Patent News

May. 11, 2015

IP Watchdog: Why customer stays are terrible for the patent system, by Gene Quinn and Brian Pomper

This post originally appeared in IP Watchdog on May 11, 2015.

A strong patent system has been the engine of innovation in this country for over two centuries, and it remains a fundamental driver of economic growth and job creation in this new technology-driven economy. U.S. competitive advantage depends on strong, enforceable patent rights that incentivize innovators to invent. A law that would make it harder to enforce U.S. patents will encourage the infringement of American ingenuity and innovation and embolden competitors in China and elsewhere.

But that’s exactly the kind of law that is currently making its way through the House and Senate. To understand why, you must understand that one of the hallmarks of the current patent debate has been the discrepancy between the stated aims and the actual effort. For example, the stated aim is to protect small businesses and startups from “patent trolls,” but the companies driving the effort are many of the largest companies in the world – just five of them have an aggregate market capitalization of $2 trillion.

Another discrepancy is between the stated legislative goals and the actual proposed language. This is perhaps demonstrated in starkest relief in the “customer stay” provision found in both the Innovation Act bill in the House of Representatives and in the PATENT Act bill in the Senate. It ostensibly would exist to protect downstream customers of a patent infringer, such as a small coffee shop offering Wi-Fi service using a device that unbeknownst to the coffee shop infringes a patent. But while the Senate Judiciary Committee’s summary of the PATENT Act says that the “customer stay is available only to those at the end of the supply chain,” like the coffee shop, the language found in the bill is actually far broader in scope.