Patent Reform Act of 2007 Would Stifle Growth

     I am no expert on patent law, but I do know that the purpose of the patent system is to encourage the advancement of the state of technology.  Without patents, which grant special rights to inventors allowing them to benefit from their work, the incentive to innovate is diminished.  Weakening the value of a patent will reduce innovation, slow technological development and curtail economic growth.  Tragically, this would be the result if the Patent Reform Act of 2007 is passed into law as currently written. The Patent Fairness Coalition, which includes high-tech heavyweights Microsoft, Dell, Google, Oracle, and Hewlett Packard, seeks to reform the patent system to reduce their vulnerability to “patent trolls.”  Improving the patent system and curtailing trolls (def: http://en.wikipedia.org/wiki/Patent_troll) is a good and noble cause; but not at the peril of inventors and legitimate patent owners.   

     One area of particular concern is proposed changes to the way damages are apportioned.  As currently written in the bill, this language would change the way patent damages are calculated by limiting the discretion of judges in awarding damages to compensate patent holders whose patent rights are violated.  As crafted, these provisions would make it more difficult for patent holders to win an award based on the total market value of the product rather than the value of one individual patented component.   For example, the damage apportionment concept is particularly troubling to medical device companies whose discrete improvement to a product may shift the sale of the entire system to the inventor of that improvement.  Arbitrarily denying courts the ability to base computations on the entire market value of a product will lead to equally arbitrary results as judges grope for the hypothetical price of an unsold feature. 

     Another potentially problematic provision in the bill is “post grant opposition” where a new open-ended post-grant opposition system would allow challenges throughout the life of a patent, leaving uncertain the validity of intellectual property and thereby diminishing a young company’s ability to attract funding.    Looking forward, if Senate authors Leahy (D) and Hatch (R) are successful in achieving a compromise on remaining issues early in the year, it is likely that Majority Leader Reid will allow a Senate vote.  Since a similar bill was passed by the House in September, an affirmative vote in the Senate would almost certainly mean the bill would become law.  However, as more time goes by without an agreement the less likely any action will take place on patent reform because the 2008 elections make it more difficult to compromise on  legislative issues in Congress.  For more information about the issues involved, the players and their positions, the law firm Fish & Richardson provides an excellent background piece at http://www.fr.com/news/2007/Sept/Patent%20Reform%20Pres%20Sept%2007.pdf.  For an even deeper dive, check out Patently-O, a blog written by Professor Dennis Crouch of the University of Missouri School of Law (http://www.patentlyo.com/patent/2007/04/patent_reform_a_1.html).   

     The economic engine that drives America is innovation.  Providing legal protection to innovators is a fundamental tenet of our system.  Let’s not shoot ourselves in the foot while trying to kill a few trolls.  It is more important to protect the intellectual property rights of America’s inventors and small businesses than to save big business a few dollars in legal fees.  Don’t get me wrong, I am all for reducing wasteful and excessive IP litigation, but not at the expense of the inventor, innovation and economic growth.