Comments for Mixing patents and trade secrets for complex innovations

Aditya Dogra
If we look at the whole change in reforms from the lens of the innovator, it is certainly more advantageous for them as it gives them the flexibility as they can file for the patent related to the trade secret. This allows them to extract benefit from the trade secret up until the point there is no imminent threat to…
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If we look at the whole change in reforms from the lens of the innovator, it is certainly more advantageous for them as it gives them the flexibility as they can file for the patent related to the trade secret. This allows them to extract benefit from the trade secret up until the point there is no imminent threat to it being discovered by somebody else. From the imitator’s point of view, the new reforms prevent them for access to knowledge that could be beneficial for them. In such a case they have to wait either to discover the secret themselves or wait for the patent to be filed, which is when they can access these secrets as they will enter the prior art repository. This will act as a push for the imitators (competitors) to keep pushing the envelope every time. The biggest beneficiary out of this would be the customer who would have a wider range of choices at competitive prices.
In my opinion, the primary objective of a patent system should be to promote interests of the consumer and in this case, the proposed reforms seem to be taking things in the right direction and thus should be hailed as a good decision. However a caveat in this case would be to give due attention to all the subjectivities that may arise in the case and to be careful about loopholes that could be exploited like in the case of some of the previous patent laws.

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Simon Verhaeghe
It’s not an easy task to answers if this change could have a positive welfare effect. Because it has arisen in a context where the patent is not used as an incentive to innovate but as a wealthy tool. But this part of the patent isn‘t our concern here, but since it is giving more power of trade secret, it…
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It’s not an easy task to answers if this change could have a positive welfare effect.

Because it has arisen in a context where the patent is not used as an incentive to innovate but as a wealthy tool. But this part of the patent isn‘t our concern here, but since it is giving more power of trade secret, it may be an improvement of environment to give incentive to develop innovations.

I will try to represent the difficulties for an independent innovator to develop and commercialize a project without filing any patent. Let’s take the example of James Dyson, the inventor of Dyson vacuum cleaner. At the early stage of his innovations, he hadn’t investment enough to lead alone the project to the commercialization. He has to present his product to the potential investors (who could be potential imitators). At the end, Dyson no found any credits and led his project himself. Results was 4 years and an amount of 30 million in development. A least 700 bad imitations of his product appeared during the year after the commercialization.

Why this story?

Because in my mind, when you see this, you can assume that the creativity’s incentives will probably increase. It increase the security for the inventors. But in a large view, which inventors have the time and the money to sue a high company for IP steeling? It induces to heavy expenses for a hypothetical return investment.

The initial goal of patent was to give a temporary intellectual monopole to enhance science, innovation and creativity. Now this monopole is used as a weapon to rent the knowledge for financial enrichment (i.e : patents trolls companies). It’s not a bad change, but I believe that if the law is “first to file” and not “first to find”, it because the innovation is a long process and we can exactly say how was the first. It will just delay the problem as to who deserves the patent’s exploitation.

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Jan Sedek
The strategy in deciding, whether to patent, or keep a secret is complex, thus the reform is not easy to evaluate. I guess, that in the theoretical model, the main channel by which the reform influences welfare is the shift in strategy of the firm from keeping a secret towards patenting. If many firms keep a secret rather than disclose,…
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The strategy in deciding, whether to patent, or keep a secret is complex, thus the reform is not easy to evaluate. I guess, that in the theoretical model, the main channel by which the reform influences welfare is the shift in strategy of the firm from keeping a secret towards patenting. If many firms keep a secret rather than disclose, it is probably, welfare speaking, not the best result for the economy. Through patenting, the innovation can enter the market (e.g. through licensing), and even if it does not, it becomes publicly available after a certain period of time after which everyone can benefit from it.
However for me it is not obvious, that the reform causes such a shift. Introducing the choice to patent the secret later, may actually promote secrecy up until the point in which the threat of losing the advantage of the secret becomes too high.
When you allow for patenting parts of an innovation and keeping other parts secret, the strategy space becomes even more complex. With the possibility of patenting only a part of the innovation, one could think of a risk, that if you patent a part of your innovation, while keeping the rest as a secret, you increase the probability, that the secret will be rediscovered by someone else.
Finally, while relaxing the requirements on novelty causes may cause innovations to be patented, rather than kept as a secret, it may also cause excessive patenting (e.g. for precautionary reasons). Subsequently the bureaucracy caused by the overgrown patent system may inhibit innovation.

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Maxime Verheggen
The america invent act has changed the way to grant patents and has modified several points in the secret priority act. It offers much more combination of protection for innovators. It is possible now for complex innovation to combine secret and patent. It is easier to fragment an innovation into a subset. First of all, i would like to remind …
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The america invent act has changed the way to grant patents and has modified several points in the secret priority act. It offers much more combination of protection for innovators. It is possible now for complex innovation to combine secret and patent. It is easier to fragment an innovation into a subset.

First of all, i would like to remind requirements to receive a patent. The invention needs to be of practical use. Next Innovation must show an element of novelty. Something that is unknown.

One important point of the AIA is that innovators can keep secret their innovation as long as they want, and still have the opportunity to patent it later. I think that’s a good advantage for the innovators. Because patent has a time limit what deep secret doesn’t have. Moreover, a patent discloses the innovation details to the competitors which makes them able to circumvent easier the patent.

However, it could create a lack of welfare because some company could develop a monopoly. Another disadvantage is the period between the submission of an innovation and the patenting. This period lasts 18 months. During this, two same ideas could be submited but the first one to be filed, will be patented. This is a lost of time and money for late innovators.

The second point is the rule to grant a patent. Before it was the first to invent, but now it’s the first to file. According to me, this modification is a big move and is very positive. It allows a better coherence in the world and an easier way to grant. In addition, it avoids a lots of judicial proceedings which saves money and time.

To conclude, AIA is very satisfactory and resolves previous embarrassing issues.

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Virág Dezső
The topic of patent contra secret arises much more questions than first I thought – before reading the article. First, my impression is that secret is almost always related to ,,one-product companies”, for which secret is a kind of device to make people being loyal to their products and brands. Because people do not look for just something with novelty, they…
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The topic of patent contra secret arises much more questions than first I thought – before reading the article.

First, my impression is that secret is almost always related to ,,one-product companies”, for which secret is a kind of device to make people being loyal to their products and brands. Because people do not look for just something with novelty, they look for rather myths, secrets and stories around the innovation. In the case of Kentucky Fried Chicken, Coca-Cola or Nutella we immediately associate to their appropriate products that likely did not be changed at all for decades.

Secondly, I have the feeling that nowadays most of the innovations are related to processes than products. Because it is really hard to create something new and give new responses to given needs. The solution is rather producing the same product, but with another technology that makes it better and/or cheaper. That is why I think patents are crucial for innovators at any time.

But finally, in my opinion the first movers usually are not best operating companies in the market and basically the first mover advantage does not exist. Imitation – in most of the cases – can be much faster, cheaper, less risky and more profitable. So regarding to the social welfare patents does not serve always the interest of customers and market competition.

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Camille Willot
Firstly, I think that having the possibility to mix secret and patent is a very bright idea. Indeed, big companies can make innovations that could be useful to everyone (for example software programs that many companies could use) and that would be a shame that no one could use them. However, in certain cases, it is normal that they want…
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Firstly, I think that having the possibility to mix secret and patent is a very bright idea. Indeed, big companies can make innovations that could be useful to everyone (for example software programs that many companies could use) and that would be a shame that no one could use them. However, in certain cases, it is normal that they want to keep a part of secret in their innovation. Because all patents have an end, secrecy allows companies to stay the competitive in their market and avoid future competition. I suggest we take the example of Coca-Cola and its secret recipe, which has brought the company being a leader on the beverage market, even if it was created more than 100 years ago, in 1892. If the brand had directly patented its recipe, it could already have expired by now, and Coca-Cola would not have the same position that it has now.

Furthermore, having the possibility to balance between both allows people who have a great “recipe” not to be manipulated by people in research of profit. I’m thinking about remote countries, where people have recipes that they are keeping secret since centuries, for example about plants mixtures that are in fact extraordinary medicines. Having the possibility to mix both secrecy and patency will allow these persons to work together with an entrepreneur for instance, develop businesses, create employment and improve their country’s economy, by still keeping their key success factor secret. If they couldn’t keep it secret, there are many chances that the entrepreneur would run off with the money and patent, knowing that these people aren’t always aware of these kinds of dangers. Moreover, if they hadn’t the possibility to patent sequentially, they could either seek patent for their entire innovation, which would not allow them to keep secrecy, or to patent nothing, which would be very risky in a world where they are many profit-driven persons.

In conclusion, in my view, being able to mix secrecy and patent is a good thing. Also, the AIA reform, which has enable inventors to keep their inventions secret more than a year after publication, is highly positive, because it gives more power to owners of the innovation and it can be, in the way I have described above, more ethical.

Sources :
Wikipédia. (2014). The Coca-Cola Company. Online http://fr.wikipedia.org/wiki/The_Coca-Cola_Company, consulted on the 20th October 2014.

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Chen Jia-Zhun
The principal idea that we must have in mind is that "First to File" becomes law. Indeed The American Invents Act was just reformed in order to change the patent system. That can provide some advantages but it has also its limits. First, the advantages. There are a good effect for the american innovators. This flexible patent system can allow small firms…
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The principal idea that we must have in mind is that “First to File” becomes law. Indeed The American Invents Act was just reformed in order to change the patent system.
That can provide some advantages but it has also its limits.

First, the advantages.
There are a good effect for the american innovators. This flexible patent system can allow small firms to try innovating to do not use a mix policy. In fact they can use this system to have benefits instead of losing time and money in order to save their secrets. For the other big firms, this could be a real advantage. Indeed, as their “inventions” and secrets are already known by people, nobody will really try to take their market share as they already are big firms or on a monopolistic situation on their market (e.g.: Coca Cola).
Another advantage of this system is that not only the americans but also the foreigners who want to have a patent will be taken into account. There is now no restrictions about the territory as it is regardless of whether the earliest effective filing date is based upon an application filed in the United States or in another country.

Then we can talk about the limits/disadvantages.
First of all, the time to obtain a patent. I think that 18 months to wait a response for a patent is very long. Indeed, Some companies could waste time and money for an innovation that could already be in a process.
Another problem is that the big firms can easily use their almost limitless ressources in order to beat some smaller companies if they use it for an innovation (e.g.: if some companies claim to be the inventor, the smaller companies will then have some financial problems if they want to go on court).

In conclusion, in one hand I think that that law could be a good thing but not in the case of the consumers. Indeed, with that kind of limits, big firms could be more efficiant and so win market share. Thus, it could start (or continues) a monopolistic situation where the cosumers won’t have fair prices for a new product. On the other hand, that could help small companies in the case that the 18 months of process are reduced. The big winners in this case are still the big companies that could still see that as an advantage.

References:
http://www.ipwatchdog.com/2013/03/16/a-brave-new-patent-world-first-to-file-becomes-law/id=37601/
http://blogs.orrick.com/trade-secrets-watch/2014/10/15/on-obtaining-and-asserting-both-trade-secret-and-patent-protection-the-itc-and-federal-circuit-weigh-in/
http://inventivestep.net/2013/03/11/america-invents-act-secret-prior-art/

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Thomas Busschot
I have mixed feelings regarding this strategy. Indeed, there are evidences that in some cases, all stakeholders are better off in this more flexible patent regime. It would actually mean that some of the knowledge will be kept secret while another part will be protected by law. Though it is obviously better for companies, I think we may be able…
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I have mixed feelings regarding this strategy. Indeed, there are evidences that in some cases, all stakeholders are better off in this more flexible patent regime. It would actually mean that some of the knowledge will be kept secret while another part will be protected by law. Though it is obviously better for companies, I think we may be able to find examples in which the society suffer a loss.

You can imagine this case : a company develops a new product/process. They choose to patent a new gear but keep the secret on a key part to use this machine. Thanks to this flexible system, the company is in a very good position towards their competitors.
But we could imagine that it would create some kind of monopoly on a long term (maybe forever if no one ever crack this secret key part). We know that monopoly are generally not the best market configuration for consumers. In this case, maybe society would have been better off if the company had patented the whole “innovation”. Because at a certain point, it would have fallen in the public domain and competitors would start to appear.

