Patent News

Nov. 17, 2014

U.S. Congressional Budget Office: Federal Policies and Innovation

The Federal Policies and Innovation report was released by the  U.S. Congressional Budget Office on November 17, 2014.

In this report, the Congressional Budget Office (CBO) examines the effects on innovation of existing policies and systems and the possible effects of a variety of proposals for changing those policies and systems. Below are excerpts from the report on the U.S. patent system:

The patent system promotes innovation by helping inventors recoup the costs of their efforts in exchange for making their inventions public. The Congress is currently faced with calls to address a number of perceived shortcomings of the patent system, including the recent proliferation of supposedly low-quality patents, pronounced delays in processing patent applications, and the cost of infringement litigation (in particular, the frequency of “nuisance” lawsuits). Because modifications to the patent system could have both positive and negative effects on the incentives to innovate, and because research on important issues of concern today remains limited, estimating the net impact of specific proposals for patent reform is generally difficult.

“The patent system contributes to innovation and economic growth in two principal ways. First, it provides an incentive for innovative activity by enabling inventors— and those who commercialize an invention through a patent transfer or license—to make money from their efforts by excluding others from applying the technical solution in question. Hence, the patent system effectively conveys a monopoly to the patent owner that can be very profitable. Second, the patent system provides for the dissemination of useful technical knowledge by requiring that a patent be published, rather than kept as a trade secret.….”

“Identifying policies that would clearly make the patent system more conducive to innovation is challenging. Efforts to address one problem could exacerbate others or weaken the incentive to innovate, and research on the extent of those problems and their impact on innovation is limited or still in its early stages….”

“One consideration that surrounds a number of the modifications suggested for the patent system is whether actions already taken by the USPTO and federal courts will resolve those concerns. For example, some observers argue that the reforms implemented by the AIA have not yet had their full effect on the patent system, and so enacting additional measures in the near future would be premature. Beyond the provisions of the AIA, the USPTO has joined with the private sector to improve the quality of software patents (the Software Partnership) and is also implementing a number of Executive Orders to address other concerns about the patent system. In addition, recent court decisions may mitigate, if not make unnecessary, the need for the Congress to legislate reform in those areas.”

Click here to read the full CBO report.