Although all legislation is designed to be helpful in some way, there are certain new laws that are viewed with particular excitement. Such laws are remembered for decades as having mended imperfections in civic life or the business world.
We’re on the brink of just such legislation during the current congressional session, with the Patent Reform Act of 2007. The bill offers improvements to our patent marketplace, helping small and larger U.S. companies become more competitive and creative.
Viewed by many as the most significant change to the patent system in five decades, the Patent Reform Act is meaningful legislation co-written by Rep. Howard Berman, D-Van Nuys, who also is its principal sponsor in the House.
It is no stretch to say that intellectual property has become an economic juggernaut. There is a lot at stake, and that is why patents have assumed unusual importance. In fact, American intellectual property is valued at approximately $5.5 trillion, more than the gross domestic product of any other single country, according to economists Kevin Hassett and Robert Shapiro. The nearly 400 patents that IBM researchers in California earned in 2006 are part of this ecosystem.
Innovation is increasingly abstract. Whereas new inventions were once mechanical, they now tilt toward properties invisible to the naked eye. These properties and algorithms help power everything from software to semiconductors. It’s a far cry from when Californian Andrew Smith Hallidie invented the cable car.
At the same time, as intellectual property has become more lucrative, it has not been easy for patent examiners to keep up with the huge variety and changes in the technology. They also have been beleaguered by exponential increases in patent filings. Unfortunately, some proposed inventions are not novel enough to deserve patent protection, or they don’t do a good job explaining what the inventor is really proposing.
One way patent examiners could gain valuable perspective on some of these filings is for them to consult experts – public citizens with expertise in a particular area. But, until now, these volunteers haven’t been able to weigh in on patent applications in any meaningful way.
Given the value of patents, businesses often claim their ideas have been appropriated by others. These days, such disputes are mediated in the courtroom, but the shock waves often resonate outward to the average consumer. For example, patent controversies have engulfed the BlackBerry communications devices and iPod music players in the recent past.
These days, the court system is the primary institution available to iron out these disputes. And in that setting, patent infringement awards, which reached $3.4 billion in 2006, can be significant – sometimes even more expensive than what the disputed product is really worth. Such awards, and the costs litigating these cases, or protecting oneself from litigation, can be a real drain on our economy as well as innovation. Dollars that could be spent on research and development are instead channeled to legal expenses.
As a result, California companies, in addition to other U.S. businesses prone to such pressures, may be less able to compete effectively.
The patent legislation will help solve these problems. Berman’s bill will enable private-citizen-experts to help patent examiners research the novelty of proposed patents so that they can make a more informed decision. The bill also will create a framework for individual inventors or businesses to dispute the validity of a patent without the expense and time of courtroom litigation.
And if a dispute does get escalated to trial, Berman’s bill would give judges and juries a way to calculate more realistic and appropriate awards, if they are warranted.
Patent practitioners say we now have a real opportunity for significant change in how the law views and manages intellectual property. Many say the bill is our best chance at promoting innovation and curbing litigation.
Berman and his co-sponsors are to be congratulated for drafting such progressive and prescient laws that will surely be remembered 50 years from now as a turning point in our invention ecosystem.