If you have been following the news in the last month or so, you’ve probably watched in amazement as Congress tackles one of our country’s most pressing issues. I’m not talking about the war in Iraq or the failing economy or even high energy costs. I’m talking about steroids in baseball—a blight on our national pastime. While others at the water cooler expressed disbelief that our elected officials called Roger Clemens to testify, I cheered. I’m thrilled Congress is dealing with this issue. Do I really care about juiced-up pitchers? No, not really. I’m just happy Congress is focusing their energy on baseball and getting their minds off something they can really mess up, like “reforming” the patent system.
While the current patent system is not perfect, and I have no doubt that some changes will be made in the next few years, I am concerned that those who value patents as important for commercializing early-stage technology are not part of the discussion. The loudest voices are those who see patents not as essential for investment and commercialization, but as a nuisance.
These anti-patent forces—mainly those in the IT industry, like Microsoft—are working under names like the Coalition for Patent Fairness and have been looking to “reform” or fix what they perceive to be a broken system; a system they feel mires industry in patent disputes, hurting the U.S. economy by diverting investment away from creating jobs and developing innovations.
What are these reformers looking to do? The Patent Reform Act of 2007 has essentially three major goals:
- Make patents harder to obtain by allowing submission of prior art by third parties and requiring applicants to do their own patent searches;
- Make patents harder to maintain by introducing a procedure that allows third parties to more easily challenge patents after they are granted; and
- Make patents less valuable by, among other things, changing the standard for assessing damages in the case of a patent infringement from one that looks at a range of factors that affect the patent’s market value to one that looks at only the novel feature(s) the patent is directed to.
Together, these and other sections of the legislation significantly diminish the value of patents.
This is the closest that we have gotten to a major overhaul of the patent system since the current Patent Act was passed in 1952. How did this happen? It’s easy. Anti-patent forces lobbied hard while pharma, bio, and university factions remained quiet. Why the silence? Some say the bio industry was focusing efforts on follow-on (generic) biologics legislation (still pending). It might also be that opponents of the legislation didn’t believe that the legislation would ever gain traction. However, there were some warnings about what could happen if it did. As Daphne Zohar, a fellow Xconomist, wrote in her July 22, 2007, column: “The proposed patent reform act would stifle innovation.” Daphne argued that “to arbitrarily limit damages and to make it easier to challenge patents shifts the balance further in favor of large companies and lowers the incentive of innovators and technology licensing offices at universities to file and support patents that could have an impact on healthcare, the environment and quality of life.”
Daphne hit it right on the head. The proposed legislation, by lowering the value of patents, is bad for anyone that relies on patent protection to promote innovation, including the biotechnology industry, universities, and non-profit research institutes. It hurts investment in early stage technology, an important part of the Massachusetts economy.
Unlike in past years, patent reform now does have real traction. The House passed a version of the bill (HR 1908) on September 9, 2007. The Senate bill (S 1145) is still pending. While there are some serious differences between the bills, compromise could be reached.
I recently received an e-mail from a colleague stating that the Senate Patent Reform Bill (S 1145) was delayed until April, and that an agreement on the “complex legislation remains elusive.” I cheered, thinking once again that the bill had stalled. I passed the e-mail on to my colleagues and expressed my delight that patent reform was looking unlikely this legislative session. Ron Eisenstein, my law partner who has been closely following the legislation, shot back the following message: “In view of how accurate all predictions have been, I wouldn’t count on anything. This may be a ploy to get those opposed to the bill to relax. Given the statements made by the proponents of the bill, paranoia is probably helpful.”
Ron’s right. A little paranoia is a good thing. Congress can’t deal with two wars, the lack of an energy policy, or a failing economy, but the patent system is something they can “fix.”
It’s not too late to let your position be known. Speak up. Be part of the debate. Let industry trade groups like the Massachusetts Biotechnology Counsel, BIO, and AUTM know how you feel. Contact the offices of Senators Kennedy and Kerry, and let them know that that passage of Senate bill No.1145 in its current form is bad for the Massachusetts economy. While you’re at it, ask them to redouble their efforts on performance enhancing drugs in baseball. If they have had enough of that, suggest that they call in Bill Belichick and look at spying in football. It’s better than patent reform!
