Fitness equipment manufacturers are preparing for a change in the U.S. patent law that could affect future innovators and the speed of new patent approvals.
In September, President Obama signed the Smith-Leahy America Invests Act (AIA), which will go into effect on March 16, 2013. AIA changes the U.S. patent system from a first-to-invent to a first-to-file system, which means that the first person or company to file for a patent gets the patent rather than the person or company who proved they were the first to invent something.
“A change to the patent system was needed for many reasons but mostly because of the increasing complexity of many patents in a global marketplace,” says Bryan O’Rourke, partner in consulting company Integerus, New Orleans. “This is certainly relevant to the fitness industry, which has become more global and competitive in nature. Therefore, the issue of intellectual property (IP) will play an increasing role in how vendors obtain a competitive advantage.”
Despite this need for a change, he says the act is controversial, and in the long run, the new patent rules will affect equipment and software companies in the fitness industry although it is still uncertain how.
Proponents of the bill say it will shorten the time it takes to secure a patent (typically four years now) and will move the United States in line with other industrialized countries, which already use the first-to-file system.
Kevin Corbalis, executive vice president of marketing and product development at Star Trac, Irvine, CA, favors the change.
“This makes it very easy for the patent office and the courts to interpret that the file date has priority,” Corbalis says. “It helps to clean up the way you interpret ownership of invention.”
The change also will push companies to make hard decisions faster on products so they can file quicker for patents, he says, adding that Star Trac will push for faster file dates than it has in the past.
Ray Giannelli, senior vice president of research and development at Cybex International, Medway, MA, says the new patent law will not change Cybex’s intellectual property strategies, but the growth in technology will.
“Technology in the fitness industry is growing faster than ever,” Giannelli says. “As technology moves faster and faster, so will applications for patents and trademarks.”
The new law allows for patent challenges in a post grant review, but only if there is a “reasonable likelihood that the petitioner would prevail.” In the current system, challenges are allowed if there is a “substantial new question of patentability.”
“If I were ‘looking’ for trouble in the bill, it would probably relate to potential harassment/obfuscation issues with respect to the post grant review,” says Dean Sbragia, CEO of Med-Fit Systems, the Fallbrook, CA-based manufacturer of Nautilus equipment. “The language appears a bit too broad, allowing challenges to be made ‘on any invalidity ground.’ So in theory, a bigger player could bully a smaller player away from their IP by raising numerous challenges to the application.”
Some people have suggested that the change will cut down on litigation, but O’Rourke disagrees—although he says it will streamline the system.
“Sadly, the act did not deal with some significant issues like patent trolling, which is creating a great deal of litigation in other industries and may ultimately impact the fitness industry,” O’Rourke says.
Opponents of AIA say the change will hurt individual inventors and small companies who do not have people dedicated to procuring patents and who need time to find investors to pay for patent-related costs, which run as little as $1,000 if the inventor writes most of the patent without the help of a patent lawyer or as much as $25,000 to $30,000 if a patent lawyer writes it. Adding patent filings outside the United States can increase the cost to $100,000. Those costs should remain the same even with the patent change.
However, companies can file a provisional patent for $110, which gives them 12 months to find investors before filing for the more expensive nonprovisional patent, which Corbalis says should be plenty of time to find investors.
Still, O’Rourke says small companies may have reason for concern.
“While there are new provisions for ‘micro-entities’ that can file for patents at reduced fees, the main beneficiaries of the new rules are going to be larger, well-capitalized businesses,” O’Rourke says. “If one assumes that innovation tends to come from smaller companies, I believe innovation in the fitness industry may suffer from the new rules.”
Giannelli says that it is unlikely companies will innovate less due to the change, but they may be more secretive about innovative ideas until they file.
Corbalis adds, “For a short period of time, it will change the behavior to push the activity quicker and faster, but that idea pool will always be out there, so maybe short term there will be more activity. But I don’t think it changes people’s progression of ideas. They will still be out there. “
In the end, patents are still only as good as their owner’s ability to defend them, which took money before this change and will take it after this change, O’Rourke says.
“So in the end, the impact may be insignificant,” he says.