In a post on Politico titled Patent reform: Good for innovation
, Senator Leahy writes:Innovation has been impeded in recent years by a patent system that too often grants low-quality patents with overly broad claims, which have been used by opportunists to extort royalty fees from manufacturers — particularly in the high-tech sector. The problem of low-quality patents is exacerbated by a litigation system that yields unpredictable and often overcompensating damages determinations, which divert investment and resources from innovation.
In a string of important decisions, the Supreme Court has moved in the direction of improving patent quality, the efficiency of determining patent validity and remedies.
These rulings reflect a growing sense that questionable patents are too easily obtained and too difficult to challenge. But some overdue reforms cannot be addressed through the courts: Congress must act.
This new legislation contains a combination of provisions that will improve patent quality; will provide a more efficient mechanism for administratively challenging the validity of patents; and will provide more discipline and certainty in damages calculations and willfulness determinations. The patent system relies on high-quality patents. Patents with overly broad claims or inventions that are obvious and not truly novel impede innovation and unfairly cast doubt on the validity of those that are high-quality.
The bipartisan agreement includes three common-sense and noncontroversial improvements. First, it includes the creation of a first-window post-grant process, which allows challenges to weed out patents that should not have been issued.
Second, it allows third parties to comment on pending applications and shifts the patent system to a first-inventor-to-file model.
Third, the bill provides the resources that the U.S. Patent and Trademark Office needs to both work through its backlog of applications and spend enough time on each to ensure that only high-quality patents are granted.
Congress is closer than ever to moving patent-reform legislation through the Senate. The bipartisan agreement is a good model of what we can do when Democrats and Republicans work together to strengthen our economy and create jobs without spending tax dollars. The Senate should consider these vital patent-law improvements as soon as possible.
Of the last point, Senator Leahy is advancing the bipartisanship on S.515 as a poster child to ameliorate some of the damage of the prounounced partisanship that followed health reform. Of course, patent reform has NOT been partisan, and more directly tracks IT vs. pharma interests.
Senator Leahy continues the old theme of "low quality" patents popularized by the Quillen/Webster "97% patent grant rate" story, which story has now been discredited. Sort of like "waving the red flag" in the post-Civil War era, but that dog won't hunt anymore. Further, referring to post-grant review as noncontroversial is a bit silly in view of the publications against post-grant review, and the opposition to PGR of various patent client groups. On filing issues, Senator Leahy does not mention that the rest of the world is simply "first to file" and the trick of "first inventor to file" gets us a new bureaucracy of "derivation proceedings".
Of --provides the resources --, S.515 does nothing to prevent "fee diversion" from the USPTO. Allowing the USPTO to charge more, when Congress diverts the fees elsewhere, is what truly is a tax on innovation
Of the damages issue, of interest to the IT folks, Senator Leahy neglected to mention the remark of Mark Isakowitz of the Coalition for Patent Fairness that S.515 "actually is worse than current law."
**Of the false analysis underlying the arguments of low quality patents:PATENT GRANT RATES AT THE UNITED STATES PATENT AND TRADEMARK OFFICE, 4 CHI.-KENT J. INTELL. PROP. 108
: In recent proposals for patent reform made by the Federal Trade Commission and by the National Academy of Sciences, there has been discussion of the possibility that the grant rate of patents by the United States Patent and Trademark Office [USPTO] is high compared to that of other industrialized countries, including that of Japan and those of Europe. This discussion began with papers of Quillen and Webster that suggested that the grant rate might be as high as 97% and more reasonably is at least 85%. Although the
actual grant rate at the USPTO is typically in the range 62% to 68%, Quillen and Webster suggested the
higher numbers based on an analysis of continuing applications (including continuations, divisionals, and
continuations-in-part). The present paper suggests that the analysis of Quillen and Webster is flawed both
legally and methodologically (...)4 CHI.-KENT J. INTELL. PROP. 186
85 JPTOS 335, 86 JPTOS 568, 88 JPTOS 239, 88 JPTOS 726
**On opposition to post-grant reviewfrom Intellectual Property Today in October 2007
What's really going to happen with S.515's version of patent reform
-->Comment to Politico-->
Of Senator Leahy's text -- Innovation has been impeded in recent years by a patent system that too often grants low-quality patents with overly broad claims, which have been used by opportunists to extort royalty fees from manufacturers — particularly in the high-tech sector. The problem of low-quality patents is exacerbated by a litigation system that yields unpredictable and often overcompensating damages determinations, which divert investment and resources from
one recalls that innovation refers to a change in the way we live. An example is the invention of xerography by Chester Carlson, which when commercially implemented, changed the way in which we live. One recalls that already-established companies, including IBM and Eastman Kodak, were offered the chance to have Carlson's patents, but declined. Ironically, in the 1970's, IBM would try to design around Carlson's various inventions.
Whether innovation is being impeded has less to do with the status of currently-existent large companies than with the climate facing less-established inventors who truly have game-changing ideas. Senator Leahy's S.515 is more about stabilizing the interests of the status quo than about advancing the interests of true innovators.
As such, S.515 does not really advance innovation. Further, in not tackling fee diversion, S.515 represents a continued tax on innovation.
**Followup on 24 March 10: Senator Leahy's piece has engendered all of about 8 comments on politico, mostly negative. To say we have a "dead horse" here is understatement. The senators are just going through the motions.