Patent Law Reform and New Legislation

I just received the Fall 2006 print issue of the Stanford Lawyer which at p. 31 quotes Stanford Law School prof Mark A. Lemley, an intellectual property law expert, in his July 11 testimony before the House Judiciary Committee hearing on the Trademark Dilution Revision Act of 2005:

It is particularly important that Congress act to prevent abuses of the patent system by those who use the patent system not to develop and make products but to squeeze money out of those who do.

Lemley made a similar statement on June 14, 2005 to the Senate Judiciary Committee in their hearings on Patent Law Reform : Injunctions and Damages:

It is particularly important that Congress act to prevent abuses of the patent system by so-called “patent trolls,” who use the patent system not to develop and make products but to squeeze money out of those who do. While there are no reliable statistics on the extent of the troll problem, there is no question that it is a widespread and extremely serious problem in the semiconductor, computer, and telecommunications industries. Large, innovative companies such as Intel and Cisco never have a week go by without threats of suit from a non-manufacturing patent owner claiming rights in technology that the defendants did not copy from the patent owner – usually they’ve never even heard of the patent owner – but instead developed independently. While there is a legitimate role for small and individual inventors who patent their technologies and license their ideas to others, increasingly the patent owners are not contributing ideas at all, but popping up years or even decades later and trying to fit an old patent to a different purpose. Trolls do this because the law permits it, and because it gives them a chance to make a lot of money – under current law, far more money than their technology is worth.

Patent reform needs to deal with these abuses of the system without interfering with the normal, legitimate use of the system to protect and encourage innovation. Doing so requires careful balancing of the interests of patent owners, technology companies, and the public.

One should read all of Lemley’s testimony to get an appreciation for the kinds of reforms that are being discussed for US Patent Law. See also Patently O here and here regarding H.R. 2795: Patent Act of 2005 as well as S. 3818: Patent Reform Act of 2006, bills currently before Congress. Also of interest is the August 21, 206 article by Matthew J. Sag and Kurt W. Rohde, Patent Reform and Differential Impact, Northwestern Law & Econ Research Paper No. 925722.

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