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Marketplace Scratch Pad

The battle over patents

Scott Jagow Mar 9, 2009

Tomorrow, the Senate Judiciary committee holds a hearing on patent reform. The weeds are tall on this one. If you’re not a lawyer, and I’m not, the reading will cross your eyeballs. But it’s a big issue for many, many companies and for the economy.

Congress tried to change patent laws a couple years ago, but the bill failed because its opponents are huge companies that are as effective at lobbying as Tiger Woods is at striking a golf ball.

The bill was resurrected last week. The most controversial provision would reduce the likelihood of major damage awards and increase the standard of proof for willful infringement.

The supporters of the bill are no slouches either — Google, Microsoft and other big tech firms. Google’s Head of Patents, Michelle Lee, blogged about it last week:

“All too often, Google and other companies face mounting legal costs to defend against questionable patent claims from speculators gaming the system to reap windfall profits. And those lawsuits make it more difficult and costly to introduce the next revolutionary product.”

But other industries, small inventors and labor unions say this is bad legislation.
Monsanto’s head lawyer, David Snively, responded to Lee:

“Unlike the solution for rampant copyright infringement the perverse solution for rampant patent infringement is to propose “reforms” that would both reduce incentive to invest in research, development and marketing of innovative American products and services and provided impediments for improving patent quality.”

In English, that means the bill will discourage innovation and cost the economy more jobs.
Opponents say the courts have already made it more difficult for “patent trolls” to collect huge
damage awards, so this bill isn’t necessary.

But Scott Fulton at Betanews points out:

In the modern era, entire businesses are based on a model of cultivating IP portfolios to execute and to win lawsuits, and potentially gain treble damage awards by jumping through the low-grade hoop of “willful infringement.”

Not to mention companies like Monsanto that are very good at gaming the system as well.
The new bill also has a “first to file” provision. That means whoever files the patent first, gets credit. Marketplace’s Innovations reporter Janet Babin says:

“That has small inventors up in arms – sometimes they don’t have the resources to be first to file, even if they are first with the actual invention…so they say this provision heavily favors the big guys.”

I doubt many people want to see small entrepreneurs lose any edge they might have. But the bill can be tweaked. It’s been 50 years since the last major revision of patent law, and I’m guessing some changes are necessary. This seems like a pretty fair fight, so hopefully the legislation comes out protecting ideas and inventors, not trolls.

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