Patent Law

2009 Patent Reform

By Gary Odom and Jordan Kuhn

The Manufacturing Alliance on Patent Policy (MAPP), a coalition of over 130 non-pharmaceutical manufacturers, took a backhand slap at Sen. Patrick Leahy in a letter to President Obama Tuesday, warning that the proposed patent reforms in recent years would hurt manufacturers by weakening patent protection. Leahy has been the puppeted force behind the computer industry's ploy to punch patents, so infringement is not as costly, while raising the cost of enforcement by making patent litigation even more expensive than it already is.

From the MAPP letter:

In the 110th Congress, legislation was introduced to make fundamental changes to the U.S. patent system. Proponents of the legislation were primarily large information technology and financial services companies. The legislation passed the House of Representatives in September 2007, but did not pass the Senate.

At the outset, it is important to note that the justifications offered for the legislation are faulty. For example, there is no explosion in patent litigation. In 1993, lawsuits were 1.45% of patents granted. In 2007, lawsuits were 1.48% of patents granted. The number fluctuates from year to year, but it has never indicated a system out of control. (Source: USPTO Annual Reports, Federal Judicial Statistics)

Moreover, there is no explosion in patent damage awards. Adjusting for inflation, the median annual patent damages award has actually dropped slightly over the last 13 years. In constant dollars, the median was $3.9 million from 1995 through 2000, and $3.8 million from 2001 through 2007. (Source: 2008 Patent Litigation Study, PriceWaterhouseCoopers.)

One claim certainly is true - that the number of patent applications has increased significantly in recent years. We view increased patent applications as a good thing, representing increased innovation that is crucial for American prosperity. It would be a terrible mistake to allow the increase in patent applications to become an excuse to undermine patent protections. Rather, Congress should take advantage of Americans' growing desire to invent by ensuring that the U.S. Patent and Trademark Office ("USPTO") has the resources and management to handle the increased number of applications in a thorough and timely manner.

The top goal of those proposing the legislation introduced in the 110th Congress was to reduce penalties for patent infringement by changing the law of damages. This change would have elevated the importance of one of the fifteen Georgia-Pacific factors now considered in calculating patent damages. By giving this one factor - apportionment - a preeminent position in damage calculations, proponents could achieve the goal of reducing damage awards.

It is crucial to remember that patent damages are imposed only after patent validity and infringement are determined on the merits. In other words, those paying damages have been found to have unlawfully used intellectual property belonging to someone else.

Proponents of the legislation introduced in the 110th Congress attempted to shift the blame in patent litigation from the infringer to the patent holder. Under this notion, the infringer became the victim of an infringed patent holder seeking too much in damages. But the validity of this claim was never established and cannot be established because it is not accurate.

The justifications made for the legislation introduced in the 110th Congress do not withstand scrutiny. There is no explosion of patent litigation. There is no explosion in patent damages. The statistics simply do not bear out such assertions.

Leahy is putting his begging bowl out again, by introducing yet another bill this year, and accepting contributions for a chance to whisper in his ear. Fortunately, thanks to groups like MAPP, Leahy will be stymied again. There isn't going to be legislative patent reform in 2009.

Full post as published by The Patent Prospector on February 10, 2009 (boomark / email).