An inside look at the innovation impairment myth of patent reform

By Mike Pellegrino

Legislative reform of the US patent system may alleviate the concerns of companies that face assertions, but they could end up with a far more difficult situation on their hands as a result

I began writing this as I returned from a trip to Vietnam on behalf of the International Finance Group and its parent organisation, the World Bank. The topic of interest was IP-backed lending in Vietnam, which I found to be remarkable given the relative lack of interest by US financial institutions for financing patent-backed assets in the United States for any but the largest patent owners in the US system. Vietnamese companies and institutions were keen to learn from experts in the banking, legal and valuation professions about best practices for IP-backed lending. Much to my surprise, an unexpected number of recommendations started with a common phrase: do not follow the United States in current legal developments. Much of the subsequent discussion focused on the dizzying and continual changes to the legal certainty of US-based assets in which companies invest tens of billions of dollars every year. Complicating the situation further is the fact that some judges admit to a core lack of understanding of many of the unique technical and economic attributes that drive patent value and innovation – a particular problem given that they sit on the bench of the United States’ highest court. Naturally, current patent reform efforts in the United States, occurring after Congress passed the first substantial patent legislation only three short years ago, was a major topic of discussion.

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Issue 90