In conclusion, though this relaxation of the law in America seems very exciting, we should check if its application would be so good in many different cases !

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Nicolas Bindels
Firstly, summarise the effect of the AIA Reform. Following that reform, the system has switched form a “first-to-invet” (FTI) regime to a “first-inventor-to-file” (FITF) regime. That law also expanded the inventor's "publication-conditioned grace period” by holding that actions like public use, sales, publications, and other disclosures available to the public anywhere in the world as of the filing date, other…
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Firstly, summarise the effect of the AIA Reform. Following that reform, the system has switched form a “first-to-invet” (FTI) regime to a “first-inventor-to-file” (FITF) regime. That law also expanded the inventor’s “publication-conditioned grace period” by holding that actions like public use, sales, publications, and other disclosures available to the public anywhere in the world as of the filing date, other than publications by the inventor within one year of filing whether or not a third party also files a patent application.

One of the most important consequence of that reform is the loosening of the novelty criteria. Indeed, under the past regime, the inventor was in front of a binary choice because of the hardness of that novelty criteria, patented or not patented. If he decides to not patent its invention could lost its novelty criteria and thus could not be patented anymore. Currently, by the AIA reform, this novelty criteria is softens and the inventor is on front of a more flexible choice which can be very efficient for him if he find a good compromise between trade secret and patent.

On the contrary, from a consumer’s perspective, it seems less convenient because as the novelty criteria is softened, the company that maintain old trade secret from years will be able to patent these secrets if they are exposed on the contrary with the past law so these trade secrets could not fall into the CC domain for some years and everyone knows that something patented or trade secret is more expensive than a CC domain product.

To conclude, in an overall welfare perspective, it seems to be pretty well equilibrate to me and I would like to conclude that reflexion by a questioning. The patent theme seems to be pretty popular these last months and I would like to ask the benefit if the Open Source. I think that the decision to patent or not depend of its activity sector. Indeed, a company as Ferrero will have much more interest to patent its recipe because if that one fall into the CC domain, the only difference between its Nutella and an other bread pasta will be the marketing behind. But in the case of a technology company, where the competitive advantage is coming from the technological advance, these company do not have more interest to focus on developing new technologies than patent the old one which will be soon obsolete ?

Where is the economic frontier between the choice of patent or not patent does it exist a model ?

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Achille Klein
This debated issue isn’t an easy one and laws don’t help entrepreneurs in their choices. Indeed, inventors of complex innovations have different choices; they can either patent their innovations, keep it secret or make a patent-secret mix. By the way, each choice depends mainly on the product in itself. It’s obvious that the Coca Cola’s manager doesn’t have to think in…
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This debated issue isn’t an easy one and laws don’t help entrepreneurs in their choices.

Indeed, inventors of complex innovations have different choices; they can either patent their innovations, keep it secret or make a patent-secret mix. By the way, each choice depends mainly on the product in itself. It’s obvious that the Coca Cola’s manager doesn’t have to think in the same way than the manager of a technical product. According me, managers have to compare the pros and cons of each possibility in function of their idea. The product’s characteristics but also the industry’s resources and needs are the main decision’s factors.

Secondly, there are many laws that regulate these possibilities.

There is a new reform, the American Invents Act reform; I think it’s a very good solution. This reform allows entrepreneurs to keep their invention secret for the beginning and patent any segments of this innovation when they want if nobody has patented it before. It can be very interesting for small industries that don’t have much money to patent an innovation and that don’t need to spend too much money in the protection of their idea yet. Indeed, this protection only depends on the idea’s success.

What about the well-known conversion of the U.S. patent system from a “first to invent” system to a “first inventor to file” system, I think it’s the best solution in connection with this new reform. Indeed, if managers take the decisions not to patent their idea, it’s a risk that somebody else patents the same idea before them.

To conclude, entrepreneurs just have to choose the best alternative.

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Julien Horlay
The AIA, seen as one of the major reform about American patent law promote a conversion from a “first to invent” to a “first to file” .Previously, the inventors had to show that they were the first to get the idea. Now, the AIA reform want to give the right at the first who files the idea. We shall here…
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The AIA, seen as one of the major reform about American patent law promote a conversion from a “first to invent” to a “first to file” .Previously, the inventors had to show that they were the first to get the idea. Now, the AIA reform want to give the right at the first who files the idea. We shall here discuss about, first, its advantages and then its disadvantages.
According to me, this reform will bring a faster and mainly an easier system in order to know who should obtain the patent. In fact, this new reform is less complicated in an international point of view. Furthermore, before the reform application, the appropriability was mainly decided through lawsuits which cost a lot of time and money.
However, I truly think that this reform will harm the smaller company rather than the biggest one. Why? Because of their lack of financial, and mostly, human resources.
Indeed, a bigger company can hire better employees with more experience in terms of filing an innovation. Besides, on a macro point of view, it can lead to a monopoly if the big companies succeed by getting several innovations. It will force the small company to go bankrupt
In conclusion, this reform is positive only if the small companies are treated equally regarding the filing in order to get a patent. Nevertheless, the AIA can only bring much more clarity and simplification.

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Gwenael Bailly
In this comment, we will discuss the introduction of the American Invents Act and see – from our point of view – whether it has good consequences on the innovation, whether the old legislation was better. Since 2011, inventors have the opportunity of keeping their inventions secret until they are willing to patent it, if they are willing. In other words,…
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In this comment, we will discuss the introduction of the American Invents Act and see – from our point of view – whether it has good consequences on the innovation, whether the old legislation was better.

Since 2011, inventors have the opportunity of keeping their inventions secret until they are willing to patent it, if they are willing. In other words, the secret can last forever if they don’t want to make it public. In the old legislation, inventors were penalized if they kept their inventions as trade secrets for a period of time longer than a year.

The second aspect of the AIA reform is the conversion from a “first to invent” system to a “first inventor to file” system. So the inventor is no longer the same person as the owner of the invention.

Let’s discuss the two aspects of the new legislation we have now exposed. From our point of view, allowing people to keep their invention secret for the time they want has a good and a bad side.

On the one hand, if the product or the process is totally new, giving more time than a year to improve it before its potential commercialization is a necessity according to us. Penalize a firm because they didn’t want to lose their first-mover advantage by patenting a non-ready product (and reveal it to other firms) is not normal and does not encourage creativity.

On the other hand, because of the second aspect of AIA, keeping things as trade secrets can be very dangerous for the firm. One should be careful that his trade secret can’t be, for example, reverse engineered if he doesn’t want to lose the property of his novelty.

In conclusion, the AIA reform gives more freedom to inventors and that is not a bad thing at all. It gives more space and more time to finalize, improve inventions in secret, without getting copied too quickly by others (and so, gives a real first-mover advantage). But this possibility should only be used if the innovation is not easily copied because the owner may lose the ownership if someone else patents it.

So a good advice would be using a mix of secret trade and patent to ensure that you keep the ownership of your product.

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Ritej Bachhawat
AIA modifications to the patent law incentivizes trade no doubt, but it is also more a step towards a free economy. Two important levers that have been modified in the AIA reform is a) scope of prior art definition and b) the softness quotient in the novelty criteria that eases the requirements of inventions to be patented. The former is…
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AIA modifications to the patent law incentivizes trade no doubt, but it is also more a step towards a free economy. Two important levers that have been modified in the AIA reform is a) scope of prior art definition and b) the softness quotient in the novelty criteria that eases the requirements of inventions to be patented. The former is something that definitely strengthens the patent laws (calling only public information as Prior Art and encouraging free flow of information) but the latter is something that somehow eases the grip on patent filing processes (by allowing easy referencing and mixing of references). The desired impact is multi-fold, of course: – 1) Allow inventor companies an extended patent duration by allowing them to operate under secrecy on their own risk 2) incentivize competitors to keep investing in R&D and vie for more innovations so that they could patent it as early as possible (“first to file”) 3) To balance the monopoly gains being earned by the inventor vs. the society benefits gained through the invention.

In my opinion, the ideal circumstances (read “stable economy”) would have warranted only changing the scope of the prior art and not softening the novelty requirements. This change may lead to proliferation of inventions on similar lines with slight modifications here and there and may evolve into a bubble where consumers start paying high for most of the things because of it being patented and unique. Or, on the flip side, it may lead to a situation where patents become meaningless as slight modifications may allow anyone to obtain their filing on a similar product/ process and making the original invention useless. Softening novelty is a serious issue and a tight grip on it needs to be maintained because there is a fine line between pushing an economy to growth vs. over-empowering the manufacturers/ inventors.

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Luyanqi Zou
Patent has been always the key of country's competitiveness and innovative evaluation of the basic indicators. A first to invent system make the application process great uncertainty, thereby increasing the possibility of patent litigation, for example, Bio-medical Field of the Invention lasted long time,during which the new launch time whether produced patented becomes particularly critical. The new first inventor to…
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Patent has been always the key of country’s competitiveness and innovative evaluation of the basic indicators. A first to invent system make the application process great uncertainty, thereby increasing the possibility of patent litigation, for example, Bio-medical Field of the Invention lasted long time,during which the new launch time whether produced patented becomes particularly critical. The new first inventor to file system just prove who should apply.

Effective patent protection system is particularly important, the new system will allow companies to concentrate their efforts on innovation and job creation. Also it’s more conducive to the protection of American innovation and economic development.

Some breakthrough innovation and independent inventors ideas also comes from small companies. Once the patent dispute, Large companies can easily rely on strong capital strength thus small companies are easy to run out.Although the new system to simplify the patent application process,small companies still face unfair competition.For example,patent application,especially for patent portfolio,large companies can use the resources and advantages of the successful pre-owned patents,then patent applications could be protected.Small businesses must adopt the same standards when patent documents submitted.

The optimal protection strategy of patent protection will help accelerate technology commercialization process and allow inventors and entrepreneurs with the fastest speed to put a new inventions into business results,stimulate economic growth and increase employment opportunities, thus enhancing the purpose of Countries competitiveness.

President Obama also believes that the government should do its utmost to encourage innovation and entrepreneurship,though which there will might be the next technological breakthrough, medical miracles and Fortune 500 companies in these applications. From this perspective, the new system is also an important measure for the U.S. government indirectly stimulate economic and social development.

The American Invents Act (AIA, passed in 2011) with the extensive the content,for foreign (EU) companies, there are three major changes require special attention:
First, patent applications, patents, from the first invention is to a first application system; Second, expanding the scope of the prior art;Third, mechanisms to challenge the patent has also undergone a major change,which are the addition of new programs.

The American Invents Act (AIA, passed in 2011), described as the biggest reform of American patent law,was made,the patent application process which more closer to the majority of countries in the world patent system are more easier. While reducing the chances of discrimination,foreign inventors to apply for patents more convenient.China,the European Union and other countries to the United States patent companies will feel easier,it is conducive for foreign(such as EU) companies in the states for more patent applications.In this case,foreign export enterprises should accelerate the deployment of patents in the United States.

In the more stringent standard of review patent examination process, Foreign companies should pay more attention to technological innovation and increase R & D funding to encourage originality, improve the innovation ability and level, abandon imitation and plagiarism.Patent applications in the United States should first do patent validity search to improve the quality of patent applications. Meanwhile,the United States Patent and Trademark Office may question the validity of the patent,in this way,it reduces the cost of litigation to mention ineffective court and does favor of foreign companies to enter the U.S. market.

Therefore, the foreign export companies in the United States should pay attention to:(before the product enters the market) First, the patent application should be actively deployed in the United States;Second, we should examine competitors’ patents-the validity of the patent retrieval, the warning analysis of patent whether it’s infringe of products and technologies in order to reduce the risk of infringement;Third, the foreign export companies in the United States may consider the use of patents after administrative procedures, analyzing the related product patent.At the same time,
Search the reasons and evidence which may make the patent invalid. If there are any patent may be involved in litigation,companies should enhance the stability of the patents by using the additional inspection procedures.

In short, Business method and patent in information age bring challenges to the traditional legal system.Business method patents by confirming the “rights” of ownership to protect the creative work of inventors with compensation for the material and spiritual comfort. It is effective to prevent the “free rider” behavior in order to drive innovation. But business method patent is a double-edged sword.It will increase the cost of beginners, trigger patent race. Anyway, Its purpose was to promote innovation.In practice, we do get a salutary.However, it still need to constantly revised and improved by specific measures.

