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Patent Reform 2.0

Patent Reform 2.0

By Thomas M. Lenard

Published in The Hill on November 1, 2013

The first major patent reform legislation in years is only two years old, yet the patent system remains plagued by wasteful litigation that is harmful to innovation. Fortunately, new patent reform legislation addressing these problems is gaining momentum on Capitol Hill.

The major concerns involve Patent Assertion Entities (PAEs), less charitably known as patent trolls. PAEs specialize in enforcing patent rights, by negotiating licenses or, if necessary, suing alleged infringers. They serve as intermediaries between the inventor and the manufacturer and, as such, can perform a valuable economic function. For example, PAEs allow inventors to focus on inventing rather than worrying about whether their patents are being infringed.

Mounting evidence suggests, however, that we have a litigation problem and that it applies to “practicing entities” as well as PAEs. This is because many patents, particularly software patents, which account for most of the increase in litigation, are overly broad or vague and therefore do not confer a well-defined property right. In addition, an asymmetry in litigation costs-which are borne disproportionately by defendants-makes it profitable for patent holders to sue and defendants to settle, even if the infringement claim has little or no merit.

Some of the reform proposals are no-brainers. For example, under the bill recently introduced by House Judiciary Chairman Goodlatte, patentees would be required to clearly state how the defendant’s product infringes the patent. They would also have to identify ownership of the patent and who has a financial interest.

 

Read More: http://thehill.com/blogs/congress-blog/technology/188899-patent-reform-20

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at https://techpolicyinstitute.org/.

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