WASHINGTON — Peruse patents filed by Hawaii inventors and you’ll find ideas that range in complexity from the pet turtle slope to an apparatus to prevent breakage on semiconductor substrates.

Yet many of Hawaii’s best inventions may be going unprotected. The state rakes in a huge amount of federal research money, but files fewer patents per capita than all but two states.

President Barack Obama says that the ideas flowing into the U.S. patent system are critical to improving the economy — good ideas make for successful businesses, which create jobs. But there’s consensus that the patent system designed to encourage innovation is so flawed that innovation is actually hampered.

There’s a massive backlog of patents stacked up in a resource-strapped office that isn’t able to thoroughly vet inventions in the first place. A lack of scrutiny creates an environment ripe for patent abuse, and patent lawsuits are rampant. On top of that, Congress drains some of the patent office’s much-needed revenue from filing fees for use in other government programs.

But even if Congress is able to begin to solve these systemic problems, local patent experts say it still may not get at the underlying issues that keep Hawaii from fully realizing innovation and growth in an ideas-based economy.

Congress has long debated overhauling the U.S. patent system, and now it appears lawmakers are finally close to doing something about it. The U.S. Senate is scheduled to decide on Tuesday whether to proceed with the America Invents Act, which passed the House in June. The Senate is expected to approve the measure.

But the act is controversial, and how to approach patent reform is one of the few issues that Hawaii’s all-Democrat congressional delegates have disagreed about.

Rep. Colleen Hanabusa voted in favor of the America Invents Act, while Rep. Mazie Hirono voted against it. Sens. Daniel Akaka and Daniel Inouye were at odds over a separate measure related to patent reform in the Senate.

“The major concern is there are a lot of small inventors who said they would be very disadvantaged by this bill,” Hirono told Civil Beat of the America Invents Act last month. “I’m looking out for the small inventors, the creativity that comes from a lot of our small companies, the entrepreneurs who are out there. Not the big boys who are up there.”

Who’s On First?

From an inventor’s standpoint, one of the key aspects of the act would move the United States away from a “first to invent” patent system, and make it a “first to file” system instead. The new system would prioritize the person who files for the patent first, even if someone else can prove he or she was working on the same invention earlier.

Hirono is among a group that argues such a change would put individuals at a disadvantage since they don’t tend to have the patent-filing resources — monetary as well as legal — that major corporations have.

But Hawaii-based patent attorney Leighton Chong says that the current system is unreliable because it’s so difficult for someone to prove that she or he was the “first to invent.” Litigation tends to pit one person’s word against another’s. Even proof like dated laboratory notebooks can be spotty, and evidentiary rules in the courts are stringent.

“Really, the advantage that the U.S. inventors had by dragging their feet and not getting to the patent office is being rapidly eroded,” Chong said. “Other countries of the world do not like this secret equitable right. They view the patent system as a way to reward someone for new technology. (In other countries), if someone is taking their sweet time researching something, ‘Too bad. We’re going to give the patent to the first person to file and inform the public (about the invention).'”

In looking at patent reform, businesses have also raised concerns about so-called patent trolls, or companies that amass huge collections of patents with no intention of actually building anything. Instead, they leverage the patents in lawsuits to make money off those who build. Often, these patents are deliberately broad so that trolls can cast a wide net, so to speak.

Some people argue that a first-to-file system would lend itself to such lawsuits, and reward the people who aim to abuse patent litigation.

But there’s a bigger problem in Hawaii, Chong says: People aren’t filing patents in the first place.

A Vicious Cycle

Hawaii’s innovators continue to protect their inventions and intellectual property at a dramatically lower rate than the rest of the nation, especially given the huge amount of federal money that pours into the state.

“We are number five of all states in the total amount of defense research dollars per capita,” Chong said. “But Hawaii inventors file for patents at one-tenth of the rate of the state of California and one-third of the national average on a per-capita basis. Of all states, we are number 48 in filing-per-capita, just behind Wyoming and Idaho.”

Intellectual property scholars say there are a number of factors that contribute to Hawaii’s relatively low rate of patent filings. Chong points to lower incomes and smaller corporate budgets, for example.

But there are other factors at play, too. With fewer people filing patents in Hawaii, there is a lower demand for local patent attorneys. Danielle Conway, a professor at the University of Hawaii’s William S. Richardson School of Law who specializes in intellectual property law, says Hawaii law students rarely pursue patent law.

