Patent Reform

Problems with Current Patent System

• Many patents are approved because examiners don’t have time or resources to search all the relevant references
• “The past three decades of wanton patent-granting have created a disastrous environment for innovation. Today it’s practically impossible to build anything without violating a patent of some kind—and risking a multimillion-dollar lawsuit for your troubles.” (Wired)
• Technology industry has too many overly broad patents, leading to incredibly silly patent litigation cases
  • Amazon “owns” the process that allows people to buy things with a single click.
  • Apple now claims the exclusive right to sell rounded-edged, rectangular-shaped communication devices on which icons are arranged in a grid with a row of persistent icons at the bottom
  • A small company in Tyler, Texas, once demanded more than $600 million from Google because of the design of the borders around its display ads.
• ‘’’Patent Trolls’’’ are nonpracticing entities that don’t make products but exist solely on the revenue of its patents
  • Costs a few thousand dollars to secure a patent, which can bring in millions through litigation
  • It is usually more expensive to win a case against a troll than to just settle
• Last year, for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products, according to public filings. (NYT-PW)
• Me-too drugs: a drug that is approved after a pioneering drug and is the 'same'; it is not clinically superior to the original drug (WHO)

Current Reform

Legislation

H.R.9: Innovation Act (Congress)

• Heightened pleading requirements: must show how each limitation of each asserted claim in each asserted patent is found within each
• Presumption of attorney fees: encourages judges to make a party pay attorney fees if lawsuit or claim is deemed frivolous
• Transparency of ownership: requires plaintiffs to disclose the owner of the patent in question so the identity of the real parties behind the litigation is clear
  • Will ensure that patent trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation
• Discovery limits: limit discovery in litigation until after a claim construction ruling
  • Aimed at reducing cost

S.1137: Protecting American Talent and Entrepreneurship (PATENT) Act (Congress)

H.R.2045: Targeting Rogue and Opaque Letters (TROL) Act (Congress)

S.632: Support Technology and Research for Our Nation’s Growth (STRONG) Patents Act (Congress)

H.R.1249: Leahy Smith America Invents Act (2011) [1]

• A derivation proceeding is established to replace the interference proceeding currently employed by the USPTO
  • The purpose is to determine whether a claimed invention in an earlier filed application was derived from the later filed application
• Transitions from First to Invent patent system to system where priority is given to first inventor to file a patent application
• Patent Office itself can rule on egregious claims, throwing them out before defendants are forced to go through the pain and expense of a full trial [2]

Failed Legislation

H.R.845: The Shield (Saving High-Tech Innovators From Egregious Legal Disputes) Act [3]

• Introduced in 2013, but was not enacted
• Requires an unsuccessful plaintiff in an infringement suit to pay the defendant’s legal fees
• Effort to dissuade frivolous patent lawsuits

Prize System for Inventions

The current patent system allows companies to file for the right to exclude if they have a novel, non-obvious invention. The right to exclude creates a temporary monopoly for a certain product, which leads to higher product costs for the consumer. One example of a patent leading to exorbitantly high prices would be Daraprim, a drug produced by Turing Pharmaceuticals. Martin Shkreli, the CEO of Turing Pharmaceuticals, led the charge to increase the price of Daraprim from $13.50 to $750 per pill. [4]

Because of such abuses of patent protections, economists and legislators have advocated for a prize system instead of a patent system for pharmaceutical drugs.[5] Under this system, companies that invent a new drug will receive a lump sum prize. The rights to the drug will then be placed in the public domain, creating generic drugs.