The truth about US patent reform is that it failed because proposed legislation was deeply flawed 25 May 14
In the wake of the decision by Patrick Leahy to pull wide-ranging patent reform from the Senate Judiciary Committee’s agenda, there is a narrative emerging that it was all down to an unholy alliance of patent trolls, plaintiff lawyers and the pharmaceutical industry. Between them, so the story goes, they crushed a united front of technology companies to ensure that their own self-interest triumphed over the needs of America’s innovators, so ensuring continuing damage to the US economy.
But while it is a claim that will, no doubt, help to fan outrage and keep the flame of fundamental reform alight, the story is not quite as simple as that. Instead, we could just see it as yet another example of some elements on the pro-reform side seeking to tell a story based on partial anecdote and questionable fact – something that they have done time and again, and in the end probably not to their advantage.
The fact is that patent reform failed because the legislation being proposed was deeply flawed. It was based on what might best be described as dodgy data and out of context anecdotes, and would have made it riskier and more expensive for cash-strapped patent owners to enforce their rights while making it easier for deep pocket defendants to get away with infringement. Far from being opposed just by trolls and a few selfish players, the legislation attracted significant criticism from a wide-range of parties, representing a diverse set of industries and interests. They arrived relatively late in the game, having allowed the pro-reform side to set the agenda; but arrive they did.
So let’s remind ourselves of some of those who expressed grave doubts about what was on the table:
In February more than 2,000 independent inventors put their names to a letter which began: “On behalf of the independent inventor community, a community whose discoveries have collectively added billions of dollars to the U.S. economy, we are writing to express our alarm at the current rush toward patent legislation that could cripple invention in America.” And continued: “We applaud the desire to curb nuisance lawsuits and bad-faith demand letters by shake-down artists who claim their patents have been infringed. But the proposals now moving through Congress would go much further than that. They would gravely undermine the ability of legitimate inventors to defend their work from willful and sometimes brazen infringers – especially if they are deep-pocketed corporations.”
Also in February, the National Small Business Association and the Institute of Electrical and Electronics Engineers were among a group of over 150 organisations and companies which wrote to Leahy and Charles Grassley, the ranking Republican on the Senate Judiciary Committee, stating: “We all have concerns about proposed legislation aimed at changing U.S. patent laws, and agree that the Senate should exercise great caution before moving any legislation that could weaken the constitutional protections afforded to patent holders or make patent rights less valuable or more difficult to enforce.”
In March, the National Venture Capital Association, representing organisations holding 90% of venture capital under management in the US, wrote to Congressional leaders identifying a number of serious flaws in proposed legislation and stating that “unintended and unforeseeable consequences for some small companies and could have a significant impact on others to the point that incentives to invest are diminished or extinguished”.
In early April, the Partnership for American Innovation was formed by Apple, Du Pont, Ford, GE, IBM, Microsoft and Pfizer. “Companies like those in the PAI support a strong, balanced system and are working together to make sure the conversation is driven by facts, not rhetoric, and reason rather than emotion,” the PAI stated. Senior adviser to the group is former USPTO Director David Kappos, who said after Leahy’s withdrawal of the reform legislation: “I think, and hope, the discussions will continue, and that through further compromise -- some of which has already taken place -- we will see legislation completed that addresses patent litigation abuse while preserving the strength of the US patent system.”
Also in early April a broad coalition of companies and organisations from a wide range of industries wrote to Congressional leaders stating: “We are concerned that some of the measures under consideration go far beyond what is necessary or desirable to combat abusive patent litigation, and, in fact, would do serious damage to the patent system. As it stands, many of the provisions assume that every patent holder is a patent troll. Drafting legislation in this way seriously weakens the ability of every patent holder to enforce a patent. This approach clearly favors a business model that does not rely on patents and tilts the balance in favor of patent infringers, thereby discouraging investment in innovation.”
There are plenty more like this, but you get the picture: a lot of people were worried about patent reform proposals as they stood. They were not trolls, they were not plaintiffs lawyers, some of them were pharma companies, but most weren’t. They saw big problems with what was proposed. Almost no-one opposed the idea of any change – but it had to be the right kind of change.
More time makes it more likely that an appropriate law, which does not do more harm than good, emerges. The disappointment of those in favour of the withdrawn proposals is understandable, but it does no-one any good for some of them to pretend that only a few narrow interests prevented progress. That is clearly untrue.
What is needed in the US is an honest debate about patent reform based on detailed, verifiable data, a complete picture of reality and a full understanding of the consequences of change. Right now, we do not have any of these things. In calling a halt on the rush to reform, Patrick Leahy has made it more likely that in the end something worthwhile will end up on the statute books. That may not suit certain agendas, but it will be best for US innovators and the country's economy as a whole.
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