References:
1.Tampone, Kevin. Patent laws get a much-needed update[J].Business Journal ( Central New York) ,2011,25 ( 43) : 11-11
2.Sharon, Barner. Strategies for the USPTO: Ensuring America’s innovation future[J].Northwestern Journal of Technology and intellectual Property, 2010(8):440
3.Colleen V. Chien. A Race to the Bottom [J].Intellectual Asset Management Magazine,2012,(10) .

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AKASHDEEP SRIVASTAVA
The changes implemented by AIA are beneficial to the general innovation ecosystem in several ways. Firstly, it provides the innovators who have kept trade secrets for a long time to patent the same for protection against its competitors. Under the earlier patent law system, ‘prior art’ also included trade secrets and obtaining patents for these ‘secrets’ became an issue because…
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The changes implemented by AIA are beneficial to the general innovation ecosystem in several ways. Firstly, it provides the innovators who have kept trade secrets for a long time to patent the same for protection against its competitors. Under the earlier patent law system, ‘prior art’ also included trade secrets and obtaining patents for these ‘secrets’ became an issue because of the ‘novelty’ clause of the patent requirement. This is a welcome change for the innovators in the extremely competitive environment and it also promotes innovation. The permission of patenting secrets will also reduce the problem of industrial espionage as even bigger and powerful corporations can’t use the patent of its smaller but innovative competitors.

Secondly, in the US patent application process, there is a time delay of 18 months between the filing of the application and publishing of the same. But if the application is approved and published, any patents filed in these 18 months will have to stand the test of novelty and obviousness clause treating the above mentioned application as ‘prior art’ whereas the applicant had no public information of the process/product at the time of his application. This fallacy prevents an honest applicant from obtaining a patent even though the patent it’s seeking is genuine and new. AIA resolves this discrepancy for the benefit of these applicants.

Thus the changes brought about by AIA seek to reform the patent process and system for ‘trade secrets’ and can be viewed as a long-term beneficial concept for all the parties involved in the innovation ecosystem.

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Charlotte Moreau
First of all, I think mixing patents and trade secrets can be a bit messy sometimes. The boundaries of what is patented and what is kept as a secret must be very clear so that the employees know what the confidential subjects are. Moreover this depends on the size of the company, if there are many employees, I guess that…
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First of all, I think mixing patents and trade secrets can be a bit messy sometimes. The boundaries of what is patented and what is kept as a secret must be very clear so that the employees know what the confidential subjects are. Moreover this depends on the size of the company, if there are many employees, I guess that only a few of them will know about the trade secrets whereas in smaller SMEs, the majority of the employees will know about it. That can be risky for example if they talk about it in public places.

Concerning the complex innovations, I think that it is necessarily for those big multinationals to keep some ingredients of their recipe secret. It enables them to keep and gain market shares. But it may also lead to a monopolistic situation where competitors wouldn’t be able to stay on the market because the one company doesn’t reveal its magic ingredient, like Coca-Cola, Nutella or others.

According to me, the AIA reform will let more space and flexibility to companies. With the change from “first to invent” to “first inventor file”, it simplifies the US patent system but on the long term, it will be in favour of bigger companies because they will be faster than smaller ones, thanks to their staff and resources.

Besides, this reform allow to keep a prior art as a secret at first and then release it as a patent. It enables companies to have much more flexibility. I think that is good to let more freedom to companies and allow them to mix secrets and patents for one intellectual properties.

Briefly, mixing patents and trade secrets can be very efficient if companies do it on a smart way.

Sources:
http://www.pcworld.com/article/240282/new_patent_law_offers_few_pros_many_cons.html

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Florian Simon
The America Invents Act, described as the biggest reform of American patent law will be discussed in this comment. The conversion to a "first to file system" is certainly the main point of this reform. Before that, it was a "first to invent" system in which the inventors had to prove that they were the first to think about the…
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The America Invents Act, described as the biggest reform of American patent law will be discussed in this comment.

The conversion to a “first to file system” is certainly the main point of this reform. Before that, it was a “first to invent” system in which the inventors had to prove that they were the first to think about the idea. Now, the reform want to give the right at the first who file the idea. Let’s discuss about the pros and cons of this point of the reform.

As far as I’m concerned I think that the reform will lead to a quicker and simpler system especially to decide who should get the patent. Indeed, before the reform, the decision was often decided by legal battle in the court. A second point is that this new reform is more in accordance with many other parts of the world. Finally for those who can not file a full invention quickly, there is a new possibility of filing a limited “provisional application” for 12 months

As a negative point, I think that in the long run, this reform will beneficiate to the biggest company rather than the small one. Indeed, with their staff and ressources, they are more likely to file quickly an innovation. Therefore, small companies and individual inventors will be constrained. In this extant, we could say that the consumers won’t be beneficiary of this reform. Indeed, the biggest companies of an industry could act as a monopoly when they will sell their new product or use new processes.

As a conclusion, I would say that the reform have both advantages and disadvantages which is the condition to end as a debate. For my point of view, I would say that it’s non-ended reform meaning that as long as the small companies won’t be beneficiary of this reform, as long the debate will continue.

To be continued…

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Arpit Agal
Before getting into debate over new AIA changes, let's look into why patents are required and how do they help innovator in terms of increasing welfare. A patent gives the innovator a right to charge a monopoly price thereby increasing their profits and encouraging them for more innovation. At the same time, the patent has an expiry date, which means…
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Before getting into debate over new AIA changes, let’s look into why patents are required and how do they help innovator in terms of increasing welfare. A patent gives the innovator a right to charge a monopoly price thereby increasing their profits and encouraging them for more innovation. At the same time, the patent has an expiry date, which means that imitators can copy the product after a certain time which is the reson why some companies choose to keep some part as a secret, so that the product is not easily copied after the expiry of patent.
Now, with the new changes, innovators definitely have more incentive for keeping secrets out of patent since they can patent it anytime later on as and when they feel the need. This means that it is useful for innovators and encourage more innovations which was the whole point of having a patent. At the same time, imitators can try going for secrets which are not patented as per the new clause which gives right to first inventor to file. That will keep innovators on their toes and promote healthy competition. Consumers might also benefit out of this competition in terms of lower prices and better quality.
But, like with every law, this also has a lot of subjectivity and implementation might become an issue because of defining ” secrets” . A company can claim any of their sub product as a secret in order to protect it from imitators. Also, there need to be a global acceptance of this law to avoid conflict with country specific patent laws. But overall, It is definitely a good step and will bring about positive changes in the long term.

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Stroobants Benoit
As far as I am concerned, I am strongly convinced that points of view change regarding from where we analyse the debate. A huge multinational company won't have the same opinion than a little start-up or even consumers. Indeed, one will earn plenty money and will have no difficulties to patent their innovation while another that doesn’t have such financial…
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As far as I am concerned, I am strongly convinced that points of view change regarding from where we analyse the debate. A huge multinational company won’t have the same opinion than a little start-up or even consumers. Indeed, one will earn plenty money and will have no difficulties to patent their innovation while another that doesn’t have such financial resources will prefer not to patent but still want to keep their assets hidden from potential competition. One will be sure that nobody will steal their innovative idea thanks to the patent; the other that can’t afford such high costs to patent, will prefer to hide their idea and its specifications during few years. This period will be required by the company to make money and to be able to afford the purchase of a patent at the right time… However, I think every company will be able to find pros and cons from the AIA reform that will lead them to extract pretty good things from that decision.

This reform starts with good ideas and try to promote the development and the protection of new ideas; however, like said earlier, every players of this game have to take the advantages offered to them and try to exploit it as much as possible. But each player doesn’t play with the same starting assets. Then, it’s more and more complicated to know what’s the best strategy to undertake with such a competitive environment where everyone is not on the same equal footing.

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Hélène Linsmeau
In one hand, the American Invents Act reform which promote patent for the « first-inventor-to-file» has several advantages. The main changes will be for foreign patent applicants who will be more taken into account than with the previous rules. Indeed, the new paragraph 102 proclaims that “an individual is entitled to a patent unless the claimed invention was patented, described…
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In one hand, the American Invents Act reform which promote patent for the « first-inventor-to-file» has several advantages.
The main changes will be for foreign patent applicants who will be more taken into account than with the previous rules. Indeed, the new paragraph 102 proclaims that “an individual is entitled to a patent unless the claimed invention was patented, described in a printed publication, in public use, on sale, or made available to the public by any other means prior to the effective filing date of the claimed invention”. This last recommendation does not mention any kind of territorial restrictions which means that a foreign publication, or a foreign public use is now an obstacle for U.S. patent protection.
Secondly, the grace period which is now reduce “to inventor activity during the year prior to patent application filing” is also an international rule. Therefore, the foreign applicants are again put on a more equal position with American applicants than previously.

On the other hand, there are limits of these new American rules.
First, a rule prescribes that if someone else announces the same invention after a disclosure from the inventor, his project/product will fail. But the term “the same invention” is not well defined and can be considered in several ways, so the court needs a more clear definition of the used terms to be able of choosing the good solution. If not, the “second” inventor will be entitled to apply for patent and it might be even worst for the “first” inventor. For instance, the second invention could perhaps become a post grant review’s resource to reject the first product declared.
The second limit to this year of protection for the inventor is that the disclosure of the new product will ruin his rights of patenting in countries outside of U.S.
Finally, the contrary of the positive effect that a request person needs to proof that the court will give at least one claim of default of patenting, there is also a negative impact. Indeed, the fact that the Patent Trial and Appeal Board has a duration of 18 months (included the prolongation of eight month “for good cause shown”) to analyze post grant review lets fewer possibilities for the inventors to give proofs of their request for patent.

To sum up, I think that, like every law, these new rules cause advantages as well as disadvantages and there isn’t a perfect solution. In my point of view, the most important fact is that countries need to agree with each other, that a worldwide way to patent inventions needs to be found.

References used :

[1] http://ratnerprestia.com/214?article=512
[2] http://inventivestep.net/2013/03/11/america-invents-act-secret-prior-art/
[3]http://patentlyo.com/patent/2012/10/did-the-aia-eliminate-secret-prior-art.html
[4] http://www.smart-biggar.ca/fr/articles_detail.cfm?news_id=729
[5] http://iprightslaw.com/the-immediate-implications-of-the-new-u-s-patent-law-on-prior-art/
[6]http://europeanpatentcaselaw.blogspot.be/2011/09/seisme-dans-le-droit-des-brevets-la.html
[7]http://www.novagraaf.com/fr/actualite?newspath=/NewsItems/fr/la-reforme-americaine-du-droit-des-brevets
[8]http://www.wolfgreenfield.com/newsstand/452-america-invents-act-implications-patent-reform

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LBusseniers
The AIA is the American Invents Act which was just reformed in order to soften the novelty requirement and to eliminate the priority of novelty in the secret. First, thanks to the reform of the AIA there are now a more fair system who attribute the right to patent on the first who claim the novelty. Indeed, the previsous system follows…
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The AIA is the American Invents Act which was just reformed in order to soften the novelty requirement and to eliminate the priority of novelty in the secret.

First, thanks to the reform of the AIA there are now a more fair system who attribute the right to patent on the first who claim the novelty. Indeed, the previsous system follows the law “first to invent”. If a firm chooses to keep his recipe secret for a sauce and then a year after another firm try to patent the same recipe, if the first one proove she invent it before (a year before) she deserve the priority to patent the recipe.This first rule let too much importance to secret. Furthermore this was not “fair”. The new rule follow the principle “first inventor to file”. Now, the faster firm who invent the recipe can choose if she keep it secret or if she patent it. If she keep it secret and a year after a competitor find the same recipe she can’t claim that she was first to invent it. This new method eliminates part of the “secret prior art”.

Second, another advantage of the reform is that there are positive welfare effects especially for the american innovator and the consumers in my opinion. It is not surprising, this more flexible patent regime allows smaller firms such as “Petites et Moyennes Entreprises” to innovate without spending money or loosing time by keeping their innovation secret. For big firms the positive effect is even bigger. When we think about the consumer’s utility, as long as the innovation is keeping secret by the firms there are less competition and therefore the consumer surplus is bigger.

To conclude I would like to remind the first aim of a patent : to reward and protect the innovation. Thanks to the reform of the American Invents Act, the innovators receive more retribution for the innovation they keep secret or they patent because they avoid to spend money to proove they were the first to invent.

