Abraham Lincoln once called the patent system one of the three greatest advances in human history, along with the discovery of America and the printing press… The result is a patent system in crisis, which threatens our economic future. Small businesses received 30 percent of U.S. patents in 2000. Last year the number plummeted to 19.5 percent. Small companies undertake the risk and expense of developing breakthrough technologies that made us the most prosperous nation in history. When they lose confidence in the patent system the country will suffer.
Innovation is the lifeblood of a prosperous economy. Sound patent policy, which encourages the nexus between risk and ideas (especially for small entrepreneurs), makes invention profitable. The U.S. patent system enables that dream by protecting the market an invention creates long enough for the inventor to gain a toehold against competition, and by creating a property right capable of attracting critical investment to bring the invention to market and grow the business. Don’t let H.R. 9 or S.1137 kill this can do American spirit of innovation.
Most Congressional offices now understand how loser-pay, bonding and joinder stops the flow of capital to innovation startups, how customer stays make defending patent rights impossibly difficult, why eliminating PRG estoppel perpetuates litigation shifting almost all of the costs onto inventors, and how IPR’s and CBM’s unjustly strip property rights and devalue all patents. Rank and file offices seem to be listening. However, key offices are deliberately deaf.
The most recent patent reform bill to pass the House, which is now expected to receive Senate backing as well, is the Goodlatte Innovation Act (H.R. 3309). Included within the various provisions of H.R. 3309 is the presumption of fee shifting for the losing party in a patent case. Put simply, this means the loser in a patent case pays the winning side’s attorney fees. In the context of a patent case, such costs often total in the millions. But as someone who operates at the center of the patent market, and is certainly sympathetic to the dangers of frivolous patent litigation, I can only hope that if additional patent reform does pass, the presumptive fee shifting provisions are nowhere to be seen. Although seen by those unfamiliar with the nuances of patents as a way to curtail abuses in the patent system, a presumptive fee shifting provision is not only unnecessary, but also likely to cause of host of unintended consequences.
The US House passed the Innovation Act (HR3309) in December 2013. The Senate is now well on its way to incorporating this legislation which will make Americans poorer. The bills have many problems that will inhibit small inventors, but the most insidious are “Loser Pays” and “Pay to Play”. It changes the law, singling out inventors as a class so onerous that only they must pay the other side’s legal fees if they don’t win every claim. Pay to Play makes inventors guarantee payment up-front. Some proposed Senate bills (e.g.: S.1013 & S.1612) make sure that almost all Americans and most small companies will never be able to afford to enforce their patents on their inventions.