A Hollywood inventor protests the patent bill

(FSB.com) -- In 45 years, George Margolin has patented 26 inventions, including a front-screen projection system (1964) that Hollywood used for special effects in 2001: A Space Odyssey, the James Bond films and Superman. He patented the folding computer keyboard in 1973, and a new type of anti-stick medical syringe in 1993. Three years ago, with a co-inventor, he patented a new method to keep computer chips from overheating. At 77, he continues to run Newport Beach, Calif. -based Margolin Development (www.margolin-development.com), which makes its money from licensing patents and consulting to companies such as such as AT&T Labs, Estee Lauder, MGM Studios and Safeguard Business Systems. Fortune Small Business special correspondent Ann Therese Palmer caught up with Margolin to find out why he so strongly opposes the proposed patent-reform bill, which includes a change that would favor inventors who were the "first to file" for patent protection above those who came up with ideas first. (For background on S. 1145 in the Senate and H.R. 1908 in the House, see "Will Congress slam small inventors?"

FSB: Congress is contemplating a major overhaul of the current patent law, which its sponsors say is needed to fix problems in the current system. But you don't seem too concerned about the state of the current system.

Margolin: No. Virtually everything - except the speed at which the Patent Office processes its increasing load of patent applications - is what one would expect, considering the budgetary constraints and the difficulty in finding enough competent examiners.

FSB: Then what do you think is really going on?

Margolin: Big tech is trying to refashion our working patent system into the failed global patent systems modeled after the 19th-century German military-industrial economy dominated by cartels. The sponsors of this bill are attempting to bring our patent system from a world leader to the lowest levels of the Lowest Common Denominator, following the least inventive, least creative countries.

FSB: Which proposed changes are most troubling?

Margolin: Let's take first-to-file rule. This creates nothing more than a race to the patent office. That's what the Europeans and Japanese do because their patent systems were specifically designed to maintain the status quo. Now the supporters of this bill wish to cripple the kinds of upstarts that they once were.

FSB: What's specifically wrong with first-to-file?

Margolin: An invention requires more than just that initial epiphany. We have the opportunity, in this country, under our current patent system, to perfect our invention before we file our patent. Europeans and Japanese object to this. They want to file fast. Incomplete patents will muck up the water for better, thought-out patents. If that concept is introduced here, it will increase the patent pendency rate. The Patent Office says it takes approximately 36 months on average to get a patent, but my experience is that it can take as long as five years.

FSB: What's wrong with a longer pendancy, if it results in a better patent, one that is less likely to be litigated?

Margolin: It doesn't result in better patents. Long waits don't produce better or stronger patents - just older, weaker, less useful, less timely patents. If you've got an application that involves breakthrough technology, and you've got to wait five or 10 years for your patent to issue, technology will have changed and superseded it.

FSB: What's the worst idea in the new bill?

Margolin: The proposal that pending applications be available for public review 18 months after filing. The Patent Office will automatically publish all patent applications, including all of the particulars of every invention, on the internet, so that anyone with a browser can read them. It might take five or 10 years for your patent to issue, but while your patent application is waiting for approval, everyone in the world will be able to copy and build upon it.

FSB: Aren't patent applications published now?

Margolin. Yes, in 1999, Congress legislated a change in the patent system that requires publication 18 months after you've submitted a patent application. That means they publish your application on the Internet unless the application is withdrawn before the 18-month window. Patentees can opt out, if their patent is only to be filed domestically.

FSB: So what's different?

Margolin: Proposed changes would make the 18-month publication rule mandatory for all patents filed in the U.S., while giving the inventor absolutely no protection at all. Once the Patent Office presses a button to publish your invention on the Internet, it takes less than a quarter of a second to travel from Washington, D.C. to China and everywhere else where it can be read, opposed, stolen or otherwise abused. This is the most destructive part of the changes. For inventors, it's striking at the heart of our lives. It's as if all of our private financial information were to be published on the internet. If this goes through, it will cripple American technology.

FSB: So, how are you fighting the proposed changes?

Margolin: I am vice-president of the Professional Inventors Alliance (www.piausa.org), a group representing thousands of independent, professional inventors, universities and small businesses. We are establishing a grass roots campaign. We don't have multi-million budgets for lobbying to fight this. Our big challenge is that these bills are gathering steam. I've never seen anything progress through Congress as fast as these measures are moving.