Kelly Slone

by & filed under NVCA Blog, Patent Reform.

Now that the Republican Congress is moving forward quickly on patent litigation reform, policymakers must consider the impact of patent reform on the innovation economy. In January, NVCA, along with a broad coalition of universities, non-profit foundations, start-ups, small businesses, manufacturing, technology, and life sciences companies sent a letter to leadership of the House and Senate Judiciary Committees conveying the importance of taking a balanced approach that will stem abusive patent practices while protecting the rights of current patent holders. However, the re-introduction of House Judiciary Chairman Bob Goodlatte’s (R-VA), the Innovation Act, H.R. 9, revives the same concerns from last Congress’ debate, without taking into consideration recent developments that have significantly reduced patent litigation filings.

Over the course of 2014, developments in the federal courts, at the U.S. Patent and Trademark Office (USPTO) through the implementation of the 2011 America Invests Act, and the Federal Trade Commission (FTC) significantly reduced patent litigation filings. Together, changes made through all of these institutions have already had an impact on abusive litigation and promise to reduce them even further as the full effects of these developments register. Certain provisions in the Innovation Act are potentially dangerous overreactions to the problem of abusive litigation and would make patent enforcement so risky and expensive that it could dry up innovation in certain sectors.

Tomorrow Robert Taylor, founder and owner of RPT Legal Strategies PC, an intellectual property consulting firm in San Francisco and Silicon Valley, will testify on behalf of NVCA before the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property, and the Internet. Advocating on behalf of patent rules that curb abusive behavior without harming innovation, Robert’s testimony will make clear that Congress must consider the evolution in patent law ongoing in the federal courts, and federal agencies that have already shifted the landscape for patent litigation.

After a period of benign neglect, the Supreme Court has reengaged and has been tackling some of the most important issues facing the patent system.  The Supreme Court has already decided more patent cases since 2010 than in the entire 1980s and 1990s combined, indicating the Court recognizes the important role that patents play in our increasingly tech-based society and economy.  Other judicial developments, such as the application of heightened pleading standards to all patent cases, will also impact the patent system.  Taken together, they mark a major shift in patent jurisprudence that have made it easier to defeat the kinds of weak or vague patents often asserted in abusive litigation, and operate to reduce incentives to advance frivolous patent lawsuits.

Any congressional effort to address abusive patent litigation practices that has the effect of making patent enforcement more risky, difficult, and expensive, will have a dramatic impact on these small businesses and startups that must be considered. Universities, medical device manufacturers, technology companies, and businesses of all sizes, from startups to Fortune 500 companies, are critically dependent on patents to protect investments of time, money, and other resources from both competition and imitation here and abroad.  Especially for the thousands of venture-backed startup companies across a broad spectrum of industries, preservation of their ability to obtain and enforce patents is fundamental to survival.

It is critical for Congress to take a measured and targeted approach in determining what steps need to be taken to curb abusive patent enforcement and improve the patent system for the innovation ecosystem without undermining the legitimate assertion of the rights of patent owners. We believe consensus can be achieved on a range of issues, including enhancing transparency of patent ownership and enforcement; curtailing unfair or deceptive practices in the indiscriminate sending of patent licensing or settlement demand letters and proper funding of the Patent Office to improve the overall quality of all patents.

The right to protect one’s ideas is a bedrock principle of our country and a vital component of our economy.  We must balance our need to prevent abuse with our imperative to explore, develop, and commercialize the ideas of the future. While we must not tolerate or enable those who trivialize the courts by filing meritless claims to extort settlements, we should not put our economy and our dominance in global innovation at risk by weakening incentives for inventors to invent.