This morning I gave the keynote speech at the ICAP Ocean Tomo IP auction in San Francisco. My remarks explained the relationship between the long-term decline in America’s global competitiveness, the impact of the capital markets crisis on new investment in research and development, and specifically addressed Senate Bill 515, the pending U.S. legislation that will transform the U.S. patent system and broadly impact intellectual property rights in our country. Some excerpts follow, and you can download the entire speech and slides by clicking at the bottom of this post:
“The absence of cohesion in American public policy can be seen in many areas—with cybersecurity coming immediately to mind. Mike McConnell, former director of the National Security Agency, recently wrote an opinion piece in the Washington Post on why the U.S. is losing the cyber war, commenting that “The problem is not one of resources; even in our current fiscal straits, we can afford to upgrade our defenses. The problem is that we lack a cohesive strategy to meet this challenge. “
This lack of cohesiveness comes from short-term thinking that has become prevalent in many aspects of American society. The notion that “posterity doesn’t matter” has unfortunately taken root in our country, and this has led to fragmented approaches to public policy solutions across the board, corroded leadership among our elected representatives, and contributed to an entitlement culture and a lack of accountability that permeate much of American society.”
“The key obstacle to moving [patent] reform forward continues to be disagreement between several large high-tech companies, namely the group of Cisco, Microsoft, Hewlett Packard, and Intel, on the one hand, and life sciences organizations such as PhRma, BIO, MDMA, AdvaMed, Universities, several union groups, the NVCA, and others, on the other hand, over the idea of creating a new post-grant review procedure within the PTO and over the proposal on apportionment of damages in infringement cases.
As we consider the broad implications of this polarizing issue, we must first step back and remember that inventors and investors devote time, energy and risk capital to innovate new products and technologies. Since the drafting of our country’s Constitution and even well prior to the establishment of the United States, it was understood that the greater good was served with a patent system that encourages this type of risk taking by protecting inventions resulting from innovation. It is also understood, though in our country it appears to have been forgotten, that innovation, and job creation, come not just from large, well-funded enterprises, but in large part result from the efforts of small companies and individuals laboring to make a better mouse trap.
The core principles underlying the patent system have not changed. We need to encourage and reward those that take risk to innovate new products, services and technologies. Unfortunately, the patent system that served us so well for so long is under assault. The cost of filing patents has increased dramatically. The cost of enforcing patents has gone through the roof. Injunctions have been taken away except for cases of head-to-head competition in the patented item. Patents are now easier to invalidate after-the-fact. A patent holder can no longer offer his/her patents for license without putting himself/herself at risk of litigation that he/she may not be able to afford. Innovation involving patents has become a rich-man’s game, with an increasingly uncertain chance of return.
At a high level, we need to understand that anything that changes our patent system creates winners and losers. In general, changes that weaken the patent system hurt inventors and innovators, while benefiting large companies with established market positions (e.g., monopolists) and low cost producers (e.g., offshore companies with lower labor costs, fixed currencies and weaker environmental standards).
Some argue for changes in the patent system based on a claim that non-practicing entities, often pejoratively called trolls, have too much power. Some extraordinary examples, such as NTP seeking an injunction that would shut down Congress’ use of Blackberrys and some high dollar jury awards and settlements, have been cited by some as sufficient reason to argue for a radical restructuring of the way that patents are filed, challenged and enforced in court.
We need balance in this process, as changes may have the unintended affect of hurting those that we need now more than ever – inventors, entrepreneurs and investors that will innovate and create jobs here in the U.S.”
For a full transcript of the speech, including the slides, CLICK HERE.