A Good Opportunity to Reframe the Patent Reform Debate

By Chris Gallagher
June 1, 2016

U.S. Capitol BuildingCorrosive changes in patent law are undermining research university commercialization of patented, federally-funded basic research, endangering our nation’s innovation ecosystem. Mounting uncertainty repels private investment needed to convert new discoveries into innovative public benefits. Prominent investment destabilizers include: post development invalidation, big-tech’s efficient infringement, increased costs of patent enforcement, looming congressional patent reform, and foreign IP theft and price/access manipulation. Collectively these uncertainties can crumble our country’s world-class innovation ecosystem. We must use the limited time left to reverse that catastrophic outcome by seizing every opportunity to do so.

In 2013 when big tech-backed HR 3309 burst through the House with a lop-sided vote of 325 to 91, it seemed that the end for research university commercialization was near. But the bill’s punishing applicability to all patent holders stalled it in the Senate. In 2014, it reemerged from House Judiciary as HR 9 and was sent again to the House floor. In 2015, HR 9’s Senate counterpart, S. 1137, cleared contested Judiciary Committee debate. It too was reported out for floor consideration.

By then however, off-Judiciary members in both bodies were hearing heated objections from home-state small businesses, inventors and especially their research universities. They learned that despite proponent assurances that both big tech-backed bills were designed to “cure” an over-blown troll “crisis”, passing either one could wreck their regional economies. They heard big tech badmouth better, narrower solutions to troll concerns they were led to believe could be fixed only by comprehensive patent enforcement litigation reform. But many members also learned that tailored, targeted demand- letter legislation could solve the troll problem without punishing every patent holder. And most important, members realized that their proudly supported annual $130 + billion dollar appropriations for basic R&D would be wasted if private investment was not forthcoming. Members also realized that costly access to judicial patent enforcement had become exclusively available to resource-rich incumbents beyond financial reach for everyone else. Controversy rose and both bodies balked, afraid to face a “tough vote” so close to upcoming elections. Neither bill has yet had floor consideration. But both still hover and almost certainly will land in the Lame Duck session or early next year.

Time, transparency and growing understanding of big tech’s market-driven infringement damages- avoidance motives have helped pro-patent advocates stave off enactment of this innovation ecosystem killing legislation. But if early stage innovation’s partnership with private sector investment is severed by any more uncertainty, the system will collapse. There is limited time left to prevent the loss of development investment’s keystone support for our nation’s innovation ecosystem. We must use it well.

Big tech’s lobbyists, PR tub-thumpers and academic boosters will be back with their bag of tactical tricks to misdirect congressional attention from big tech’s strategic need to serially infringe. But if we wisely use the months ahead to make the most of every opportunity to help the Congress better understand the economic miracle of our innovation ecosystem, we can defeat these looming anti-patent measures. We can begin eliminating the investment uncertainties repelling mission-critical private sector investment to commercialize promising federally-funded basic research. We must repair commercialization’s conduit to public’s receipt of innovation’s beneficial products, cures, and economic development whose birth is triggered by congressionally appropriated R&D funding. In short our nation’s innovation ecosystem must be better understood by Congress.

All ecosystems depend for their survival on certain “keystone“ components. Our innovation ecosystem is no different. Fresh ideas matter, but only when they are developed with supportive capital. For example, commercializing fundamental life science research is both costly and time-consuming. It requires complex scientific study, elaborate testing and regulatory approval before its breakthrough cures complete their trip from lab bench to bedside. IP uncertainty is now deterring university tech transfer efforts that must take place ten years earlier. And even after successfully completing that burdensome development trek, the most effective biomedical products become the most targeted victims of new patent invalidation ploys and foreign IP manipulation.

Big tech’s skillfully orchestrated anti–patent onslaught has been enabled in the past by the confluence of: issue complexity, an unengaged public, member time constraints, public relations “pre-gaming”, and irrelevant but effective bi-partisan and bi-cameral leadership “buy-in”. But the most important driver of big tech’s past momentum has been member failure to consciously connect their federal support for basic R&D with patent enforcement reliability. Patent unreliability eliminates attraction to invest in the patent’s subject matter. Innovation ecosystem ignorance invited big tech’s past “bait and switch blitzkrieg” of misinformation, enabling them to shift the burden of persuasion to big tech’s pro-patent opposition. And it has been a heavy burden.

Because “yes” votes must be explained, they are harder to secure than “nays”. Big tech cleverly converted comprehensive patent litigation revision “yes” votes into easily explained votes that said “no” to patent trolls. This tactic shifted the burden of persuasion to pro-patent advocates. Persuading pre-sold members already committed to curbing patent trolls that revising complex, arcane patent litigation was uncalled for and unfair is no easy task. Pro-patent advocates also had to scale pre-constructed walls of leadership support and inevitable passage climbing the weedy ladders of arcane patent law and trial procedures. There is no “elevator speech” on patent reform.

