Patent Reform Has Problems, More Work to Do

By September 10, 2007Innovation

Catching up on Friday’s vote to approve H.R. 1898, the Patent Reform Act, by a vote of 220-175 (a bipartisan split). The Washington Post’s story on passage was pretty good; The Hill had a piece about organized labor getting involved, which struck some observers as odd; the unions held their fire on final passage on assurances that more work would be done on the Senate side.

The serious problem with the legislation is its provisions governing the determination of damages and the resulting awards. The Coalition for 21st Century Patent Reform elucidates in a news release:

The damages section in the House passed bill proposes a new, untested ‘prior art subtraction’ requirement that is fundamentally flawed and unworkable.

The damages methodology mandated by H.R. 1908 heavily favors infringers, as most inventions are not as valuable at the time they are first conceived as they are after the inventor invests time and money to develop, manufacture and market them. Moreover, it is widely accepted that the economic value of an invention at the time it is made is largely unrelated to its current commercial value. Many great technological advances are simply ahead of their time, and do not become commercially valuable, if ever, for years after their creation. This is why, under current law, reasonable royalty damages are determined by looking to the marketplace value of the use of the invention at the time infringement began. This is the only fair way to compensate an inventor for what has been taken from him by the infringer.

The Administration’s Statement of Principle, which raises several other objections, is available at the White House website here.

UPDATE (10:25 a.m.): From Forbes:

“We’d like to see more debate, more hearings, more negotiation,” says Marc-Anthony Signorino, director of technology policy for the National Association of Manufacturers, one of the country’s largest industry groups. “Even a brain surgeon needs to be trained for a while to understand how the brain works.”

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