MaxDrei,

From your vantage point, everything I say makes very little sense. Descriptions, events, practices and patenting scenarios for American startups that I describe, simply do not seem to connect with the spectrum of experiences and realities with which you are familiar. No doubt, you are a reasonable, thoughtful and probably an excellent European patent attorney. Why then do we have this “disconnect,” wherein you cannot see the risks that some of us see in changing our U.S. system to a filing date-based patent system?

I suspect it is because you can only see what comes your way. Entities, events, practices and patenting scenarios that do not arise, and indeed cannot survive, in your European economic system and your FTF world are not there for you to observe, experience and understand.

We have an early-stage company environment that you do not see. It is readily apparent from your assertions above: “American corporations with an eye beyond the US domestic market already live in a FtF world, one in which being first to the Patent office is imperative. One is already filing, just as early as possible, whether a key employee left yesterday or not.”

Many American startup companies do not fit your image, which apparently you formed based on mature and larger firms. All the startups with which my colleagues and I have been involved, raised money from investors under a ‘due diligence’ process that focused entirely on our ability to succeed in the U.S. Any business plan that relied on foreign revenues for its success was discounted. In some cases we seek no foreign patents on technologies developed for U.S. standards or markets that do not even exist outside the U.S. International business is often the icing on the cake with more distant prospects. (Of course, these prospects become more important in the later stages of the company, perhaps after the founders/inventors’ exit). You apparently do not see much of the corporate “newborns” or the “young”, as they are a small minority in Europe. The figure below provides a partial explanation. The Schumpeterian “creative destruction” is much more prevalent in the U.S. and it has profound effects on the competitive dynamics that make patent protection essential for the “newborns and the young.”

The higher rate of firm formations in America is accompanied by higher employee mobility and more intense knowledge and technology diffusion. U.S. engineers’ average time with one employer is less than half that of their European counterparts. These factors and others compel U.S. startups to adopt non-trivial defensive procedures to protect their IP and the current provisions of FTI make that possible. However, many such events, practices and patenting scenarios do not arise, and indeed cannot survive, in your European economic system and your FTF world. Your FTF patent system denies a patent to first inventors in 90% of the scenarios and precludes a patent grant to any party in 83% of the scenarios. Figure 7 from Pedersen & Woo illustrates this. With such odds, most of the scenarios that early-stage American startups face, do not exist in Europe. Thus, your utter dismissal of my example of the procedures for key employee departures is understandable, as these may not be relevant in your world.

It is also apparent that your clients’ work may not expose you to the real workings of the invention process, one that is often clearly evident in basic and disruptive technologies developed by startups. Your comment on enabling disclosures is illuminating:

“In FtF country, people like me constantly urge their corporate clients not to make non-enabling disclosures, for fear of setting up obviousness attacks on their in-the-pipeline improvement inventions. Instead, we urge prompt filing of enabling disclosures of those improvement inventions, in priority filings (provisionals, if you will) at the earliest commercially sensible dates.”

Urging prompt filing of enabling disclosures is often urging the impossible. The belief and conviction that this is possible appears to be a theme in many of your postings. You must be involved with minor or incremental inventions, and perhaps explaining your misapprehension of our American startup environment. The following example of an actual American startup invention process would be illustrative.

Consider an actual profile of a five-year R&D and invention effort of the Mova® system developed by my friend Steve Perlman. It is described in Steve’s Columbia University presentation available at link to j.mp. Slide 35 shows that no less than fifty important inventive ideas had been conceived, evaluated and tested over periods spanning months or years in the course of this system’s development (labeled by “invention” squares). The majority of these inventions proved to be useless. During that time, only about six patent applications had been filed (labeled by “path to success” arrows). In most cases, there was no way of filing prompt and enabling applications. As Steve explains in his presentation, the prospects of such a development effort under FTF would have been dire. Because the cost, effort and time lost to have acted on every one of these inventions would have been prohibitive, this R&D team would have had to frequently face a painful dilemma as to which of these inventions should be written up and filed in a patent application. Unfortunately, many such premature guesses would have proved wrong, so, under FTF, costly applications would be filed for some useless inventions and patent protection would be lost for other valuable inventions. Investors will not assume such risks, which is why such inventions seldom occur under FTF scenarios.

Max, from your vantage point, everything I say makes very little sense. This is apparently because you simply do not know enough about a process that is rather rare in your world. You can never be concerned about the sky falling if you have none.