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Aymeric de Pret
Of course from the point of view of some big firms which can keep a secret without too many problems, the AIA reform is a very good thing. They will keep their secret as long as they’re not threatened and will patent it if needed. On the other hand, this reform is not efficient at all for the consumer. Even if…
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Of course from the point of view of some big firms which can keep a secret without too many problems, the AIA reform is a very good thing.
They will keep their secret as long as they’re not threatened and will patent it if needed. On the other hand, this reform is not efficient at all for the consumer. Even if another company discovers the secret formula of a lambda firm they will put a patent on it and the innovation won’t fall in public domain for twenty more years.
This is about big companies. If SME’s innovate in a very successful way, the new rule won’t benefit them at all. Even worse, big enterprises have the necessary ressources to do reverse engineering and could then legally « steal » and patent the innovation of the small innovative firm if this one had tried to keep it secret.
So maybe this reform is a good incentive for innovation because firms will have the opportunity to hold the exclusivity of their innovation for a longer time if they play well but I think everybody is not equal towards this new rule. Furthermore, it could even have a downward effect on innovation. If firms allocate more ressources in order to find other firms’ secrets because they can patent it, there could be less ressources for « new » innovations.
It’s once more less efficient for the customer.
As conclusion, the global effet is, in accordance to me, negative. Even more when knowing we’re living a in world lead by already very powerful companies!

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Alex Angelini
I agree with the opinion that the AIA reform should, in very general terms, be beneficial to the different actors of society in the long run since the mere fact of having more information available – the patents themselves – is favorable per se. But trying to be more specific seems complicated: given that it is almost impossible to reduce the…
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I agree with the opinion that the AIA reform should, in very general terms, be beneficial to the different actors of society in the long run since the mere fact of having more information available – the patents themselves – is favorable per se.
But trying to be more specific seems complicated: given that it is almost impossible to reduce the variety of patents to simpler cathegories, it’s difficult to predict the specific effect of the AIA reform on the different kinds of patents – different in the aspect that they reflect different economies of scale and profit functions w.r.t. innovations – and consequently on the different fields of production.

As Professor Belleflamme reminds us in the article, we can draw favorable results from the AIA reform only under the concavity assumption of the innovator’s profit function in the fraction of the innovation that the imitator can exploit: that is to say that the AIA reform produces favourable effects if “the imitator must learn a large fragment of the innovation in order to be able to exploit it usefully”.
Otherwise, if convexity prevails, the innovator loses a lot of its choice elasticity and is left with a strict all-or-nothing patent strategy that will allegedly harm the stakeholders in the long run (since the secret is kept).

If we think the problem in terms of convexity or not of the different profit functions, the answer seems more unclear and I feel like the AIA could even produce overall negative effects, since I imagine that the concavity assuption could not be verified in a lot of relevant cases.
Why is that? Going by intuition, due to efficiency reasons I would expect to have more frequently than not markets made by similar firms with similar shapes: that is to say that the innovator and the imitator are “separed” only by the respective patents and trade secrets, which implies that in most cases they are both fairly near to each other and that just a fragment of information on the aformentioned innovation could be enought to exploit some advantages.
Is this reasoning unrealistic? It seems to me that if we do not obtain information on the concavity of the innovator’s profit function it is difficult to really value the complex effects that the AIA reform will bring. But is it possible to measure it, given the bias that follows the complexity and heterogenity of the patent sistem?

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Peeters Pierre-Yves
From the innovator point of view this reform is clearly positive. In fact, before they had to choose between the risk to keep the innovation secret hoping nobody will find what the secret really is and to patent it for a defined time frame knowing that they will have to come with a new innovation in order to avoid the…
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From the innovator point of view this reform is clearly positive. In fact, before they had to choose between the risk to keep the innovation secret hoping nobody will find what the secret really is and to patent it for a defined time frame knowing that they will have to come with a new innovation in order to avoid the imitators to steal their profit.
Instead they have now all the security they want because they can patent it long after they truly discover it. I think they will keep all the sub-innovation secret now. And then they will be waiting until others discover it.

From the imitators point of view, I think this reform from AIA is a bad news, they will have to struggle to discover what is the secret of their competitors and then wait until the patent is over. I can’t find a real benefits of this reform for these imitators who will be working more and more to get to the same point.

From the consumers point of view, this reform is also a bad news. Indeed as I wrote above, innovation is going to be less common and the market price will stay high a longer time.

This is maybe an opinion a little bit to naive but I have the impression that all these American reforms concerning the market are commonly against the consumer and tends to protect the big companies. This one gave to the inventors too much security and a larger part of the profits. This reform is also a brake on future innovation.

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Stefano De Martini
Trying to combine trade secrets and patent in the best way possible it is a difficult task. First of all trade secrets exists because there are many technical information or just specific recipes, as we saw from the article, which represent a great economic value for the companies or the inventors. When I talk about technical information I’m referring to…
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Trying to combine trade secrets and patent in the best way possible it is a difficult task.
First of all trade secrets exists because there are many technical information or just specific recipes, as we saw from the article, which represent a great economic value for the companies or the inventors. When I talk about technical information I’m referring to the know how of a certain industry or firm. Those firms are willing to keep their know how secret, it represent a great deal for them it could be the very reason of their profit. In order to protect it patent are neither sufficient nor satisfactory enough, that’s the main reason that lies behind trade secrets; keeping trade secrets certainly does not have an impact on other inventions and it does not instil the urge to create new innovations. A part from that trade secrets have a greater risk of industrial espionage from the competitors and, therefore, firms would try to use if the have a positve trade off.
With that being said, though, I believe that the limitations on trade secrets are essential and they will have a positive welfare effect. Just as I believed that prolonging the copyright protection was a mistake, because that would have had a negative effect on the public, I think that the conversion made in the U.S. going from “first to invent” system to a “first inventor to file” system is good news. By doing so firms will have less incentive to keep their information secret but instead could have an incentive in patenting them and innovations will be favoured. The process of sharing information is crucial in order to progress and the “policy” of trade secrets certainly does not go on this direction.
I still believe that a certain degree of secrecy is impossible to prohibit and is probably necessary, but since a perfect combination between patent and trade secrets seems really hard to achieve, trying to limit, for what is possible, trade secrets can improve the public and have a positive effect on the welfare.

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Ankur Kaul
The modification that has been introduced into the definition of what is prior art, is definitely one that deserves that careful attention due to its obvious ramifications on patent applications, and its long term impact on the choice that inventors make regarding commercial sale of their inventions, so as to accrue maximum benefit to themselves. The addition of the phrase…
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The modification that has been introduced into the definition of what is prior art, is definitely one that deserves that careful attention due to its obvious ramifications on patent applications, and its long term impact on the choice that inventors make regarding commercial sale of their inventions, so as to accrue maximum benefit to themselves. The addition of the phrase ‘otherwise available to the public’ can be interpreted to mean that secret sale would not be grounds for dismissing a subsequent patent application, as has been held by USPTO, ABA IPL and AIPLA. I am also of the opinion that this addition does amount to a shift away from the precedent set by the Metallizing case of 1946, where even secret sale was sufficient to dismiss an application.
Those who argue that the additional phrase does not modify the existing status quo base their argument on the fact that the exact wording does not explicitly state that secret sale does not constitute public access. This point of view can only be addressed by judicial or Congressional clarification, and fails to recognise that it denotes an effort to give more leverage to the inventor on how she/he wishes to commercially exploit the intellectual property. Seemingly, this would run contrary to the First-to-File system, as another line of thought argues, but it could also signal an intent to move closer to the other IP standards existing in other parts of the world, where the existing precedent wouldn’t stand.
Thus, I believe that this addition is an effort at harmonization and enhancing the ambit of an inventor’s rights.

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Mario Medina
Discuss this mixture of strategies for protect the inventions or innovations is complicated, because the decision of the use of patents or trade secrets depends on the product’s characteristics or the innovation’s recipe, it depends also in the company´s resources and needs. Maybe for Coca-Cola Company is okay to keep in secret their syrop formula and patent the preservatives, but…
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Discuss this mixture of strategies for protect the inventions or innovations is complicated, because the decision of the use of patents or trade secrets depends on the product’s characteristics or the innovation’s recipe, it depends also in the company´s resources and needs. Maybe for Coca-Cola Company is okay to keep in secret their syrop formula and patent the preservatives, but for other companies of beverages would not be so clever to trade secret their formulas because of the reverse engineering or the lack of loyalty in their crew. For Coca-Cola Company it is a good strategy to do this because of the name of the company, if in the unlikely event one were to concoct the very solution Coca-Cola uses, the value would not be as high because the product would not be marketed as Coca-Cola (1). That´s why for this company it is the best choice to keep secret their formula and avoid pay for a patent instead.

Of course the change made by the AIA will produce positive welfare effects. With the AIA reform you have the option of decide if you´ll trade secret or patent an idea for as long as you want, with this you can manage your resources at your convenience and keep your idea as trade secret at the beginning because it won’t cost anything and depending of the success of your product and the develop of it, decide if you are going to patent it or you´ll keep it as a secret (as long as you’re sure that it is impossible to exposure it). You can also patent only some fragments of your product and others keep them as a secret. This allows you to protect your intellectual property by the most practical and efficient way.

Apparently for some people the fact of give those kinds of facilities to protect the intellectual property is unfair for the market or the innovation fields, because the companies can protect their ideas in many ways that could for instance stock the market, but in the other hand I see it like a fair way to protect the rights of the inventors and a way to promote other people to create new ideas from other angles and not to try to copy other’s ideas, like we saw it in the past themes that’s why there is another controversial topic that discus about patent the method and no the final product, an example is Coca Cola and PepsiCo, the product is somehow the same but the recipe changes and it is not plagiarism. I think it is good to have several choices to protect your ideas and it depends on you which way you´ll take for improve the benefits from your products or methods.

In the scientific field there is also another option that is published an article in specialized journals with your formula and with that protect it from imitators, although it doesn´t always apply.

(1) http://www.pellegrinoandassociates.com/why-coca-cola-will-never-patent-its-formula/

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Vinayak Tirakaraddi
From a perspective of trying to maximize the total welfare of the society, patents go a long way in achieving it (especially the First to File system). Firstly, in comparison to keeping trade secrets, patents system encourages inventors to "cash in" on their inventions, rathert than risking the total loss by keeping it a trade secret through significant investments in…
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From a perspective of trying to maximize the total welfare of the society, patents go a long way in achieving it (especially the First to File system). Firstly, in comparison to keeping trade secrets, patents system encourages inventors to “cash in” on their inventions, rathert than risking the total loss by keeping it a trade secret through significant investments in protection from industrial espionage. Secondly, it also lets the inventors know of the inventions that have already been patented, and hence can focus in a different direction. Thirdly, I feel the ambiguity in deciding the “true inventor” is less in FTF than FTI, and therefore reduces the amount of non-productive work for the verifying agent. Lastly, and also most importantly, the consumers tend to benefit the most from early disclosures of patents as better products reach the market without them having to pay the premium for “trade secret”.

Regarding patenting complex innovations, though it tends to make the concept of patenting more objective, a limit must be set upto which an innovation can be broken down for sub-patenting. This not only reduces the level of work for the verifying agent but also reduces the number of disputes over trivial issues (Apple-Samsung trial).

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Marta de Sousa Lucas Caeiro
When referring to patents or any other kind of intellectual property rights, independently of the type of innovation aimed to be created, one might understand that they exist as tools to achieve the best balance between dynamic (incentives for innovators to keep innovating) and static efficiency (social benefit for users). One recognize the importance of patents to enhance further investments…
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When referring to patents or any other kind of intellectual property rights, independently of the type of innovation aimed to be created, one might understand that they exist as tools to achieve the best balance between dynamic (incentives for innovators to keep innovating) and static efficiency (social benefit for users). One recognize the importance of patents to enhance further investments in production of Knowledge, given its specific properties as a (pure) public good.