What matters is which side is forced to crawl through the tangled policy weeds of patent litigation and which enables members to say “no”. Big tech cleverly shoved pro-patent advocates into asking members to say ”yes” to trolls (though undefined) because it was not sound policy to pass revisions in arcane, unknown patent litigation process. It is thus a tribute to pro patent advocates these bills are still on “pause”. Delay is not defeat. HR 9 and S. 11137 will pass unless we shift that burden of persuasion back where it belongs by making the big-tech lobbyists justify their requests for voting “yes” to patent litigation reform. Make them explain to members how patent litigation is now flawed, and how and why it must be changed. Members proudly understand the medical and economic benefits of saying yes to annual R&D appropriations. They need to understand the commercialization pipeline that enables tax-payer to realize those benefits.

The New Invention Caucuses:

Senators Daines and Hirono have circulated letters inviting Senate colleagues to join an Invention Caucus whose purpose is to “educate members and staff about the innovation ecosystem.” A House Caucus counterpart established by Reps. Foster and Gosar invites colleagues to share candid, balanced conversations about regulatory and legal IP barriers to economic growth. Both initiatives can enable better member understanding of our innovation ecosystem, but only if pro-patent advocates actively support them.

Invention Caucus founders will need support to help them efficiently achieve their laudable objectives. Members should be urged to join. Joining a caucus is not an admission of common cause, only of common concern. All who join will only have signaled interest and a willingness to learn more about our innovation ecosystem. There is no sound policy reason to cripple commercialization of federally-funded basic research. Private investment in the development of such research is its only pathway to the public’s return on members’ R&D investments. Members who understand our nation’s innovation ecosystem will not again be stampeded again into thinking they are curbing patent trolls by voting “Yes” to big tech-backed proposals that will cripple the innovation ecosystem. The Invention Caucuses provide a pathway through big tech’s walls of misdirection. We must help their leadership succeed

We cannot not match big tech’s financial resources and political clout. If we productively use this pause to reframe the congressional question, we can undo HR 9 and S 1137’s destructive answer. By focusing member attention on how our innovation ecosystem delivers the public benefits of their funding for basic R&D, we can force our anti-patent adversaries to explain why they should say “no” to messing with it by voting “no.”

The Author

Chris Gallagher

Chris Gallagher is President of IP Strategic.com and a perennial selection to The Best Lawyers in America. Having spent years as one of the most influential and highly regarded advocates in the New Hampshire Legislature and state administrative agencies, Chris is now focused primarily on federal policies in Washington, DC. Chris has been involved in nearly every substantial New Hampshire economic regulatory initiative over the last 25 years. He has served as general counsel for the New Hampshire Bankers Association and has represented New Hampshire utilities, hospitals, insurers, aggregate manufacturers and numerous other entities. This experience provides him with a uniquely respected voice on Capitol Hill, enabling him to communicate effectively with members whose federal decision-making must reflect and respect the complexities of their home-state constituents.

A frequent speaker and commentator in local and national media on policy issues, regarding financial services, privacy, business and government, Chris has testified on financial services issues before U.S. House and Senate Committees and has been a panelist in Capitol Hill briefings on intellectual property issues. He can be reached at chris@ipstrategic.com

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 9 Comments comments.

  1. Ternary June 2, 2016 12:54 pm

    The term I found for this initiative is “Inventions Caucus.” It seems like a good idea. The article does not provide an operational advice on how to support this. I assume that writing a letter to your representative and senators, urging them to attend or at least learn about the “Inventions Caucus,” is one approach to support.

    I noticed an alarming trend during Sub-committees hearings, wherein exceptions to patent bills were made or suggested for academic institutions, basically letting independent inventors holding the bag on these issues.

    Chris writes: “By focusing member attention on how our innovation ecosystem delivers the public benefits of their funding for basic R&D, …”

    I am an independent inventor. My work is self-funded and by a group of angel investors, not by public funding. My experience is also that independent inventors are usually outside the concern of academia. When Members of Congress suggest exceptions for Academia in new IP laws, I do not hear any objections from Academia that this is not sufficient.

    I have been told several times that the time of the independent inventor is over, passed, done. Valuable inventions are to be expected from organized institutions, corporate and institutional labs and universities. The narrative is that independent inventors are either crackpots or trolls who are out to squeeze money out of honest infringers (!!!) by obtaining patents on extremely obvious or simple not deserving inventions.