“There is this sort of unspoken premise that there isn’t enough (intellectual property) work in Hawaii to keep IP lawyers going, or to sustain them,” Conway told Civil Beat. “At our law school — and we’re the only law school in the state — how many of those students are going to take the patent bar? Is that a practice area that’s done here in Hawaii? Not really.”

Even when businesses and inventors consider patenting their work, Chong says that many people assume that only mainland patent lawyers are expert enough to provide counsel.

“Companies here operate under a mistaken assumption that we’re local boys who are second rate,” Chong said. “That is totally wrong. I worked in New York City for 22 years. But they go to Morgan Lewis and all of these big firms on the West Coast, and they get quoted $15,000 or $20,000 to do a patent. It’s their own mistaken assumption that causes them to say, ‘I can’t afford a parent filing.'”

It’s a vicious cycle: Inventors don’t file patents because they believe they can’t afford mainland legal help; Many Hawaii law students don’t study patent law because the demand for local patent counsel appears low; With fewer experts to educate the business community, inventors fail to understand their options; So they decide not to file patents.

So what does this mean for Hawaii’s economy?

What most people realize is that, given Hawaii’s geographic isolation, an economy based on manufacturing and shipping goods is not sustainable. What they don’t realize, UH’s Conway says, is that real economic opportunities to capitalize on intellectual property are being ignored in Hawaii.

“It’s almost like trying to reprogram people that we live in an information economy,” Conway said. “We’re not producing textiles. We’re not producing machinery. What Hawaii has the capacity to do is to innovate in information. So if people continue on this path that information is not a commodity, then we won’t have an innovative system that recognizes the value of that type of intangible property.” 

One economic approach that people like Chong advocate is a focus on licensing patents as a business model. In other words, Hawaii’s researchers could patent their findings then license them to global companies that have the infrastructure in place to carry out ideas on a larger scale.

“Maybe we are never going to have enough venture capital money to grow companies locally in our small economy that can compete around the world,” Chong said. “But we can still capitalize on our great R&D assets by patenting innovations and licensing to bigger companies that can, because they have the global presence and economies of scale.”

Take the “pet turtle slope” patent, for example. Its inventor describes it as a “wedge-like shape, which rests at the bottom of the tank or container,” designed in such a way that it doesn’t float around. Instead of trying to manufacture and ship such an invention to pet stores all over the world, a licensing approach would enable the inventor to capitalize on his idea without taking on impractical overhead costs associated with production of goods from the most remote location on earth.

For the substrate example, a company outside Hawaii that manufactures computer chips might already have the resources in place to use the idea to improve its produce.

He says such a model would encourage Hawaii’s universities, small businesses and individuals to invest in research and development without wasting money on manufacturing or operations that have a history of relocating to the mainland anyway.

If such an approach could change Hawaii’s economy, though, both Chong and Conway say that Hawaii residents will first have to change the way they look at patenting their work and ideas.

“Imagine if we had more people who understood information as a commodity, like if we had patent agents and IP attorneys, maybe a nonprofit IP organization that helps with licensing,” UH’s Conway said. “If we had that, then more people would be reprogrammed to think about all the things they do as information, innovation, and technology.”

‘Looking for a Miracle’

The licensing strategy that Chong described is already taking place at the University of Hawaii’s Office of Technology Transfer and Economic Development.

Jonathan Roberts is a senior licensing associate in the office, which he calls “the biggest game in town” when it comes to filing patents. In the last decade, his office filed an average of 69 patents per year, according to data Roberts provided.

When someone comes to the Technology Transfer office with an idea, staffers file what’s called a provisional patent. That gives them one year to shop the idea around to licensees.

“During that year we put it in front of people in industry and we’re looking for someone who likes the technology and is willing to put money in risk,” Roberts told Civil Beat. “It’s not a bunch of academics, this is people in industry. We try to get it out there.”

And it works. Sometimes, his office even finds multiple licensees for patents. When that happens, it’s “wonderful,” Roberts said. But he also has a warning for the people who look to his office — or the kind of work that it does — as an economic cure-all for the state.

“Everybody is fond of saying we’re going to be the engine of economic growth for Hawaii,” Roberts said. “OK, but the whole university does that. Tech transfer is getting new ideas into the hands of the private sector for economic growth. That happens not just by licensing. The primary way that happens is by education. Everybody’s always turning to us looking for a miracle: ‘We’re looking for a new plantation here, have you guys come up with it?’ If you’re waiting for the miracle, you’re going to die holding your breath.”

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