Patent News

Jan. 27, 2015

IP Watchdog: Politics and Patent Reform: The Baby is in Danger in this Bathwater, by Robert P. Greenspoon

This post originally appeared in IP Watchdog on January 27, 2015.

President Obama surprised many people by not mentioning patent reform in his 2015 State of the Union Address. His Administration has turned so-called “abusive” patent litigation into a major theme. The 2014 Address famously trumpeted the Administration’s goals to stop “abusive” patent assertions. In 2014, the Administration also strong-armed the USPTO to post a webpage giving “advice” to companies accused of patent infringement. The official United States Government position now includes stonewalling, even in the face of a valid assertion of infringement. Among the bullet points: “You may elect not to respond to the letter or any follow-up letters.” And what went missing from this advice? To investigate if the patentee was right. Investigating alleged infringement is, after all, what the law requires of accused infringers. The Administration’s positions made it seem obvious that the President’s 2015 Address would mention patent reform.

The Republican side of the aisle took note of the President omitting mention of patent reform. Judiciary Committee Chair Goodlatte immediately published his own response to the President’s Address, chastising the President for failing to mention it. The Chair promised swift action on the topic.

His threat is credible. Chair Goodlatte pushed through patent reform legislation in the House in 2014, a bill numbered H.R. 3309. In Congress’s Orwellian way, it named this bill the “Innovation Act.” But inventors know better. They hate H.R. 3309. To their relief, the Senate did not take up the bill in 2014. But relief may be only temporary. With all its flaws (and there are many), the current Congress will most certainly take up either the Innovation Act, or its near twin.

How did it all come to this? The Supreme Court and the Court of Appeals for the Federal Circuit have been clarifying patent law doctrines for years, with the net effect of making it harder for patentees to win, and devaluing patent rights for everyone. Isn’t respect for the sanctity of property rights part of the catechism of conservative ideology? Might campaign funding and interest politics have something to do with lawmakers turning their backs on inventors? After all, the community of infringers has power and political money. Start-ups and inventors do not. Organizing and lobbying are second-nature to West Coast tech companies. Not so for inventors.

While Congress wages war on inventors, some in the Academy have joined in. Almost on cue, just as Congressional work began on what became H.R. 3309, a pair of Boston law professors published a piece blaming abusive patent litigation for $29 billion in losses to the economy. The forces of copying rallied behind the message, and “$29 billion” became a slogan. Far less noticed was the follow-on critique by noted empiricist legal researchers, Jay Kesan and David Schwartz. Their responsive article shredded the “$29 billion” methodology. Among the most egregious mistakes that Kesan and Schwartz identified – the Boston paper counted actual payments to inventors as part of the “loss.” It is a fact of basic economics that payments to inventors are considered “transfers,” not “losses.” In the words of the Kesan & Schwartz essay at page 438, “[t]he transaction has resulted in money moving from one entity to another in exchange for intellectual property rights, and economists do not consider these costs.”

It might now be said that, in the United States, reward for innovation is another “loss” to be eliminated or minimized. Watch out inventors.