Joff Wild

A report commisioned by an organisation called the Manufacturers Alliance on Patent Policy - which is composed of companies that employ more than 250,000 people in industries including chemicals, transportation, agriculture, food, electronics, aerospace and construction - was published yesterday. Written by economist Scott Shane, it concludes that the changes to the way in which damages are calculated in US patent litigation, as advocated by those who supported the Patent Reform Act that stalled during the last session of Congress, would probably have "severe adverse effects". These include:

  • Lower patent value: reduced patent damages wouldlead to reduced patent value of between $34.4 billion and $85.3 billion.
  • Reduced R&D: reduced damages would lead to reduced R&D spending of between $33.9 billion and $66 billion.
  • Decline in corporate value: decreased value of intellectual property would cut $38.4 billion to $225.4 billion from US public company value.
  • Jobs jeopardised: Lower company value could imperil 51,000 to 298,000 American manufacturing jobs.
  • Minority favoured over the majority: Making it cheaper to cheat would benefit industries with fewer US workers at the expense of those with more. 

It looks like this report is designed to introduce the MAPP, which has a membership comprising some of the biggest names in US manufacturing. Given that the alliance is opposed to major changes in the US patent system, it is not really a surprise that the research has come out in the way that it has. However, that is not really the point - the real issue is whether it is right. If it is, then it is going to make the jobs of those who support the legislation that much harder should it be reintroduced in the new session of Congress. After all, how do you counter assertins tha your proposlas could cost thousands of jobs, especially at a time when unemployment is increasing so rapidly?

Something worth noting is that one of the sources that Shane cites with regard to his calculations of patent value is James Bessen. The same James Bessen who co-authored Patent Failure with Michael Meurer and argued that the US patent system was, in most cases, not delivering the benefits that it was originally designed for. It is ironic that his work is being used in an argument to keep things as they are, when Bessen himself strongly believes that fundamental change is needed.