With a Republican wave sweeping into Congress, hopes are on the rise once again that our elected officials on Capitol Hill will find a way to make themselves useful. Professional pundits have pressed Republicans, soon to be in control of both chambers of Congress, to show America they’re in the business of getting things done. Patent reform is seen as legislative low-hanging fruit that can be resurrected to rise above our partisan squabbling.
In the case of the revitalized push to overhaul the patent system, the backers come largely from companies like Google -- who stand to benefit financially by tipping the courts in their favor. These companies have the wooing power of lobbyists and plenty of scary-sounding statistics on their side.
Proposals to overhaul the patent system would affect all patent holders, not just those subjected to supposed abuse. They would also provide a template for foreign governments and companies who are in the business of stealing U.S. intellectual property. China, for example, has a rocky record on intellectual property and has been on the U.S. Trade Representative watchlist for the past 25 years. The Chinese government and companies there could adopt arguments similar to those we are making for overhaul and twist them to avoid heavy R&D costs and undercut U.S. companies. There is no need to make it easier for them to erode the competitive edge that our patent system provides, or the innovation that these protections allow to flourish.
Many tech companies and individual inventors make money licensing their patents. This type of specialization is a testament to our free market system. These inventors deserve to reap the rewards of their ideas and recover the cost of their investments, whether they manufacture a product or not. The current path of so-called reform we're on would threaten that. The strong patent protections in America have always been a catalyst for economic growth, and they always will be. If we water down these standards, it opens up new markets for China and other bad actors to abuse our intellectual property.
When you dig into the reality, it is not our entire patent system that needs fixing so much as it is a small portion of issues. It may be that some vague and overly broad patents are awarded. There are ways for the Patent and Trademark Office (PTO) to improve patent qualityand we can debate what sort of reform is needed here, but it’s safe to say that it is not the knee jerk, one-size-fits-all approach that Congress so often adopts.
Carly Fiorina, a former chairman of Hewlett Packard who understands the importance of patents as well as anyone, has warned against the current push for overhauling the patent system. She notes that the proposed new rules would put patent holders at a greater disadvantage in court, and they would thus have a harder time preventing others from misappropriating their inventions and that the legislation would help big and powerful corporations at the expense of individual inventors and small companies.
It’s easy for some advocates of reform to throw out rhetoric about an explosion of patent infringement lawsuits over the past several years and conclude that we have a burgeoning problem on our hands that demands an immediate legislative solution. But the facts do not show a litigation crisis. Certainly the current system could stand to benefit from certain modest reforms, but it’s easy to overstate the problem. The number of patents being awarded has grown just as quickly as the number of patent-related lawsuits, so the percentage of patents ending up in litigation has actually remained fairly steady. And, according to Adam Mossoff, a law professor at George Mason University, the rate is quite low--less than 2 percent.
Over the past year and a half, in fact, the number of lawsuits has been declining. They have dropped especially quickly in the last quarter, thanks in part to a Supreme Court ruling and changes in the courts that makes it more difficult for those abusing the patent system to profitably sue companies for patent infringement.
The proposed overhauls to our patent system may result in some short term gains for big companies and help Congress score a few political points, but in the end it’s the kind of “reform” that only China could want.
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