By Donald Zuhn --
Last month, the Manufacturing Alliance on Patent Policy (MAPP) released a report that indicates that the apportionment of damages provisions found in prior Senate (S. 1145) and House (H.R. 1908) patent reform bills would have adverse effects on the U.S. economy. In particular, the report concludes that an apportionment system of damages would decrease the value of U.S. patents by $34.4 billion, decrease the value of U.S. public companies by $38.4 billion, decrease research and development spending in the U.S. by $33.9 billion per year, and place 51,000 to 298,000 U.S. manufacturing jobs at risk (see "Manufacturing Alliance on Patent Policy: Apportionment of Damages Provision Will Have Adverse Effects").
Earlier today, MAPP released a letter, signed by more than 130 non-pharma manufacturing companies, that the organization sent to President Obama. In the letter, MAPP argues that "[s]trong protection of patents and other forms of intellectual property are essential to American prosperity, particularly during the current economic crisis -- a time when we need to develop new and improved products to stimulate economic activity." MAPP also argues in its letter to the President that the patent reform bills introduced in the Senate and passed by the House contained "a number of provisions [that] would have weakened rather than strengthened patent protection," and ultimately "could have harmed the competitiveness, investment and employment of [the manufacturing] sector." With the 111th Congress poised to once again take up the patent reform debate, the letter reiterates MAPP's concerns regarding the issue and reaffirms the group's belief "that the prosperity of a few companies within two industries [i.e., information technology and financial services] should not come at the expense of a larger group of stakeholders."
MAPP begins its letter by exposing the flawed justifications of patent reform proponents. First, the group contends that there has been no explosion in patent litigation, since the percent of litigated patents has risen only 0.03% over the past fifteen years (increasing from 1.45% of issued patents in 1993 to 1.48% of issued patents in 2007). Second, the group contends that there has been no explosion in patent damage awards, since the median patent damages award, when adjusted for inflation, has actually dropped over the past thirteen years (decreasing from $3.9 million from 1995-2000 to $3.8 million from 2001-2007).
According to MAPP, the patent reform movement is led by a narrow slice of patent stakeholders having as its top goal the reduction of penalties for patent infringement through a change in the law of patent damages. This change would elevate apportionment of damages above all other factors presently employed in determining patent damages awards. MAPP argues that proponents of apportionment have "attempted to shift the blame in patent litigation from the infringer to the patent holder," with the former becoming "the victim of an infringed patent holder seeking too much in damages." Asserting that the current patent damages system accomplishes exactly what it is intended to accomplish, MAPP "encourage[s] policy makers to reject the call for drastic changes to the law of patent damages."
While MAPP concedes that there has been an explosion in the number of patent applications filed in recent years, the group sees this "as a good thing, representing increased innovation that is crucial for American prosperity." MAPP's letter argues that "[i]t would be a terrible mistake to allow the increase in patent applications to become an excuse to undermine patent protections." Instead of focusing on reform of U.S. patent law, MAPP therefore requests that President Obama focus on reforming operations at the USPTO.
Image of President Obama: Pete Souza, The Obama-Biden Transition Project, Wikipedia Commons, Creative Commons License
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