William Hawkins
Senior Fellow for National
Security Studies
U.S. Business and Industry
Council
Washington, D.C.
Edited by Kenneth Korane
Congress is pushing a
bill that could cripple most of America’s
smaller inventors and even larger
industrial firms that depend on patents.
The bill could also weaken the
prominent role our nation’s universities
play in technology development.
The House passed its version of patent
reform in Sept., and action is now
pending in the Senate (S.1145).
Throughout the legislative process,
there has been a bias against
manufacturers. Not a single manufacturing
firm was invited to give testimony,
even though technological
innovation and industrial advancement
are closely intertwined. Indeed,
manufacturers undertake 60 to 70%
of the nation’s R&D and hold 60% of
its patents.
Lawyers, bankers, and leading
high-tech firms like Microsoft, Palm,
and Intel have dominated the hearings.
Yet, smaller enterprises drive true
innovation. Independent inventors,
small companies, universities, and nonprofit
research groups make about one third
of all patent applications. These efforts
are usually the most important for
leading-edge scientific advancement.
The bill is meant to shift the legal
balance. Many large IT companies
want to make challenges to patents
easier, and to curb the power of patent
holders protecting their rights. It would
even allow challenges after patents are
granted. This would deny patent holders
clear ownership and inhibit their
ability to commercialize products or
attract venture capital. The legal costs
associated with post grant challenges
favor deep-pocket corporations over
smaller firms and inventors, and raise
barriers to independent innovation.
Pending legislation would also reduce
damage payments for infringement
and make it harder for courts to
levy punitive damages. The idea seems
to be to define away damages, making
infringement — the stealing of someone
else’s idea — a winning business
strategy.
Perhaps the direst threat is mandatory
publication of applications before
a patent is granted. Currently, applications
are published after 18 month, but
Americans can opt-out of this requirement
if not filing for foreign patents. The new bill eliminates
opt-out
provisions. Considering
it takes
an average of 33
months to receive
a patent, publishing
the invention’s
details after
only 18 months is a windfall for pirates,
among which the Chinese are the most
numerous.
S.1145’s assault on intellectual property
rights has created wide-ranging
opposition among high-tech firms,
independent inventors, university research
centers, large manufacturers
including 3M, Caterpillar, and General
Electric, many labor unions, and
even the patent examiners association.
These groups believe that if the law reduces
the rewards — but not the risks
— of high-tech research, less work will
be done and fewer new ideas will be
forthcoming.
Today, Americans are fighting a
global trade war and innovation plays
the dominant role in economic growth,
increased productivity, and new products.
It seems a particularly bad time
to weaken the protection of intellectual
property in the name of “reform” or
shift the legal scales against inventors.
The future of American innovation
hangs in the balance.