certain patent practices that disrupt the operations of high-tech companies and other businesses," Smith said. "The legislation represents the most comprehensive change to U.S. patent law since 1952."

The bill is still in the midst of what political wags call the legislative sausage-making process. But even without a final draft of the legislation, those in the know about patents agree that if the bill becomes law, it will substantially change the way patents are gained and maintained in this country.

The Software Business Alliance, the National Research Council and USPTO Director Jon W. Dudas are among those who have endorsed H.R. 2795's reforms. The reception from small companies, independent inventors and universities, however, has been decidedly cooler. These groups worry that the new legislation could put them at a disadvantage when trying to secure a patent.

So, what should engineers working in academia expect if the Patent Reform Act passes? The bill ought not to affect engineers' actual research, says Eugene R. Quinn Jr., president of IPWatchdog.com and a patent attorney with a B.S. in electrical engineering. "The changes have very little to do with the actual invention," he says. But, Quinn adds, university technology transfer offices should expect big changes when it's time to file those inventions with the USPTO.

One reform that's generating controversy among universities and independent inventors would award patents to the first people to file their patents with the USPTO. That's a substantial change from the current "first-to-invent" system, which grants the patent to the first person to devise the invention.

The so-called "first-to-file" system is the standard among the nation's major industrialized trading partners. Proponents of H.R. 2795 say that this reform will harmonize U.S. patent laws with patent procedures in places like Europe and Japan-a change that will save money when filing a patent internationally. A first-to- file system also removes the ambiguity that's inherent in a first-to- invent system. In contentious cases, it's not necessarily easy to tell who came up with the idea first. In first-to-file systems, all that matters is who got their paperwork to patent office first.

H.R. 2795's opponents say that the change could create a costly race to the patent office that will ultimately hurt universities and independent inventors who don't have deep corporate pockets or armies of patent lawyers at their disposal. The Professional Inventor's Alliance (PIA) has come out strongly against the bill, dubbing it the "Patent Deform Act of 2005" on its Web site.

"This provision would undermine-not further-innovation, as it rewards not the inventor, but the first to file," writes PIA President Ron Riley. "This provision rewards the individual or entity that is fastest in filing a patent application, irrespective of the significant contributions of the inventor."

The draft of proposed legislation circulating at press time actually called for a "first-inventor-to-file" system. This language is meant to imply that the new system would be somewhere between first-to-invent and first-to-file, explains Carl E. Gulbrandsen, managing director of the Wisconsin Alumni Research Foundation (WARF), the patent management organization for the University of Wisconsin, Madison. "It is a hybrid version, but it still creates a race to the patent office that wasn't there before," he says.

"U.S. patent laws are unique in a number of ways, and I'm not sure that those differences are bad," IPWatchdog.com's Quinn says. "In the U.S., the lion's share of our economy is based on small businesses." Many paradigm-shifting inventions come out of smaller companies, which are then bought up by larger firms hungry to expand their patent portfolios.

According to Quinn, when you factor in fees from patent searches, attorneys and the USPTO, it costs upwards of $6,000 to get a patent for a relatively simple invention. A patent for a complex invention could easily cost more that $25,000. "Writing patent claims is arduous," he says. "Writing more claims requires more attorney time and more patent fees."

Universities and independent inventors work with limited budgets and therefore have to be picky about what they decide to patent. Moving to a first-to-file system means that university technology transfer offices and small companies will have to make decisions faster than they did under the first-to-invent system. "They won't be able to take a leisurely pace to the patent office," Quinn says.

None of the universities that Prism contacted was willing to go on record about H.R. 2795, saying that the topic was too controversial. There have been murmurings from organizations that represent academia's interests, however. In a joint statement, the American Association of Universities, the American Council on Education, the Association of American Medical Colleges and the Council on Governmental Relations stated that although they do not oppose the switch to a first-to-file system, there is concern that first-to-file will not be as amenable to universities as the first-to-invent system.

"University inventors typically are faculty members who first publish in academic journals and later consider whether to file to obtain a patent," wrote the associations in their joint statement. "Before filing a patent application, universities often need time to consider the potential commercial application of a basic research discovery, which may not be obvious at the point of discovery, and to assess the receptivity with the commercial sector to licensing any resultant patent for development. All such practices are accommodated in a first-to-invent system but could be could be compromised in a first-inventor-to-file system."

