Bush Administration Continues Attempt to Destroy U.S. Patent System

    By Kevin E. Noonan --

Just when you thought it was safe to stop worrying about the stalled "patent reform" bill in the Senate (S. 1145), along comes Secretary of Commerce Carlos Gutierrez (at right), trying to reenergize the IT community in Silicon Valley to push for passage of this misguided bill.

Last week, Mr. Gutierrez announced his intention to meet with leaders of the IT community in an op-ed piece published in the San Jose Mercury News (see "Get moving on patent reform measure stalled in Senate").  Mr. Gutierrez bemoaned that negotiations over the bill had stalled and that the legislation was unlikely to pass this year (see "Senate Patent Reform Bill: R.I.P.?").  The Secretary emphasized the importance of intellectual property protection to the U.S. economy, citing a value of $5.5 trillion corresponding to 40% of the U.S. economy and employing 18 million Americans.  All important and vital statistics, sadly misapplied in defense of a bill guaranteed to put those jobs and technology at risk.

Tellingly, the Secretary cites "products such as cell phones and blenders, to high-technology microchips and heart valves" as deserving protection.  Not surprisingly, he neglected the contributions of the biotechnology and pharmaceutical industries and the importance of patent protection to those industries; these industries do not comprise the intended Silicon Valley audience.  He then set forth "a way forward" to pass legislation "streamlined" to contain only some of the many provisions contained in S. 1145.  (Some provisions, such as Senator Sessions' "patent infringement 'get out of jail free'" portion of the bill, has already been deleted.)  The Secretary's "way forward" includes these provisions of the bill (as presented in the Secretary's op-ed article):

• Damages:  The debate has largely focused on how different business models win or lose under the current system.  This is the wrong way to approach the issue.  Our patent system must work to encourage innovation in all sectors of the economy, and it shouldn't tilt toward one industry or another.  Most agree on reforms that would give judges additional authority to direct juries as to which factors they may consider in determining the compensation for infringement.  Judicial guidance will help ensure more rational decisions while protecting judicial discretion.

• Post-grant review:  Most agree that establishing cost-effective alternatives to litigation after a patent is granted would be a significant improvement.  One way to accomplish this is to provide a venue for patent holders and patent challengers to resolve their differences in front of experts at the Patent and Trademark Office.  This should include protections to ensure that it does not become a vehicle to harass the patents of competitors.

• Patent quality:  The Senate bill currently includes language that emphasizes the importance of patent quality at the front end of the process.  This reform is essential.  Our patent system faces increasingly complex applications, which is why - despite significant productivity initiatives - the patent office currently has a backlog of 760,000 patents and the average patent exam takes 31 months.  Requiring quality on the front end will allow us to speed the flow of new ideas through our innovation pipeline.

Secretary Gutierrez calls these the provisions "where there is broad agreement on the need for reform."  Many would differ with this assessment (see "Commerce Secretary 'Entirely Wrong' on Inequitable Conduct Reform").  The Secretary's bill would include Applicant Quality Submissions, placing the examination burden on applicants rather than the Office.  Anyone with any real experience knows that the philosophical underpinning for these provisions, that applicants are in the best position to know the relevant prior art, is deeply flawed and any factual basis is due to the overwhelmingly high percentage of recently hired new examiners.  And this situation is the result of mismanagement and years of insufficient funding for the Office.  These transient circumstances are not an acceptable or adequate basis for twisting the fundamental balance between applicants and the Office, a conclusion seemingly beyond the ken of those in the Administration fomenting for this dubious reform.

The other patent-unfriendly provisions provide post-grant review for an Office without any apparent confidence in the integrity of the examination process, and a damages provision demonstrating a similar lack of confidence in the ability of the judiciary to determine the fair and proper amount of damages for patent infringement.

Once again, in this election year it is important for those in the patent community with actual experience, who are not career bureaucrats looking to improve performance statistics or political employees padding their resumes for the next government job or K Street consultancy, to contact their Senator and tell them the "compromise" offered by the Secretary is merely the "worst of" S. 1145.  Passage would not represent compromise but rather capitulation, to those whose intention is to gut rather than bolster the U.S. patent system.  It is still time for us to remain vigilant.

Comments

[Waiting for 2009.....]

I'm always stunned by the fact that someone can be appointed to such a high level in government and not understand the basic fundamentals of their job. Does the Bush administration really want to mess up the US economy as much as it has messed up Iraq? Are they doing these things on purpose?

[Dr Bawa]

This is typical of the past few administrations. Look at the top 5 people running the PTO and you will quickly understandtand why our patent aystema dn the PTO are such a mess.

[JTS]

The worst aspect of the developing legislation is the attempt to give the PTO substantive rule-making authority. Considering the follies they've put us all through with mere "procedural" rule-making authority, imagine what they'd do with carte blanche.