    America has problems to gets its mind around what an invention actually is. Chris’ article provides a good analysis of what is going on. This is a political issue that has to be resolved by Congress, not in the courts or the USPTO. But, explicit inclusion of the role of independent inventors in our “innovation ecosystem” is needed. If not we will end up with a severely closed European-like patent system.

  2. staff June 2, 2016 3:11 pm

    ‘Corrosive changes in patent law are undermining research university commercialization of patented, federally-funded basic research’

    We agree, but the affect is far worse for inventors and small entities who rely on patents to obtain funding. In all, the patent system for us has become far too lengthy, difficult and expensive. When the PTO forces us to fight to get our patents, or fight to keep them we go out of business.

    Don’t believe the lies of Chinese and large multinational invention thieves. Just because they call it ‘reform’ doesn’t mean it is.

    For our position and the changes we advocate to truly reform the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com/category/our-position/
    or, contact us at tifj@mail.com

  3. Edward Heller June 2, 2016 3:16 pm

    Chris, if and when the Supreme Court takes MCM Portfolio v. Hewlett-Packard (IPRs are unconstitutional), it will be important that universities file amicus briefs in support.

  4. Edward Heller June 2, 2016 5:23 pm

    staff, I fully agree. Absolutely agree.

    When the cost of obtaining a patent that can be enforced is made to approach $1million, who but the wealthy can truly participate in the patent system, and, as a corollary, who but the wealthy can engage in inventing new products and services.

  5. Ternary June 2, 2016 10:59 pm

    Edward, I can tell you from experience that doing an invention can be very affordable. Large companies and institutions want us to believe that a huge investment is needed. In software for instance it is mostly not. That has upset the vested interests to no end, and they are trying as hard as possible to raise the barrier for independent inventors and small entities to obtain and assert valuable IP. This discourages (and is intended as such) small inventors to leverage their ability to do inventions at minimal costs, probably one of the few advantages they have over large organizations that carry the cost of infrastructures and personnel.

    I absolutely agree that obtaining, keeping and asserting a patent is becoming unaffordable for small inventors and has become such a low value effort that many now wonder if a patent is such a good idea anymore.

  6. Christopher Handel June 3, 2016 5:51 am

    “Big tech’s strategic need to serially infringe” “efficient infringement”

    The “patent troll” designation has been a beautiful political designation. No two people mean the same thing when they identify a patent troll. But it surely is disgusting that they exist and something must be done. From there patent reform is needed and the lobbied reform outcome is lopsided in favor of big money. Our current mess.

    There is an equally compelling need to describe “patent pirates” and build some horror stories and legendary decade long IP theft tales. Get the Pirates and Trolls narrative built and told.

    The reform we need is to replace efficient infringement with efficient licensing. Make it easier, safer and more profitable to license fairly and efficiently. Decrease the benefit of conflict and increase the benefit of efficient licensing.

    Patent owners who want to be paid fairly for their IP are not trolls. IP users who would willingly pay a fair price if their competitors also paid are not fools.

    When the pirate story and the troll story are both equally disturbing getting better reform will be easier.

  7. Night Writer June 3, 2016 2:02 pm

    The march of K-Street continues. I just don’t see any hope against Google and K Street anytime soon. I think once Google starts to use the new trade secret law to lock down employees that there might be an opening at that point.

  8. Ned Heller June 3, 2016 4:23 pm

    Christopher Handel, Story addressed the issue of efficient infringement long ago, and in cases like Pierson v. Eagle Screw Co., 3 Story 402 (1844)(see also Curtis (’67, Section 388, note at note 7) held that patent owner had a right to collect as part of his damages the cost of enforcement (including attorneys fees) otherwise the enforcement of his patent that could only result in legal damages (which were small to nothing) would be ruinous.

    Efficient infringe exists only because there is no penalty for forcing the patentee to court to prove his case when the patent is presumptively valid and infringement is clear. The obligation of the otherwise innocent infringer is to take a license when notified or cease use; otherwise severe penalties need to be imposed including adding the cost of enforcement as legal damages.

  9. Anon June 4, 2016 9:58 am

    Ternary @ 5,

    You are addressing Mr. Heller, who on the “other blog” has made it clear that he does not share your views on the viability of software patents.

    Your argument, while sound and to the point regarding how software is one of the greatest equalizers of innovation, and is the primary reason of the greatest acceleration of innovation that the world has ever seen, simply will not be given its due and proper weight from the person that you are addressing.

    A cardinal rule to remember is explicitly denied by that person: in the particular Arts under consideration, the “wares” of software, firmware, and hardware are purely equivalent in the patent sense.

    So while you may read here Mr. Heller’s pleas and views on efficient infringement, keep in mind that he will only selectively apply such theory to his own views of what is and what is not eligible subject matter, views having no firm grasp or proper recognition of the Arts that do not fit his particular world view.