Cheaper Challenges?

The first-inventor-to-file switch isn't the only provision in the Patent Reform Act of 2005 that promises to substantially change the patent process for universities. Although it seems to be less controversial, one of H.R. 2795's most sweeping changes establishes a new process for challenging patents, known as a post-grant opposition procedure in legislative jargon.

"If the legislation were to go through in its present form then these changes would have far-reaching consequences," says Stuart Graham, an attorney and professor of strategic management at Georgia Institute of Technology. Post-grant opposition is part of the European patent system, and Graham, in collaboration with University of Munich professor Dietmaer Harhoff, has been studying how adopting this procedure would affect the U.S. patent system.

While there is a re-examination procedure within the current U.S. patent system, Graham notes that most people agree that it hasn't been very effective. At present, he says, "by and large, anyone who wants to challenge a patent can do that effectively only with litigation."

Of course, litigation can get expensive. The American Intellectual Property Law Association estimates that the median patent litigation costs $500,000. If more than $25 million is at risk in the patent suit, the cost of litigation is likely to be closer to $4 million, and Graham says litigation costs have been known to go above $30 million in high-stakes cases. Graham says the high cost of litigation usually prevents those who can challenge a patent from doing so. It's simply easier for them to pay a licensing fee to the patent holder and then pass that cost on to consumers.

Although post-grant opposition would never eliminate litigation, proponents of H.R. 2795 think that the provision would give patent challengers a less expensive alternative to litigation. When Graham and Harhoff compared U.S. patents that have been litigated with their equivalent European patents, they found that a patent litigated in the United States is three times more likely to face post-grant opposition in Europe. "That's good news for us," Graham says, "because it is evidence that opposition is a substitute for litigation."

Graham and Harhoff also found that there were a number of patents challenged and subsequently invalidated under the European system that are still valid in the United States because they were never litigated. Graham says these bad patents are a cost to U.S. innovation. "Think about the impact that this has on engineers working in labs," he says. Researchers may be steered away from working in certain areas where patents could potentially be invalid, Graham explains. "It's really those costs that the opposition will be most effective in eliminating."

But challenging a patent under the proposed litigation isn't free. Paul Bianco, an intellectual property attorney who holds a Ph.D. in bioengineering, estimates that a post-grant opposition could double the costs of getting a patent. "This post-grant opposition proceeding would potentially add time and expense to the patent process," Bianco says. "If you're a small college or university or individual inventor, it could make you consider whether or not to proceed with the process."

Graham concedes that additional costs could be a burden if the patent holder's resources are tight. But he argues that the other side of the coin needs to be taken into consideration, too. "It is increasingly in the university's interest to challenge a patent," Graham says, and opposition is a tool likely to be more palatable to academia's higher-ups, who understandably rankle at the thought of spending $4 million in litigation.

Costs aren't the only thing likely to change if post-grant opposition is adopted in the United States. Although he doesn't oppose the new grant-challenging system, WARF's Gulbrandsen worries that oppositions will heap extra work on an already overloaded and under-funded USPTO.

Earlier this year, USPTO Director Dudas told the Senate Subcommittee on Intellectual Property that, on average, it takes more than two years for a patent to be granted after it is filed. "Without fundamental changes in the way USPTO operates, Average pendency in these areas could double by 2008," Dudas says. "Moreover, without intervention, the backlog of applications awaiting a fi rst review by an examiner could grow from its current level of approximately 500,000 to over 1 million by 2010."

Gulbrandsen says that delays in getting a patent put universities in a dire situation. "If I can't get a patent issued, why is someone going to get a license from me?" he asks.

Whether or not the Patent Reform Act of 2005 will ever become law remains to be seen. At press time, various interests were still carving up the bill, and its ultimate fate was uncertain. Gulbrandsen offers some advice to those still tinkering with the reforms: "We need to be very careful about tampering with the patent system because it's kept us very innovative," he says. "We are the most innovative country in the world, and our patent system has been crucial in that."

Bethany Halford is a freelance writer based in Baltimore.