Taking into consideration complex innovations, the relevance of patenting emerges, since it undermines the possibility of imitation and strong competition, due to the fact that complex innovations entail several sub-innovations, which being patented harm competitors – the monopoly market power is larger and imitators, on one hand should incur in more transaction costs, and in other hand have to fulfill more technical skills in order to comprehend the connections within sub-innovations. The critical point to the innovator is to decide the appropriate balancing and/or mix strategies between the acquisition of patents to all sub-innovations and respective enforcement or to keep some ideas behind such sub-innovation in secrecy. Nevertheless, this decision is not straightforward, assuming not only the requisites an innovation should entail to be patented – novelty (prior art) and utility, but also given the reform of AIA, that underlines “(…) inventors (…) are left with the option to practice their invention as trade secrets for now and still patent those same inventions later”. This reformation, at a glance, seems flexible, however when analyzing deeply it evidences some shortcomings.

First of all, as argued by some experts, the definition of “prior art” is not clear ( “ In this way, the AIA expanded prior art to include the variety of ways information can now be published, not the least of which is publication via the Internet. This would seem to indicate congressional intent to broaden the definition of prior art.”; “The trouble is defining what is “new.” Prior art must be a reference of some type (i.e., a patent or a printed publication) or some type of knowledge or event (i.e., public knowledge, public use or a sale of a product) that demonstrates that the invention in question is not new.(…) in http://www.ipwatchdog.com/2012/10/03/the-impact-of-the-america-invents-act-on-the-definition-of-prior-art/id=28453/ ).

Secondly, a secrecy can only be patented if there is yet no patent for the same idea kept as a secret, it means that this reform benefits most not the “first to invent” but the “first inventor to file”, which of course discourages secrecy at all. Although, one of the properties of a secrecy is that it is defined as “tacit” Knowledge, in other words, some ideas can be expressed but only perfectly performed by the inventor (case of most recipes kept secret); therefore patenting some secrecies is worthless.

Last but not least, I would say that assuming a given secrecy is patented, the length of protection of the innovation as a whole will increase, which will benefit, at the first stage the innovator, who keeps his market power for a longer period. Additionally, in medium-long term, the social welfare will overall decrease, given that :

– For inventors, there will be an increasing R&D costs of innovation and diminishing expected present value of their returns (discounting).
– For users, they are delaying the use of new Knowledge.
– Higher temporarily deadweight losses.

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Thomas Ruelle
I have the impression that it is always a matter of balance between personal and general interests. On one hand we have people who have ideas, they need incentives to keep innovating and protections to benefit from their ideas. On the opposite we have people that would like to exploit someone else’s idea in order to either innovate or…
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I have the impression that it is always a matter of balance between personal and general interests.

On one hand we have people who have ideas, they need incentives to keep innovating and protections to benefit from their ideas. On the opposite we have people that would like to exploit someone else’s idea in order to either innovate or offer a similar service/product to the market for a smaller price. That would lead to more competitive offers, which is positive for consumers. Wouldn’t it be possible to match both interests? I get the impression from the texts we had to analyse on the blog, including that one that all measures are taken in favour of the innovators. But we tend to forget that innovation brings innovation. It means that if protections offered to innovators are too strong, we do not allow other people to bounce back on that innovation to come up with something better or different.

For instance the AIA reform appears to me only in favour of ideas owners.
The previous regime was, according to me, more “fair” for both innovators and potential imitators. If the first wanted to keep the secret and financially benefit from his idea without any time restriction, he takes a risk and gives a chance to the potential imitator to find the secret out. If the innovator directly files for a patent, he fully hedges his idea from copy but only within a specified time frame. In the new version, removing the penalty linked to a shift from secret protection to patent protection is positive only for innovators. I guess that an inventor can track how far are his competitors from the information. If the information owner figures out that competitors are close to find the content of the info, then he can apply for a patent, which will hedge his knowledge from copy.
I think this AIA reform makes the balance between both interests unsteady in favour of the Innovators, which is according to me negative from a total welfare perspective. The innovator’s welfare obviously increases, but on the other hand people who could potentially provide the market with a better offer cannot use the idea. It doesn’t stimulate the competition and slow innovation down. However, the text states that the welfare would be positively affected. I have some difficulties to grasp how it could be the case. Would it be possible to have more information about the author’s analysis?

Whereas I do support the idea that inventors should directly decide which option to apply for (Secret VS patent) at the early stages and stick to it, I think that a protection consisting of a mix of secret and patent is really clever and could represent an solution to the problem I just mentioned above. That Hybrid protection still gives a chance to people to discover secret and to exploit someone else’s idea at the term of the patent, whereas those two protections in a row is, I think, value destructive.

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Kasper Vagle
After reading the different articles, my thoughts are that the changes are for the better. Because the required work by the patent offices will decrease, as they don't have to dig as deep to find out whether the invention is prior art or not. Further on I support the idea that the rules becomes more comprehensible, and that the law…
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After reading the different articles, my thoughts are that the changes are for the better. Because the required work by the patent offices will decrease, as they don’t have to dig as deep to find out whether the invention is prior art or not. Further on I support the idea that the rules becomes more comprehensible, and that the law focuses on higher prosperity. With more information available for those who want to find it, the change in rule is an improvement.

Further on I support the idea of “first-to-file”. Again this gives an incentive to patent secrets, as you don’t know when someone might “crack open” your secret. Although patents might lock up information, its at least only for a certain amount of time, and not forever (which might be the case for a secret). I strongly believe that sharing information is the best way of obtaining further improvement, and secrets might slow down our development.

Touching upon this theme, I was inspired when Tesla Motors published the content of many of their patents. Not only contributes this to increased research and development on electrical engines. But I believe Tesla Motors can profit from this move, as hundred of researchers will work on improving the technology used in their engines, without Tesla having them on their payroll. This is also an example on how sharing information can contribute to public wealth, and at the same time be profitable for the firm.

This example stresses my fundamental support of openness and shared information. And as the law now opens for patenting long held secrets, I believe that the end result will be more information available to more people. On the same time I understand the importance of patents, as this gives the innovators an incentive to invest in R&D.

So to sum up, patents are in my opinion better then secrets, but keep the patents flexible and easy to understand.

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Ankit Gupta
To comment on the AIA reforms, I would like to first analyse it from the perspective of all the relevant stakeholders: For Innovator: The AIA reform (shift from penalizing innovators for maintaining long held trade secrets to the provision of making those secrets being patentable at a later stage) has allowed the innovator to reap incentives from his invention till…
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To comment on the AIA reforms, I would like to first analyse it from the perspective of all the relevant stakeholders:

For Innovator:
The AIA reform (shift from penalizing innovators for maintaining long held trade secrets to the provision of making those secrets being patentable at a later stage) has allowed the innovator to reap incentives from his invention till the time it does not foresee a threat of it being founded/disclosed or make it patentable when it has already taken competitive advantage with that.

For competitors/imitator:
The AIA reform keeps the competitors away from the knowledge of an advancement/invention in their industry. Thus putting them at a back seat till the time they do not find the invention themselves or a patent is filed.

Also with the conversion of patent system from “first to invent” to “first innovator to file”, U.S. patent system strikes a balance for the competition at large. It provides a flipside to innovator’s decision of keeping sub-innovation as a trade secret, thus a threat of being patented by a competitor and rendering it un-usable by the real inventor.

For industry and consumer society at large (world):
With more number of trade secrets and less patents, the productivity frontier of the industry will move at a slower pace than when the information diffusion takes place. So the delay in patenting will actually result in loss at large for the industry evolution and thus denying the public welfare of invention for a long time.

For Inventor’s economy – U.S.:
Despite the loss of consumer welfare at large, through the provision of removal of the prior art effect of private uses and private offers for sale of invention – the innovator’s economy(U.S. in this case) can benefit “relatively” through the confidentiality of invention from the world.

Now to conclude, I believe that the move of AIA will strengthen, as intended by the U.S., their patent system. But the reinforcement will benefit U.S. for short term only – against the diffusion of invention to the world by motivating the innovators to maintain long term trade secrets. In long term, this move will hamper the expansion of productivity frontier for the U.S. economy itself as several innovators will be working on the already invented thing– resulting in not much growth for the economy. Thus, a denial to consumer welfare not only at large but also from the microscopic view of U.S. economy.

The patent system is designed to drive industry for consumer’s welfare and if patent system is not resulting in that – I would like to “not” support the change in U.S. patent system made by reforming AIA. In my suggestion – there should be a limited period of keeping an invention as a trade secret even in private uses, so that trade secret will not only benefit the innovator, but also results subsequently in the evolution of the industry timely and hence contributing to the consumer welfare like a patent does. In that way, the mixing of trade secrets and patents is justified for complex innovation.

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Chirag Sachdeva
Both patents and trade-secrets work in an essentially similar way when we look at them from the perspective of the innovator; through both these tools an innovator is trying to reap maximum returns either by completely with-holding information pertaining to his innovation or by legitimately patenting his innovation so that although his innovation is available to the industry at large,…
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Both patents and trade-secrets work in an essentially similar way when we look at them from the perspective of the innovator; through both these tools an innovator is trying to reap maximum returns either by completely with-holding information pertaining to his innovation or by legitimately patenting his innovation so that although his innovation is available to the industry at large, but in the wake he has bought himself a right to use that innovation exclusively for a stipulated time.
Now, the essentially similar looking tools being discussed here must have a very substantial difference between them for their usage finds most relevance under very specific scenarios, and the truth is, that yes, there is, as a matter of fact, very significant difference in their risk-return outline.
We obviously know that, a trade-secret works for the innovator as long as it is managed to be kept under the wraps, once it is out in the hands of the competitor, he can virtually do anything and can push us out of the business, yet we take this herculean amount of risk for just 1 reason, and that is the notional return. This above is the reason why Coke’s syrup formula is still a pursuit for many, or the KFC’s list of secret herbs, still boggles the minds of chefs and competitors alike.
Now, a patent for sure is a less risky avenue, I mean you potentially define for yourself the time for which you and you alone would be able to reap the benefits of you innovation (actually the innovation which was filed by you!), no one can definitely take that away from you. But, in the wake, you obviously are ready to assume the risk what all the industry can do with your innovation. I mean it can probably run its course even before the patent period ends!
Coke’s syrup formula, KFC’s 11 herbs or McDonald’s special sauce on one hand; and ‘Beverage preservatives’ by Coke, ‘Device and method for frying and grilling’ by KFC, or the ‘Method and apparatus for making a sandwich’ by McDonald on the other hand – these two groups fundamentally represent two different classes of innovations, first one is such that innovator must protect them even 100 years post innovation for their disclosure might just make the company irrelevant, it is because these innovations may or may not be replicated again, it was just sheer chance that what was developed was well received by the end consumer. However, the second group majorly points at methods of increasing operational efficiency, now one thing is for sure that they are much more mechanical innovations as compared the first group, hence sooner or later they can be replicated, hence it makes more sense to patent them.
We have in front of us a very clear motive for choosing either of the modes discussed above, now with that been established, let me ask you a question – Will coke ever disclose its Syrup recipe? Will KFC ever make public the list of those 11 magical herbs? Now, in the wake of above, the latest move by AIA to allow innovators to patent their trade-secrets at a later stage, will this move ever find its relevance?!
For me the answer is a straight NO. If I am the Coke of this world, I will never disclose the one thing that alone stands for my survival. Absolutely No! And, not today, not in future!
However, let’s amuse ourselves by considering an hypothetical scenario that Cokes and KFCs of the world decide to shut themselves one day, and just to ensure that last piece of return from that innovation, they go for patenting their innovation since they won’t be using them for their own usage anymore, then yes in that amusing hypothetical scenario, this move may serve the mankind.
Before, I end; I must consider one more possibility, where an innovator himself is not sure about which of these tools serves his purpose more, and then the latest modification is sure going to find usage as it still leaves the option of patenting at a later stage for the innovator.

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Justine Costeur
What is most known about the reform AIA is the conversion of their patent system from a “first to invent” to a “first inventor to file” system. In other words, the focus is put on the product rather than on the idea. However, the debate doesn’t come from that part of the reform but rather from the fact that it…
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What is most known about the reform AIA is the conversion of their patent system from a “first to invent” to a “first inventor to file” system. In other words, the focus is put on the product rather than on the idea. However, the debate doesn’t come from that part of the reform but rather from the fact that it eliminates several types of secret prior art. The consequence is that it incentivizes trade secret and might therefore discredit patent as a first choice for innovators. In order to understand if this is a good thing as a whole, the following question need to be answered: Is keeping the innovation secret better than patent it right away?

