Latest Patent Reform Attempt In Congress Misses The Big Picture

from the some-good,-some-bad dept

As expected, folks in both the Senate and the House of Representatives (cross-party in both cases) have teamed up to put forth a new bill for reforming the patent system. Many of the ideas are quite similar to past bills to reform the patent system that never went anywhere. In fact, there really isn't that much new. It still includes the provision to change the US system from "first to invent" to "first to file." That's how most of the rest of the world works, but it's a problem because it simply encourages people to file as many patents as they can as quickly as possible, rather than figuring out if it really makes sense to file for patent protection. If anything, this will only overload the patent system with even more patent applications, which the system can't handle.

Of course, the backers of the proposal might point out that if all the other features they've included pan out, that will discourage the filing of frivolous patents -- and potentially balance out that problem. The proposal would try to counteract many of the problems of the current system by limiting where patent suits could be filed (to stop the obsession with the court in Marshall, Texas), allow for a one-year "post grant review" process allowing people to challenge patents as well as setting up a better system for outsiders to present prior art. That all sounds good in theory, but may not be as useful in practice. The one-year post grant review process and the system for presenting prior art really only work if the patents come to the attention of relevant experts in the space. And, while the new proposal changes the rules for what's considered "willful" infringement, there's a reasonable fear that participating in these programs opens you up to charges of willful infringement and triple damages. All these proposals would really do is put incentives in place for the patent holder to wait another year until after the review process window has closed -- and then start sending out infringement letters.

One part of the proposal that does make some sense is the attempt to limit the amount of damages for infringement, capping the damages based on the significance of the patent above and beyond the prior art. In other words, it would basically recognize that the patented invention can often be a very, very, very tiny part of the specific product being offered by the infringing company -- and it doesn't make sense to then award a huge percentage of the company's revenue based on that incremental invention. Again, that's a useful start, but it's likely open to a tremendous amount of interpretation and gaming -- especially with overly broad patents.

While it's good that those writing the bill seem to have really tried to understand the issues with today's patent system, and it's nice to see them finally realize that it makes sense to coordinate the reform effort, rather than introduce it piecemeal, the bill (like those in the past) again is simply trying to fix the symptoms of the problem, rather than look at the core of the problem concerning whether or not the system is actually helping to promote progress in innovation. As such, some of the proposed changes may alleviate certain egregious problems, but other problems will pop up from the unintended consequences of the changes that will simply shift the problems around so they appear elsewhere in the system. Also, of course, despite the coordinated effort in announcing the bill, there's no guarantee it will go anywhere. The powerful pharmaceutical industry is already trashing the proposed changes (other than "first to file," which it likes) and could present a pretty big hurdle towards getting this bill any traction.