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by Johanna Shelton, Policy Counsel and Legislative Strategist
and Michelle Lee, Head of Patents and Patent Strategy

Many of our nation's founding fathers (most notably Ben Franklin) were inventors, and from America's earliest days we've been a country that has promoted innovation. To protect and promote invention, those same founding fathers gave Congress the power (in Article I, Section 8 of the U.S. Constitution) "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Inventors have relied on the patent system to protect those rights (check out Google Patent Search to see for yourself).

Unfortunately, the patent system has not kept pace with the changes in the innovation economy. Google and other technology companies increasingly face mounting legal costs to defend against frivolous patent claims from parties gaming the system to forestall competition or reap windfall profits. The National Academy of Sciences has said the current patent system shows “areas of strain, inefficiency, excessive cost on one hand and inadequate resources on the other hand that need to be addressed now.” And the Supreme Court's consideration of several patent cases in the past two terms is evidence of growing consensus that patent law needs to be rebalanced in order to protect patent owners while ensuring that patent rights are not abused.

A growing chorus of business leaders and companies spanning the technology, financial services, and traditional manufacturing industries has joined with legal scholars, economists, consumer and public interest organizations, government institutions and major editorial boards in calling for patent reform.

Bipartisan patent reform legislation is likely to be considered by the full House of Representatives later this week, and is moving through the Senate as well. As a member of the Coalition for Patent Fairness, we support this legislation and have urged Congress to address these issues in particular:

• Damages apportionment. Damages should be calculated based on the fair share of the patent’s contribution to the value of a product, and not on the value of a whole product that has many components. So for example, a windshield wiper found to an infringe a patent should not spur a damage award based on the value of the entire car.
• Restricting forum-shopping. Certain district courts have become notorious for rarely invalidating a patent, and have tilted the balance too often in favor of plaintiffs. We support judicial venue provisions to ensure that patent lawsuits are brought only in district courts with a reasonable connection to the case.
• Post-grant review. The patent system should include a meaningful second chance for the U.S. Patent and Trademark Office to review potentially problematic patents in a timely way, thereby promoting high-quality patents.
  
• Willfullness. Patent infringers can be forced to pay triple the damages in cases where they are found to have "willfully" infringed a patent, but that standard has been devalued. Punitive triple damages should be reserved for cases of truly egregious conduct.

The product of six years of legislative debate and compromise, the bipartisan Patent Reform Act would achieve many of these goals in a fair and targeted manner. It clarifies the standard for calculating damages based on the value of the invention, establishes fair criteria for where patent cases can be brought, improves post-grant review and applies to patent law the traditional standard for punitive damages. These reforms will go a long way toward modernizing the patent law system to ensure it continues as an engine for economic growth and innovation.

Some have argued recently that reforms to the patent system would somehow make the U.S. less competitive in the world. That couldn't be further from the truth. Low-quality patents and escalating legal costs are currently hurting the ability of U.S. companies to compete globally, and that in turn hurts U.S. workers and consumers. Without a modernized patent system, U.S. companies are at a competitive disadvantage, spending resources on unnecessary litigation and unwarranted licensing instead of on innovation.

We'll be talking to House members and their staff this week to tell them just how important this is.