Posts in Legislation

This year we’re placing our focus on the rapid pace of development in autonomous vehicles and self-driving car technologies here on IPWatchdog. We’re still a fair ways off from the entrance of a self-driving vehicle into the consumer marketplace; some with a knowledge of the industry believe that the debut for autonomous vehicles won’t be experienced until 2020, with widespread…

In 2014 there were 1,070 fewer patent lawsuits filed than during 2013. Furthermore, the number of patent cases filed in 2014 was lower than the number of cases filed in 2012 by some 433 cases. Therefore, the stories of continued run away litigation seem to be greatly exaggerated. Given the dramatic decrease in patent litigation it seems entirely premature for Congress to be considering additional patent reform at this early stage.

This patenting step is absolutely crucial for the commercialization of inventions. In the absence of a strong intellectual property system – specifically patents – most of those inventions will never see the light of day. Why is that? The answer is quite simple – the cost to develop those inventions to a marketable product are significant and in the absence of intellectual property protections that the patent system provides, no one will ever invest in the promise of an invention. Said another way, how many of you would invest in a company that will spend tens to hundreds of millions of dollars on a product knowing that a competitor will be free to offer the same product at a fraction of the cost since they invested substantially less in R&D?

On one road, legislation such as The Innovation Act poses threats to our patent system. This type of legislation tries to alleviate concerns about litigation costs and frivolous lawsuits. The problem is that such concerns are based on inaccurate data and flawed economic analysis. On the other road, legislation such as the ‘STRONG Patents Act may help to strengthen our patent system. The road we choose will “make all the difference” to future generations.

Incredibly, despite widespread damage to inventors, most staffers still do not understand how the patent system works to create innovation, jobs, and economic growth. They do not understand how patents drive capital to small patent-based businesses thus delivering the vast majority of our new technologies to American consumers. How can it be that they have not heard this perspective? Why aren’t the patent lobbyists in Washington like IPO and AIPLA protecting the patent system? Are the views of inventors so far apart from corporate patent owners? Or are the companies so caught up in other Washington issues that pushing hard for strong patent rights conflicts with other agendas and political asks? Too many Congressional staffers don’t understand the patent system, but staffers are not the ones at fault here.

Significant consensus was reached between representatives of small business and universities at a hearing of the U.S. Senate Committee on Small Business and Entrepreneurship on March 19, 2015. The hearing was held to take testimony relating to proposed reforms to the U.S. patent system. The day’s discussion prompted Sen. Chris Coons (D-DE) to make the comment that the argument over…

Universities are dependent upon the U.S. patent system and the capacity of that system to protect the legitimate intellectual property rights of individual university inventors and large companies alike. This system drives U.S. innovation and our economic competitiveness in the world. Patents provide universities with the means to ensure that many discoveries resulting from research are transferred to the private sector where those discoveries can be turned into innovative products and processes that power our economy, create jobs, and improve quality of life.

Earlier today the Senate Judiciary Committee held a hearing on patent reform. The hearing was titled The Impact of Abusive Patent Litigation Practices on the American Economy. There was a variety of diverse views presented by the witnesses, including one witness, Krish Gupta, who continued to cite the bogus and thoroughly debunked Bessen-Meurer “study” that erroneously claims that patent trolls…

There is no credible evidence behind proposals to make the drastic changes embodied in the Innovation Act, the removal of discretion from judges to judge each case on an individual basis with mandatory stays and fee shifting, and new rules for pleading and discovery that would undermine the ability of legitimate inventors and patent holders from enforcing their rights against infringers.

Earlier today 40 economists and law professors wrote to Senate and House Judiciary leaders explaining that the data it that keeps being cited to justify HR 9, otherwise known as the Innovation Act, is “flawed, unreliable and incomplete.” The professors caution Congress to proceed cautiously, particularly given the numerous misleading and flawed studies that “highly exaggerated claims regarding patent trolls.”

Carly Fiorina: ‘[W]atch carefully who is supporting that [the Innovation Act]. It’s not the small it’s the big. It’s the big companies whose ongoing economic benefit depends upon their ability to acquire innovations and patents at a lower cost.”

Senator Coons: ”[P]atents are not just foundational. Patents are really about the American Dream. They are about what it means to come to this country or be from this country and believe in the possibility that you and a team of folks that you work with can invent and develop and then protect a groundbreaking innovation. Patents are about constantly laying a stronger foundation upon which future generations can continue to innovate and about insuring we will find solutions to the challenges that face us, not just here but around the world… So here is the truth. We need to both strengthen patents and target real abuse. They are not mutually exclusive…”

An effort to address bad actors may unnecessarily create significant hurdles for innovators seeking to enforce or license the rights to their own innovations. The fear of unintended consequences requires targeted reform that will specifically address only the abusive behaviors relied upon by the bad actors, namely misleading and fraudulent demand letters. The trick will be to tackle these abusive behaviors that serve no legitimate purpose while not making legitimate business communications impossible. Luckily, it is not difficult to spot fraudulent demand letters and distinguish them from legitimate business inquiries. But will Congress be able to strike the appropriate legislative solution?

The company that just forcefully promised to fight the troll at all costs now can’t write the check fast enough. The case settles, the corporation feels vindicated because they didn’t have to pay their high priced attorneys for more than a couple hours, and they have mitigated the risk. This story is repeated constantly, but one thing never changes. Because the case was settled there is no prevailing party. Therefore, there will never be an award of attorneys fees against the nefarious actors that are rightly called patent trolls.

The STRONG Patents Act appears to be overwhelmingly favorable to innovators and patent owners. This legislation stands in stark contrast with the Innovation Act submitted in the House by Congressman Bob Goodlatte (D-Va) and shows a very different, alternative vision for the patent system.