Patent Reform
Contents
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.1896: Demand Letter Transparency Act of 2015 (Congress)
- If an entity sends more than 20 demand letters to the USPTO within a year, each demand letter must follow certain rules and requirements
- Must include disclosure with specific details regarding the case, such as exactly what patents have been infringed upon, the related parties, etc
- Permits a recipient of a demand letter to file a petition with the USPTO if it believes that disclosure or patent letter information requirements have not been met
- USPTO will notify the patent owner that the patent will be voided unless a fee is paid
S.1137: Protecting American Talent and Entrepreneurship (PATENT) Act (2015) (Congress)
- Pleading and early disclosure: must identify each claim of each patent allegedly infringed and which products or processes are infringing
- Discovery limits: requires a court to stay expensive discovery pending resolution of preliminary motions
- Fees and recovery: provides that reasonable attorney fees will be awarded if the court finds that the non-prevailing party was not objectively reasonable
- Disclosure of patent ownership: requires patent holders to disclose to the PTO whenever there is an assignment of interest in the patent that results in a change of ultimate parent entity
- Small business provisions: directs PTO to develop educational resources for businesses targeted by patent suits and to create a list of pending patent cases on its website
S.632: Support Technology and Research for Our Nation’s Growth (STRONG) Patents Act (2015) (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
Drafts of Future Legislation
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.
