Canada’s “First to File” Change to Patent Law Harmed Small Inventors

Way back in 1989 Canadian patent law changed from a first-to-invent system to a first-to-file system. Now the United States, a last hold-out along with the Philippines, will soon switch in the same way, pursuant to §3 of the America Invents Act, which will come into effect in March of next year.

A recent article in the New York Times (Steve Lohr, “In Canada, the Impact of America’s New Patent Law Is Seen“) points us to an article by two University of Pennsylvania professors (economics, law) that uses the Canadian experience in the years before and after the change in our law to gauge what is likely to happen in the United States after their change. Here is the nub of their findings from the abstract to “Poisoning the Next Apple? How the America Invents Act Harms Inventors” [PDF] by David S. Abrams and R. Polk Wagner:

Using data on all patents granted by the Canadian Intellectual Property Office and the US Patent and Trademark Office, we find a significant drop in the fraction of patents granted to small inventors in Canada coincident with the implementation of first‐to‐file. We also find no measurable changes in patent quality and perform several additional analyses to rule out alternative explanations. While the net welfare impact that can be expected from a shift to first‐to‐file is unclear, our results do reveal that, contrary to the conventional wisdom, the March 2013 implementation of a first‐to‐file rule in the U.S. is likely to result in reduced patenting behavior by individual inventors.

The role played in the economy by small inventors — “Edison, Hewlett and Packard, Jobs and Wozniak” as the authors put it — is a matter of debate among economists, so for that reason, and despite the undoubted efficiencies consequent upon the change in the system, it’s unclear whether a net benefit will result.

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