First of all, looking at trade secrets, we can’t deny that there are advantages for small startups that don’t have a big amount of money to invest. Moreover, innovations can be launched faster and if the secret is well kept, the innovator can be in a position of monopoly for almost no limited time. Then, as soon as the secret is on the way to be discovered and that the innovator has no way of keeping its idea secret anymore, the only way to gain from it a little longer will be to patent it. At the end, I think benefits from the American reform go almost only to the innovator, who will keep its innovation his for a longer time (trade secret duration +patent duration) than he could have before the reform (patent duration). The good thing is that potential innovators may take this as an incentive to innovate.

However, in my opinion, if we look at this from the population side, the longer the innovation is kept away from competition (secret then patented), the more utility is kept away from the population as well. In fact, the presence of competition enables other companies/innovators to create similar products which will be more affordable for the population and/or more adapted to the need and desire of consumers. That will increase their utility and why not even the production of the country.

As a conclusion, I think that the reform is a good thing for innovators who might get more rewards from their innovations. But I think the benefits that innovators gain from it are taken directly from the benefits of the population. I will therefore conclude that the reform is not a good thing because extending the period of time during which the innovation is protected from competition might deteriorate the welfare of the population.

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Saad Ahmad
Before introducing my opinion on the matter, I would like to point out the rationale behind the existence of IPRs such as patents in the first place. Drawing my analysis from the Romer Model (Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October), I would like to list two…
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Before introducing my opinion on the matter, I would like to point out the rationale behind the existence of IPRs such as patents in the first place. Drawing my analysis from the Romer Model (Romer, Paul M, 1990. “Endogenous Technological Change,” Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October), I would like to list two important lessons from Romer’s paper to support my analysis –

1. Knowledge is a non-rivalrous good, i.e. the same piece of knowledge can be simultaneously consumed by many
2. If we consider technological knowledge (A) as an input in production, then due to the non-rivalrous nature of knowledge, the production function would show increasing returns to scale w.r.t. technological knowledge. This means that if technological knowledge is doubled, along with other factors of production, then the output should be more than double.

Due to the above mentioned reasons, while the innovator who produces the first unit of a new idea incurs large fixed costs, the imitators face a very low marginal cost of production (MC). Hence the average cost of production for the innovator, AC > MC.

In a world absent protection to the innovator, i.e. in a perfectly competitive world, the price, P would be equal to MC. In effect, the innovator would face losses as AC<P. Hence, a world absent patents and other forms of IPRs doesn’t offer any incentive to the innovator to invest in innovation. Trade secrets and patents are two of the many possible solutions to this problem.

The AIA reform can be seen as another incentive for innovators to invest time and money into innovation. Between patents and trade secrets, while patents require a) government approval, b) involve costs to the innovator and c) require the innovator to go through the statutory litigation procedure, trade secrets, in my opinion, offer a better alternative to innovators for protecting new ideas without going through all of the above.

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Jori Sihvonen
The new law change in the US should be considered a positive one for entrepreneurial innovators. The new law allows the strategy to be chosen at a later date, and if the company decides that it want's to licence a trade secret (which has held and hasn't been reverse engineered), it can first patent the secret and then licence it.…
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The new law change in the US should be considered a positive one for entrepreneurial innovators. The new law allows the strategy to be chosen at a later date, and if the company decides that it want’s to licence a trade secret (which has held and hasn’t been reverse engineered), it can first patent the secret and then licence it. However it is likely disagreements will be more usual (as if there aren’t enough quarrels with patents already), as the innovator of the trade secret may be not around, or in control of the secret, thus the entity benefiting from patenting may be other than the original innovator. And in practice how to prove a trade secret is your original idea? Sometimes also trade secrets can be very simple and used as a strategy to bring value to the product by having a bogus secret behind it , just aiming at making it sound better. Some of these issues mentioned are also moral issues.

I will end this comment with a opinion about the Coskata case. If a complex innovation has something that can not be patented, then it is better to patent what can be in the innovation. Preferably the whole process. This leads to secrecy and hopefully an edge in competition. Trade secrets are not necessarily new ideas or products, thus it is better to patent the process, not the ingredients.

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Tiago Fins Joaquim
Attempting to gain an advantage from an innovation boils down to the choice between filing a patent or trying to keep it a secret from competitors. A patent protects the innovator for a certain period of time but competitors will know how the innovation functions. Trade secrets have no such explicit protection but as long as the innovator manages to…
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Attempting to gain an advantage from an innovation boils down to the choice between filing a patent or trying to keep it a secret from competitors. A patent protects the innovator for a certain period of time but competitors will know how the innovation functions. Trade secrets have no such explicit protection but as long as the innovator manages to conceal how his innovation works, he will have an effective advantage over his competitors and it will also allow him to stay “ahead of the curve” (further develop the idea, create spin offs, etc.).

The best strategy then largely depends on the type of invention. Innovations that are relatively easy to reverse engineer, are better protected by a patent. Innovations that are more complex to reverse engineer, can perhaps be protected by secrecy for a longer period of time than what a patent would achieve.

The first-to-invent (FTI) system allowed the original inventor to have priority when filing for a patent. If a competitor creates a very similar innovation at a later date than the innovator, it will not be granted the patent even if the competitor filed for the patent at a prior date than the innovator.

The switch to first-to-file (FTF) system under the AIA reform does not take into account the date at which the innovation was created. Only the date of the filing for patent matters. First-come, first-served. If a competitor manages to crack the trade secrets of an innovator, the competitor can be granted a patent even though it never really was the originator of the innovation.

Thus, it would appear that companies that have extensive resources to reverse engineer trade secrets could benefit from the switch from FTI to FTF. Indeed, looking at the corporations that lobbied for the pass of the AIA reform and the money they spent [1], it does appear that large corporations were very interested in the reform. I would argue that they would not have lobbied in that dimension if it went against their interests. “The Coalition for 21st Century Patent Reform” includes such companies as PepsiCo, DuPont, 3M, P&G and General Electric [2]. “The Coalition for Patent Fairness” which includes such companies as Google, Adobe, Intel and Samsung [3], was also in favor of a switch to a FTF system [4].

Amanda Becker [5] from the Washington Post, notes that “the shift [from FTI to FTF] was a victory for big companies” and “smaller start-ups and entrepreneurs — and the organizations that represent them — lobbied fiercely on the idea that the first-to-file system favors powerful corporate players”. Large companies not only have the capability to appropriate other companies’ ideas through reverse engineering, but also to beat smaller companies in a race to the patent office, due to the fact that they generally have an army of lawyers at their disposal. Becker continues by quoting The National Small Business Association, saying that the reform is “strongly titled in favor of large incumbent corporations”.

This is of course a point of view that is not based on economic models. However, considering the large sums of money spent by large corporations to pass this reform, it is not obvious to see why they would do that if it went against their interests. Social welfare is usually not one of their main priorities.

References :
[1] http://firststreetresearch.files.wordpress.com/2011/11/first-street-report-lobbying-the-america-invents-act.pdf
[2] http://www.patentsmatter.com/about/coalition.php
[3] http://www.patentfairness.org/learn/about
[4] http://www.uspto.gov/aia_implementation/pur-2011nov08-coalition_for_patent_fairness.pdf
[5] http://articles.washingtonpost.com/2011-03-27/business/35208767_1_first-to-file-system-patent-system-patent-office

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Frederic Anaëlle
I think that it’s necessary to let the opportunity to companies to choose between the three options : use a patent, use the trade secret or use both. It’s a good way for them to choose the best alternative. This may encourage them to innovate and thus, stimulate the economic growth. Like some students have already said, it can…
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I think that it’s necessary to let the opportunity to companies to choose between the three options : use a patent, use the trade secret or use both. It’s a good way for them to choose the best alternative. This may encourage them to innovate and thus, stimulate the economic growth.
Like some students have already said, it can be a good way for small companies which haven’t money for a patent to choose the trade secret. During this time, they can try to collect money for the patent.

Concerning the America Invents Act, it’s indisputable, it will change patenting forever.
By changing the « First To Invent » by the « First To File », I fear that in the future, people will not care anymore of who came up with the idea first but only who filed it.
Like Robert Barr, a professor of intellectual property law at UC-Berkeley, said : “Under the old system, if you kept lab notebooks … you could prove you were the first inventor even if you were not the first to file, so you didn’t necessarily have to be the first to get to the patent office”.
And it’s well-known, a lot of inventions were created by chance, by accident. So it’s possible that some people created something new in the past but they didn’t know it. And in the future they can realize that some old works were in fact, useful inventions.
Robert Barr even added that “Now, with a few exceptions, you need to be the first. If two people come up with the same invention, and they often do … it’s not going to matter if you can prove you were the first inventor if you weren’t the first to file.”
And I agree with him, It can be difficult for an inventor to accept that he can’t have the patent because he arrived just a little to late to file his invention.

As I said before, small companies could be tempted to choose trade secret by financial worries. But during the time of the trade secret, another company could find the same novelty and choose to use a patent on this novelty. And so, it will be a big problem for the small company in question.

But I must admit that it can simplify things. Indeed, no need to try to discover who was the first creator of the innovation anymore.
Moreover, it’s not possible anymore to cheat on the dates of an invention in order to benefit from the patent.

Source :

(1) http://www.wired.com/design/2013/03/america-invents-act/

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Yasuhiro Minami
I think we need to change the protection regulation so that inventors can get more incentive to some innovation. Because I have several reasons for this. First, I wonder what makes inventors, some companies or some institutions more incentive to the innovation. The patent protection is good system to the public, I think. Because if a company keeps some…
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I think we need to change the protection regulation so that inventors can get more incentive to some innovation. Because I have several reasons for this.
First, I wonder what makes inventors, some companies or some institutions more incentive to the innovation. The patent protection is good system to the public, I think. Because if a company keeps some innovation as a trade secret, other companies or some actors in the same field as the companies cannot get the key to new innovations, so if the trade secret is disclosed to the public, the new innovation will happen easily using the secret even though some money was needed. But this is just on the point of view of receivers. How does the suppliers of the innovation think about patent? It is true that they can get money using the patent system. But is it enough for them? I also think it is better for them to disclose their innovation and make the society better. But for the innovation, we need the incentive. To maintain the incentive we need make the patent system more profitable to investors.
Second, what I think is different from just making the criteria of patent softer. The reasons why the inventors maintain their innovation secret are the desire to make more profit and feeling of superiority. The feeling of superiority is the important factor of it. So, I think that we need to make some patent system concerning to the point of view. For example, the system give some award of extra fee to the investors.
For these reasons I think we need to change the protection regulation so that inventors can get more incentive to some innovation. In addition to making the patent criteria softer.

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Oleg Nikolaiko
Due to the new law, inventors who want to protect by secret their innovation are not penalized like before. It is a great motivation for such engineers who want to commercialize and make some profit of their work. But this practic has also a negative side. On the one hand we have in the US a certain competition policy, so bringing…
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Due to the new law, inventors who want to protect by secret their innovation are not penalized like before. It is a great motivation for such engineers who want to commercialize and make some profit of their work. But this practic has also a negative side.

On the one hand we have in the US a certain competition policy, so bringing something new must be graciously rewarded to avoid that everyone counts on everyone for discovering something new (I think it was possible during the cold war, but now we can foget such nationalism). It can also help start-ups who want to create a new concept of something, they do not have enough ressources to patent their “know-how”, so they can in a first time just keep it secret, but if the idea is really great, spies from other companies can try to discover it…

On the other hand we will face a kind of monopoly, and the social welfare will be of course reduced, the biggest and the richest firms are too strong to compete, and they often have a ferociuos behaviour with the potential entrants (they try to patent before them, or just steal some secrets).

In conclusion I would say that there is no perfect laws, there will be always winners and loosers… but this one puts hope into the mind of the firms and eingeneers

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Marina Dinkova
Thеrе arе many factors to considеr whеn dеciding which typе of protеction to sееk for a nеw idеa or dеvеlopmеnt. On thе onе hand wе can chosе thе protеct our idеa with a patеnt. Patеnts typically last for 20 yеars from thе filing datе. Maintеnancе fееs must bе paid pеriodically to kееp thе patеnt in forcе –е.g. еvеry four yеars in…
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Thеrе arе many factors to considеr whеn dеciding which typе of protеction to sееk for a nеw idеa or dеvеlopmеnt.

