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July 20, 2005

Oh Say Can You See

A Library of Congress report, titled Patent Reform: Innovation Issues, well researched and written by Wendy Schacht and John Thomas, is crucial reading for anyone interested in the U.S. patent system and reform thereof.

In addressing the stalking-horse issue of patent trolls, the report observes: "The U.S. patent system have long acknowledged the role, and particular needs, of independent inventors, small firms, and universities."

The divergent views of two powerful U.S. economic engines where patents play a major role: "Although broad generalizations should be drawn with care, two industries widely perceived as viewing the patent system in different ways are the pharmaceutical and software sectors... Patents are also judged to be crucial to the pharmaceutical sector...In contrast to the pharmaceutical field, the nature of software development is such that innovations are typically cumulative and new products often embody numerous patentable inventions." Hence, the hue and cry from the software companies seeking to limit the damages from patent infringement, but no cheering section for "reform" from other industries, particularly the pharmaceutical industry.

To my way of thinking, one of the best ways to lower the costs of litigation are to simplify the rules wherever possible while maintaining inventors rights. To that end, Patent Hawk supports first-to-file, an international harmonization of grace period, elimination of the best mode requirement, tightening assertion of inequitable conduct, not allowing prior user rights - what a nightmare of litigation complexity/cost potential this thicket is; patents are better for society than trade secrets.

Clarifying the terms of willful infringement seems a good idea. As observed in the report: "Critics of the policy believe that the possibility of trebled damages discourages individuals from reviewing issued patents. Out of fear that their inquisitiveness will result in multiple damages, innovators may simply avoid looking at patents until they are sued for infringement. To the extent this observation is correct, the law of willful infringement discourages the dissemination of technical knowledge, thereby thwarting one of the principal goals of the patent system. Fear of increased liability for willful infringement may also discourage firms from challenging patents of dubious validity." The suggestion of going to a no-fault regime is a bit far, however. Willfulness is a legitimate concept.

Other reform issues don't directly impact litigation costs, but do potentially affect patent quality, utility as a business tool, and property right.

Mandatory pre-grant publication and pre-issuance submission, essentially eliminating discretion and the intrinsic ex parte prosecution process, are two peas in the same pod. My concern with pre-issuance submission is the potential generation of intellectual heat without light, raising costs to the patent office, and the loss of inventors' current right to discretion. Disparaging submarine patents doesn't lessen their legitimacy as a business tool. Better to give the patent office the resources to do a decent job of examination, most especially: 1) giving examiners more time per application as required to do a good job; 2) better examiner training.

Post-issuance opposition makes a travesty of the patent grant. Let the patent office do its job, and let a patent holder not be subject to harassment.

Other suggested reforms bear the telltale jackboot imprint of corporate influence, seeking to eviscerate patent rights. Crimping continuations is an injustice to inventors' rights. Gutting injunctive relief is an insult and an injury to patent holders, a gross corrosive of patent right, and of questionable constitutionality. The proposed limitation of damages seems to arise from ignorance of economics and case law.

The Patent Act of 2005, H.R. 2795 has too much taint of corporate influence without appreciation of the historical and economic importance of patents. While the opinions expressed here are strongly worded (punchy writing making for eye-popping reading), my greatest concern is too much of a shift from current law without thinking through the implications of the dynamics the reforms may have, thus raising a risk of reducing America's role as the world's greatest invention engine, with significant long-term impact on economic well-being. Patents are the fuel that makes that engine run.

Posted by Patent Hawk at July 20, 2005 12:02 AM | The Patent System

Comments

Of your words:

Better to give the patent office the resources to do a decent job of examination, most especially: 1) giving examiners more time per application as required to do a good job; 2) better examiner training.

I totally agree; see "Patent Reform 2005: Sound and Fury Signifying What," New Jersey Law Journal, July 18, 2005, discussing issues with H.R. 2795. Rather than going off on tangents such as an opposition procedure, reformers should make the first objective of patent reform to end fee diversion and thereby to give the USPTO enough money to do its job. For this reason, I don't support giving the USPTO responsibility on inequitable conduct.

Posted by: Lawrence B. Ebert at November 5, 2005 10:28 AM