Monday, September 27, 2004

Relatively small group of people deciding patent policy?

The jump below is to a discussion in the New York Times of a book by Lerner and Jaffe, generated in the context of patent reform.

Although this is "news" in the New York Times for Sept. 27, 2004, Scientific American had published a review in May 2004. Sadly, the book relies on many mistaken assumptions, including the patent grant rate numbers of Quillen and Webster.

--> From Scientific American website, May 2004

The patent bar is a priesthood with its own secret dialect, intelligible
only to initiates. Two economists--Adam B. Jaffe of Brandeis University and
Josh Lerner of Harvard Business School--have now undertaken to translate for
the rest of us the inner workings of the patent process and then to dissect
what plagues it. Innovation and Its Discontents: How Our Broken Patent
System Is Endangering Innovation and Progress and What to Do about It is to
be published by Princeton University Press in October. The book describes
how two seemingly well-meaning changes made by the U.S. Congress have
engendered the current crisis. In what the authors call a "silent
revolution," Congress in 1982 took what appeared to be the relatively
mundane decision of assigning all appeals in patent cases to a single
court--the Court of Appeals for the Federal Circuit (CAFC). Intended to
eliminate "forum shopping" (the attempt by plaintiffs to find the most
patent-friendly jurisdiction), the congressional move ultimately resulted in
a court whose specialized nature tended to turn it into an advocate of
patent holders' rights. The CAFC has issued ruling after ruling that
sustains lower-court findings of patent infringement and has fostered the
extraction of greater damages from defendants. It has even made it easier
for a patentee to shut down a competitor's business before the patent is
shown to be valid. And its rulings have held that software, business methods
and certain biotechnologies--considered by many to be unpatentable--are
eligible to receive patents.

The other major action by Congress came in the early 1990s, when, during the
annual budgetary process, it converted the U.S. Patent and Trademark Office
from a primarily taxpayer-funded agency to one that survives on the fees it
collects. The revamped structure, intended to serve patent applicants in a
businesslike manner, created incentives to process patent applications as
fast as possible, with little heed to the complexity of a particular
application. The two actions, Jaffe and Lerner assert, led to a decline in
rigor in the standards by which patents are assessed. The impact of the
changes resulted in an explosion in patents granted: annual increases in
patenting had nudged along at a rate of less than 1 percent from 1930 to
1982; in contrast, that rate skyrocketed to about 5.7 percent from 1983 to
Rather than marking a blossoming of innovation, the patent boom has
signified a rise in the number of questionable patents, such as, infamously,
a Smucker's patent on crustless peanut butter and jelly sandwiches. A
broadening of patent coverage has also inhibited research. For instance,
some medical investigators, the authors note, have abandoned their programs
to study two breast cancer genes because of what they perceive as onerous
licensing terms imposed by Myriad Genetics, the holder of the patents on
these genes. A concurrent growth in infringement lawsuits creates a
situation in which established companies, often with declining market shares
but large patent portfolios, file suit against smaller firms, forcing the
defendants to pay royalties that crimp their ability to conduct their own
research and development. The collective effect has produced what the
authors characterize as nothing less than a tax on innovation.

[Book relies on patent grant statistics of Quillen and Webster, debunked in July 2004; see]

-->From "Greedy IP":

Key quotes:
"there's a relatively small group of people in the D.C. patent bar, and they have a very powerful influence on how patent policy gets decided. There is a powerful incentive for them to keep a patent system that is complicated, and one that involves protracted, costly litigation."

Yikes! They're on to us!


"Second, to see the patent review process as 'one size fits all' is again a mistake. There has to be way to figure out how to devote more resources to those patent applications which are really the important ones, and less to the unimportant ones."

P/A to large corporate client: "sorry, sir, it's been determined that your application just isn't all that important."


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