On thе onе hand wе can chosе thе protеct our idеa with a patеnt. Patеnts typically last for 20 yеars from thе filing datе. Maintеnancе fееs must bе paid pеriodically to kееp thе patеnt in forcе –е.g. еvеry four yеars in thе Unitеd Statеs. Assuming that thе fееs arе paid as thеy bеcomе duе, thе еxclusivе patеnt rights will last for thе full 20-yеar tеrm. Aftеr еxpiration, thе еxclusivе right to prеvеnt othеrs from using thе claimеd invеntion еxpirеs and thе invеntion can bе usеd by anyonе with no liability to thе patеnt holdеr.

On thе othеr hand wе can dеcidе to usе tradе sеcrеt. As an altеrnativе to patеnts, tradе sеcrеts may bе onе of thе most important ways to protеct and dеvеlop nеw idеas for thе most of innovativе products. Tradе sеcrеts arе gеnеrally dеfinеd as an еxclusivе right to valuablе information not gеnеrally known in thе industry. In many casеs, it makеs morе sеnsе to protеct intеllеctual propеrty using tradе sеcrеts rathеr than patеnts. Tradе sеcrеt law: providеs broadеr protеction than patеnt law; pеrmits thе invеntor to kееp thе innovation is immеdiatеly availablе and rеquirеs no govеrnmеnt approval and costs significantly lеss; “sеcrеt” without having to disclosе thе idеa through patеnt publication. Howеvеr, tradе sеcrеts havе nеgativе part as wеll. Tradе sеcrеts arе not protеctеd if anothеr pеrson dеvеlops – indеpеndеntly and without accеssing thе sеcrеt information – thе samе еxact idеa. Morеovеr, if a product that contains a tradе sеcrеt is rеlеasеd into thе markеt, tradе sеcrеt protеction is lost if thе tradе sеcrеt can bе rеvеrsе-еnginееrеd. Thus, tradе sеcrеt law is not еffеctivе for obvious and gеnеric nеw idеas or thosе that could bе еasily rеproducеd oncе a product is in thе markеt.

Having in mind all good and bad aspеcts of patеnts and tradе sеcrеts, I agrее with thе AIA Rеform, as it compounds patents and trade secrets. This act еncouragе companiеs and invеntors focus on innovation and job crеation rathеr than costly, and somеtimеs unnеcеssary, litigation.

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Shashank Rai Goel
Patents have been an effective way of protecting an innovators investment into developing a novel idea/product. In my opinion, the purpose of a patent is to guarantee the innovators adequate returns on their investments, before the innovation can be made available for the benefit of the whole society. The use of patents to generate supernormal profits indefinitely into the future,…
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Patents have been an effective way of protecting an innovators investment into developing a novel idea/product. In my opinion, the purpose of a patent is to guarantee the innovators adequate returns on their investments, before the innovation can be made available for the benefit of the whole society. The use of patents to generate supernormal profits indefinitely into the future, should not be encouraged. As such, I do not agree in principal with the amended AIA which allows inventors to patent a long held trade secret. It can be argued that by holding an invention as a secret, the inventor has already benefited from the protection that a patent would have otherwise given. And having recouped his initial investment plus returns, the sole motivation of the inventor would be to make supernormal profits while minimizing social welfare.

I, however, concede that it would be nearly impossible to determine a single time-frame, for different fields, in which one can say that the inventors have recouped their investments while holding the invention as a trade secret.

Nevertheless, I stand by my argument that patents should be granted for novel innovations, so as to encourage more and more inventors to pursue innovations that will ultimately benefit the whole society. If trade secrets are allowed to be patented in future, it will only slow down the progress of society as a whole, by making it more difficult for people to access the innovations.

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Depreter
What should we think about the America Invents Act reform? Actually, I think it depends on which side of the debate we look it from. Indeed, competitors (the first potential imitators) are willing to know how and why their competitors have lower production costs than them in the industry, and why do the innovative firms make highest margins. From the…
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What should we think about the America Invents Act reform? Actually, I think it depends on which side of the debate we look it from. Indeed, competitors (the first potential imitators) are willing to know how and why their competitors have lower production costs than them in the industry, and why do the innovative firms make highest margins. From the point of view of competition regulatories, if firms compete in Bertrand fashion, the competitive advantage that innovatives firms are going to enjoy with secret and then extended patents, could threat the competition between firms by promoting the emergence of a firm among the others.
While forbidding that long held trade secrets are then patentable would allow a faster diffusion of the ideas and promote a faster economic growth.

But it seems that the whole society would benefit from this reform. Now that the AIA has softened the novelty conditions there will be more and more possibilities of mixing patents and secrecy. I think it could lead to an increasing trend to innovate, because if innovators are consolidated to have the exclusivity of using their own products and processes, they will be encouraged to invest more in R&D, to have a bigger “innovation rate” (which can be compared in the macroeconomic perspective to the “intensity of innovation” equals to R&D expenditures/GDP) etc.
We can conclude that although such practices (secrecy and patent) could be badly seen for the innovation and economic growth, they are welcomed from an economic point of view. Moreover we know some examples where there are lot of patents combined with sercrets (i.e. Coca-Cola Company, Mc Donald restaurants, …) and that despite of these “barriers at the entry” there exist other firms which almost copied them succesfully (i.s Pepsi, Quick, Burger King, …).

Finally, in aspects of law, I think that the switching from the “first to invent” system to a “first inventor to file” system will give facilities for all what concerns industrial espionage, and the “Justice” should take it in account. But that is an different debate…

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Guillaume d'Oreye
I don't think that the American Invents Act reform is a really good idea. Actually i don't really see the point of this reform as it creates a problem more than it solves one. Let's take the case of two companies : Coca-Cola and a start-up with low ressources. One of the reason why The Coca-Cola Company is successful is the…
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I don’t think that the American Invents Act reform is a really good idea. Actually i don’t really see the point of this reform as it creates a problem more than it solves one.

Let’s take the case of two companies : Coca-Cola and a start-up with low ressources.

One of the reason why The Coca-Cola Company is successful is the famous “secret-recipe” if its Coke. If someone one day finds the recipe and decides to patent it, Coca-Cola will face a very strange problem. Are they going to stop producing Coke as they brake Intellectual Property laws? What if the person who patents it does not want to sell it to the Coca-Cola Company?

I’d like to be in the board of director mind of this company. Do they think their recipe if secret enough to ignore the reform or are they puzzled because it’s not the case?

The second reason i decided to take The Coca-Cola Company as example is that if they choose to patent their recipe they lose a part of the Myth but they have no problem to purchase the patent and I don’t think consumers will leave the product because they know the current recipe of this beverage.

The second case is about a Start-up. This freshly established company is made up a brilliant team which found or created an innovative product which composition is held secret. Their biggest problem is that they can’t afford a patent, I mean they can’t borrow money from banks and the money they receive from the selling of their product is immediately used for the survival of their company. So they cannot patent their innovation, they don’t want to but they fear a competitor with money finds the secret and patent it. Is that a good situation for this Company? Obviously no and the problem is, I think, that this reform is not an incentive for people who want to create a company in a patentful sector.

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Alain Strowel  
Paul, I think you should indicate that your analysis is done with reference to the US patent system only. For European ears, it is strange to read the following: A first requirement for patentability is that the invention be of practical use. A strict enforcement of this utility requirement could prohibit the patenting of fragments of innovations. As…
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Paul,
I think you should indicate that your analysis is done with reference to the US patent system only.

For European ears, it is strange to read the following:

A first requirement for patentability is that the invention be of practical use. A strict enforcement of this utility requirement could prohibit the patenting of fragments of innovations. As a result, the innovator would be left with a binary decision: seek patent protection for the entire innovation or for nothing.
A second requirement is that the invention show an element of novelty; that is, it must show some new characteristic that is not known in what is called the “prior art”, i.e., the body of existing knowledge in the technical field of the claimed invention. Hence, a strict interpretation of the novelty requirement could prevent inventors from patenting long held trade secrets.

Utility (as such) is not a patent requirement under European law (you might discuss of course whether the industrial applicability requirement is the same). An invention that is kept secret (therefore the role of NDAs) can always be patented.

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Paul Belleflamme
Thank you Alain for these precisions. It is true that our analysis is done with reference to the US patent system (we aim at submitting our paper to the top journals in our field, which are, admittedly, American before being international). However, this is no good reason to abstract away the differences between the US and the European patent systems.…
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Thank you Alain for these precisions. It is true that our analysis is done with reference to the US patent system (we aim at submitting our paper to the top journals in our field, which are, admittedly, American before being international). However, this is no good reason to abstract away the differences between the US and the European patent systems. I guess that I should discuss this matter further with you to make sure that we give the correct interpretation.

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Rachit Khare
In my opinion, the recent changes in the new patent law has both positive and negative aspects attached to it. I would first highlight the improvement - the fact that the inventors can now use their inventions as a trade secret for a period of time more than a year and still file for the patent is a welcome change.…
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In my opinion, the recent changes in the new patent law has both positive and negative aspects attached to it. I would first highlight the improvement – the fact that the inventors can now use their inventions as a trade secret for a period of time more than a year and still file for the patent is a welcome change. Trade secrets are an important constituent of a firm’s business as they provide competitive advantage. Firms go for trade secrets when they think that the invention is of commercial use and if made public it can be used by a competitor to learn from it and come up with a better technology. Firms invest millions of dollars in R&D to come up with better technologies that can help them survive in today’s market with cut throat competition. Thus, principally it is right to give an option to the inventor to use its invention commercially as a trade secret for as many years as he wants and file for patent whenever he feels the time is right. I feel the flexibility given to the inventor in the new law will motivate firms to invest further in R&D and come up with better and efficient products and thus enhance both the producer and consumer surplus. I would now highlight the negative aspect of this new law – in my opinion redefinition of “prior art” by eliminating the secret prior art may have some negative consequences. According to guidelines published by U.S. Patent and Trademark Office (PTO), as to how it will interpret the AIA, “on sale” activities, such as offers for sale or commercial use of invention, that do not amount to a public disclosure of the invention, will not be considered prior art by the PTO. I feel that there should be clarification on how trade secrets pertaining to “on sale” activities can be recognized as public or private. According to me, the clause under pre-AIA law, “information disclosed privately to an inventor qualified as prior art for both anticipation and obviousness analyses” was correct and should have been retained. Thus, a firm which had kept a trade secret for years could challenge the patent application of an invention same as the trade secret and invalidate it on the basis of prior art. I feel the earlier clause should be brought back. To make this arrangement fair and valid, external auditors can be used to verify the claim that the trade secret did come into existence prior to the filing of patent by a third party. I would like to cite an example to support my views – patents and trade secrets are extremely important to firms in semiconductor industry. Several firms in this industry have adopted IT for managing their patents and trade secret portfolio. An employee first files a patent application to the firm patent department through the IT system and after thorough analysis the application is either recognized as a potential patent and firm files the application on employee’s behalf or recognized as a trade secret or ignored . All the activities are recorded in the IT system with all the relevant dates. So, in cases when a third party is filing a patent application similar to the trade secret company can easily prove that the trade secret existed much before the application.
Thus, I believe the new change is a mixed bag with one change promoting trade secrets while the other, by removing secret prior art, prompting the inventors not to go for trade secrets.

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Diogo Machado
Biopiracy is a reality and a major source of concern for developing countries. I believe that the American Invents Act passed in 2011 will worsen the disparity between rich and poor countries, contributing to make the use of patents an international zero-sum game. Biopiracy is the commercialization of natural biological materials, such as plant substances or genetic cell lines, by a…
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Biopiracy is a reality and a major source of concern for developing countries. I believe that the American Invents Act passed in 2011 will worsen the disparity between rich and poor countries, contributing to make the use of patents an international zero-sum game.

Biopiracy is the commercialization of natural biological materials, such as plant substances or genetic cell lines, by a technologically advanced country or organization. One common practice is to use wild plants, widely used for centuries in developing countries, to develop medicines. Companies patent medicinal plants or traditional knowledge, taking advantage of monopoly profits without a fair compensation to the people or nations in whose territory the materials were originally discovered. Besides, the unrewarded communities even face the threat of having to buy the products from these companies at monopoly prices! As a result, this privatization of public knowledge is not only unfair, but also inefficient as it restricts the access to something that was previously in the public domain.

