Patent Reform Act Focuses On the Wrong Problem

The Patent Reform Act of 2007, passed by the House last year, is still wending its way towards the Senate. The New York Times positions the upcoming battle for passage as one that pits big tech companies against the individual inventor. In the wake of increasingly expensive patent litigation, a section of the act would limit the amount of damages courts will be able to award patent owners in successful suits. The NYT reports:

Under the proposed law, what are known as the “Georgia-Pacific factors,” a set of 15 guidelines that courts now use for determining damages in patent cases, would be boiled down to a single concept of “apportionment.” Damage calculations would be based on an economic analysis to ensure that a royalty damage award captures only the economic value attributable to the patent’s specific contribution over previous inventions.

The sad truth is that patents have always been more valuable in the courthouse than in the marketplace. But focusing on the size of awards is treating the symptom instead of the disease. Too many patents are granted that should never see the light of day in the first place.

A much bigger problem is the general quality of patents that are approved. Hire and train more patent examiners and raise the bar for which inventions deserve a patent, and you will fix a lot of the underlying problems with the broken patent system.

The Reform Act of 2007 does try to take a few steps in this direction by making provisions for post-grant challenges that could nullify patents that are too obvious or replicate prior inventions. It also tries to streamline the review process by switching to a first-to-file, instead of a first-to-invent, system. This latter provision seems to favor big companies with patent-filing bureaucracies rather than small-time inventors, but it is the way most other countries do it and makes it a lot simpler to determine who was first. Neither of these steps, however, adequately address the bigger problem of poor patents being granted in the first place.

What Should Congress Do To Fix the Patent System?

Total Votes: 508
Started: January 14, 2008

Any other suggestions? Comments are open.