Stiglitz (2007) presents a few examples of this practice, as the massive patenting by American and other foreign companies of indigenous medicines, plants, or a variety of indigenous ideas and traditional knowledge in Ecuador. Another shocking example is the US patent for basmati rice (that has been consumed in India for thousands of years) to the USA company RiceTec in 1997. Turmeric, a root widely used as a spice, but also known in India for its healing properties for probably thousands of years, was also patented in the US in 1993.

In Africa, while Tanzanians languished in poverty, the patent of a modified plant widely used by locals from Usambara Mountain Range, “impatiens usambarensis” was fetching millions of dollars to Swiss and British firms [The Guardian]. The same with two plant species, “Pelargonium sidoides” and “Pelargonium reniforme”, from South Africa and Lesotho, which were patented by a German pharmaceutical company, Schwabe Pharmaceuticals that used them to produce a remedy for respiratory tract infections [The African Executive].

One of the requirements for patentability is that the claimed invention must show some new characteristic that is not known in what is called the “prior art” (the existing knowledge in its technical field), that is, it must show an element of novelty. So, one should not be able to patent something that is widely known. But if it is not patented it is not known from the perspective of the patent examiner! Still, it is possible to challenge the patent; however, with its high costs and need for specialized experts developing countries are obviously put aside.

The American Invents Act passed in 2011 has considerably softened this novelty requirement, making it even more flexible. Consequently, one may expect biopiracy to become even more effective in years to come. While it will benefit US citizens, it is likely to impact negatively the populations from poor countries, mainly Africa, which lack the capital and human resources and also yet have to put their property rights regimes in order.

SOURCES:
Stiglitz, J. E. (2007). Economic foundations of intellectual property rights. Duke LJ, 57, 1693.
The Guardian: http://www.theguardian.com/science/2006/aug/27/plants.theobserversuknewspages
The African Executive: http://www.africanexecutive.com/modules/magazine/articles.php?article=6107

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Christophe Speth
Starting by an observation, I would like to remind that secrecy is likely to entail (quasi) monopolistic rents. Put it differently, there are no perfect substitutes for the product or the process for which the firm holds a secret. Alike, a patentee has the right to prevent competitors from using the specific solution that it disclosed to solve a problem,…
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Starting by an observation, I would like to remind that secrecy is likely to entail (quasi) monopolistic rents. Put it differently, there are no perfect substitutes for the product or the process for which the firm holds a secret. Alike, a patentee has the right to prevent competitors from using the specific solution that it disclosed to solve a problem, but only for a limited amount of time (i.e. typically 20 years since international patents laws have been harmonized in the 1990’s). Therefore, it is expected that the static deadweight loss of monopoly is the same for both the secret and the patent until the latter falls in the public domain. Once this point in time is reached, the static deadweight loss of monopoly only applies for products protected by a secret. Following this way of reasoning, one can conclude that a patent is more efficient than a secret from a social point of view, assumed that secrets can be protected effectively.

Does that mean that it is desirable to allow firms to patent old secrets? I argue that in certain cases, such a conception of novelty may harm social welfare. In particular, a firm that holds a secret and that did not patented it when it discovered the considered invention has no interest to patent it now, if the environment inducing its decision-making process is still the same. However, if technological progress opens the door for a horizontal or an improved invention (one which is strictly better than the one protected by the secret), it might be the case that patenting the old secret would reduce the incentive of competitors to innovate in this matter.

While such a duplication of R&D costs has to be taken into account, new innovators are expected to compete only if it is profitable for them to do so. Therefore, the larger the mark-up of the established firm, the higher the probability for new innovators to find a new invention that fulfils the same functions as the old one. The problem of appropriability is of critical importance at this step of the process. If new innovators are not able to appropriate the results of their research, they will end giving up and let the incumbent firm with its (quasi) monopolistic rents.

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Solène Thibaut
Concerning this issue, I think I don’t agree with the AIA reform because I believe that it removes the notion of "prior art" and all the potential protection behind this concept. On one hand, a small firm trying to survive on a new market, to find investors to financially help them commercialize it, could see its invention stolen by these…
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Concerning this issue, I think I don’t agree with the AIA reform because I believe that it removes the notion of “prior art” and all the potential protection behind this concept.

On one hand, a small firm trying to survive on a new market, to find investors to financially help them commercialize it, could see its invention stolen by these stakeholders at any moment because they would be the first to file it. With the law “first to invent” the company would be forced to patent it right away to ensure its right to produce its own product. This thus gives a strong advantage to bigger companies (or older companies) because they can afford patenting. Now, if we think about incentives, I think it is thus a bad thing for young entrepreneurs and for the society in general because they are now disadvantaged compared to established successful companies and those companies don’t always want to innovate.

On the other hand, patenting old ideas kept secret for a long time could generate new ideas because it allows the world to finally understand how and why this firm was able to succeed. It can then create a wider “prior art”, a greater knowledge background allowing more new ideas of better quality with a lower cost because you wouldn’t need to create the knowledge already acquired by those “secret companies”. But not having a proper definition of what is already protected and therefore inimitable leaves, in my opinion plenty of room for excesses and abuses. Also, literally, to innovate is not defined as patenting an old secret. The Oxford Dictionary defines it as: “make changes in something established, especially by introducing new methods, ideas, or products”. To me, patenting an idea must keep that notion of innovation and thus this novelty requirement because all secrets are already protected by their image (for instance, even if Nutella was imitated, people would probably still buy Nutella because they identify and trust the brand).

Finally, I would like to address the question concerning the 18 months delay. To me, this is a waste of energy (and social increase in potential welfare) because in some industries, where the R&D pressure is high, scientists may waste their time trying to make an innovation work while it is already on the patent office desk, filed by a competitor.

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Arnaud De Visscher
From what I understood, I agree with the law proposition of AIA. I think it can help little companies to start their business without wasting money. I explain myself: Imagine that young people create a start-up from a new concept of something. They would like to patent their innovation but because of its high cost, they cannot afford it.…
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From what I understood, I agree with the law proposition of AIA. I think it can help little companies to start their business without wasting money. I explain myself: Imagine that young people create a start-up from a new concept of something. They would like to patent their innovation but because of its high cost, they cannot afford it. If they keep their concept secret during the early years of their company, they can gather enough money in order later to buy the patent they wanted in the first place.
Of course there is a risk for this company to be outdistanced by rich companies who could discover its secret. It can outrage some people but in my opinion it is part of the game.

Another comment I would like to make concerns the process of the patenting. The one who says there is a retro-application of 18 months of the patent starting from the disclosure. First of all, in my opinion, 18 months to wait a response is way too long. There is a risk that others companies waste time and money in R&D for a concept that is already in the process of patenting. Moreover, I don’t think it is fair to set a retro-application. A company X who decides to put on a market a product holding in a concept that is being patented by a company Y, could be sued for reproducing something that wasn’t even patented back in the days.

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Alexandre Faber
Amongst others, the AIA reform has softened the novelty requirement. Thereby, the pool of strategic parameters available to innovators has been extended to further accommodate the possibility to patent an invention that has been used by the innovator for more than a year, prior to that. On the other hand, the AIA reform has also replaced the “first to invent”…
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Amongst others, the AIA reform has softened the novelty requirement. Thereby, the pool of strategic parameters available to innovators has been extended to further accommodate the possibility to patent an invention that has been used by the innovator for more than a year, prior to that. On the other hand, the AIA reform has also replaced the “first to invent” system by a “first inventor to file” system. This somewhat qualifies the new freedom enjoyed by innovators through the softening of the novelty requirement. More importantly however, it totally obscures the judicial process, for instance in the case that competing companies rely on the two aforementioned new regulations simultaneously.
One question is whether softening the novelty requirement is desirable, and for whom. Quite naturally, if the innovator has one more alternative to take into consideration when optimizing his patenting-secrecy mix, he will do no worse than without it (except if the new option was to affect the credibility of some other profit-enhancing actions). Belleflamme and Bloch (2013) actually find that there are environments in which all parties involved-innovator, imitators, consumers-profit from this rise in flexibility for the innovator. Yet this finding is not unconditional in their analytical framework (for instance, the interests will always be conflicting in the case of process innovation, i.e. inventions that induce cost reductions) and further research is required to see if their results can be reproduced at least partially in different economic environments. In Industrial Organization, conclusions are too often reversed or at least relativized in subsequent papers and thus, results from single papers are unfit for policy recommendation for as long as subsequent research does not strengthen the assertions made.
Irrespective of whether the softening of the novelty requirement is “good” or “bad” on its own, it is the policy makers’ reluctance to leave too much freedom to innovators, by marrying the softer novelty requirement with the “first to file” rule that makes the AIA reform a complete failure with regards to the increase of the welfare of any of the participating parties, except that of the IPR lawyers. Since the extra work for lawyers could better be used for other purposes, it remains that the reform leads to a waste of resources. Why is this “novelty”-“first to file” marriage doomed to fail? On the one hand the AIA reform allows innovators to operate in secrecy for several years before applying for a patent. On the other hand the AIA reform has also introduced the “first inventor to file” system. What, for instance, happens if one company has invented something first but dealt with it in secrecy and then another company reinvents a similar “something” and applies for a patent? To me, it seems as if this unnecessarily obscures the legal process and the steps by which one can provide proof of lawfulness.
Except for the IPR lawyers’ profession, loss in legal clarity is never good. It creates uncertainties for companies where there weren’t, it increases legal expenses, and thus it might reduce incentives for R&D, thus innovation, thus economic growth.

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Alexis Winders
The possibility to patent a sub-innovation or to keep it secret is probably a good way to stimulate the economic environment and to force companies to choose a good strategy. I believe that revealing part of an innovation with a patent is a good way to benefit from an innovative position first (kind of first-mover advantage), which then allows other…
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The possibility to patent a sub-innovation or to keep it secret is probably a good way to stimulate the economic environment and to force companies to choose a good strategy.

I believe that revealing part of an innovation with a patent is a good way to benefit from an innovative position first (kind of first-mover advantage), which then allows other companies to make improvements when the patent ends. This will clearly be good for society as a whole.

But patenting only a sub-group of an innovation is a good way to prevent the risk that if you had chosen to keep it secret, another company decides to patent the same innovation. Therefore, this possibility of sub-patent provides a sort of safety to a company.

The fact of patenting a very specific part of an innovation is also a good solution to deal with companies asking for a too wide patent, where the innovation and the process is unclear. This allows companies to ensure the exclusivity of something they are developing but without real results so far.

We can still see that the American law is often soft about patenting and competition. Like for the software patenting, the possibility to protect a part of an innovation has been given even if the innovation existed in the past but kept secret.

But I wonder if the AIA is not wrong with the objective of this new legislation. I believe that the real goal of a patent is to protect the investment and research of a company so they can enjoy for a certain period of time from this investment. Here, companies have been enjoying this secret for years and do not bring something really new on the market. This new legislation is perhaps going to change the mentality of companies and we can wonder to which extend this will modify their innovation rhythm and policy.

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Brasseur Amandine
A person who invents a complex innovation has three strategies to protect it: use a patent, use the secrecy or use both. The inventor has to choose the optimal choice between those three strategies, taking into account the patent regime (indeed, this regime implies sometimes to protect all the innovation with a patent or nothing). Actually, with AIA, an inventor…
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A person who invents a complex innovation has three strategies to protect it: use a patent, use the secrecy or use both.

The inventor has to choose the optimal choice between those three strategies, taking into account the patent regime (indeed, this regime implies sometimes to protect all the innovation with a patent or nothing).

Actually, with AIA, an inventor can choose to first protect its invention by maintaining it as a trade secret and then use a patent protection. I think this change implies a new optimal choice which will be always a mix of secrecy and patent.

In my point of view, this change is not a good thing. With a patent, everybody knows that this invention exist, how it works and that it is protected.
Few years ago, inventors who protected their invention by maintaining it as a trade secret were penalized. But now it’s not anymore the case, so we can presume that it will have more secrecy to protect invention. Therefore, secrecy implies that nobody knows that this invention exists and knows that they cannot use it. In my opinion, that will drive us in lots of situations where people will think to find a new innovation and then they will hear that they cannot use this invention as their property because it is still protected by a trade secret.
It is a waste of time for this innovator because they spent lots of year to think about something that still exists.

In conclusion, to let innovator focus on inventing new innovation it’s better to protect the existing innovations by a patent in aim to let the world know all the innovations still existing.

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