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Analyzing Congress's Multiple Approaches To Patent Reform
ectoman writes "Patent reform is becoming an unavoidable issue — and the United States Congress is taking note. But the scope and scale of the problem have prompted multiple legislative solutions, and keeping track of them all can be rather difficult. Mark Bohannon, Vice President of Corporate Affairs and Global Public Policy at Red Hat, provides an overview of four important legislative actions currently under consideration, offering clear and concise analysis of their goals and provisions. He also assesses their potential impacts. 'Given the widening attacks by PAEs [Patent Assertion Entities],' Bohannon concludes, 'it is essential that Congress work to produce meaningful legislation on at least the issues identified above in order to begin to stem the tide.'"
I say the idea of granting monopolies over work which has already been performed is counter to the nature of the Universe, and that we have Zero evidence that Patents and Copyrights are actually beneficial for society. Laborers have unlimited monopolies over their works prior to the work being done, and can leverage this monopoly in the same way that home builders and car mechanics do: Payment Agreement Up Front. Copyright and Patent laws ignore the economic fact that ideas and procedures and information are in infinite supply in the Information Age. Economics 101 states that which is in infinite supply has zero price regardless of cost to create or demand. What's scarce is not the solutions and information; What's scarce is the ability to create new solutions and new works. Market the labor, not the infinitely reproducible output, otherwise you're trying to sell ice to Eskimos; You're letting mechanics charge you for each time you start the car.
Humans and all life are information duplication and refining machines. Laws against human nature should be abolished, especially if they have ZERO evidence to support the assumption that they're beneficial for society -- Especially when the fashion and automotive industries are successful and sell primarily on design, even though these markets are not allowed design patents or copyrights; This is evidence these archaic restrictive systems are unnecessary. No scientist would agree to run the world on unproven hypotheses. What if patents and copyright are harmful? We MUST test the hypothesis and abolish them.
The important thing to be careful about here is that the patent and copyright regimes do greatly benefit the large rich corporations the most. In fact they do give an advantage to the immortal corporations which can simply wait out a patent before using it, or leverage a copyright for three generations of humans. I hypothesize that in a climate where corporations rule via lobbyists that any change to the patent system that is not abolition will be in the best interest of corporations primarily, and secondarily will be detrimental to society as a whole if possible.
Here we have a situation where through a loophole a small entity can leverage patents against small business and big corporations alike without retaliation if they merely do nothing but hold one or more patents and sue over them. If my hypothesis is correct, the patent reform will not address the issue of anti-competitive practices against small companies with small patent portfolios who actually create things, but will merely remove the teeth of patents held by smaller companies in general.
Be Careful. The medicine they're developing is not a cure for the artificial scarcity insanity; It could be much worse than the disease.
Speaking as an inventor of more than 50 patents - the current system _is_ broken, but not in the way that these reforms are trying to fix. The real problem is that companies do not and will not negotiate with patent holders until they are taken to court. Before filing a lawsuit, companies won't take any discussion seriously. Licensee's don't negotiate outside of litigation because (1) the record of such negotiation might be used against them in litigation and (2) there is no penalty for refusing to negotiate. The "stick" of treble damages for wilful infringement is never awarded in court, and licensees know that.
The direct consequence of licensees refusal to negotiate outside of a lawsuit is that patent holders MUST file a lawsuit to have any hope of negotiating a license. Patent holders must pay enormous costs to lawyers and expert to file such a lawsuit, and these costs are never recovered in settlements - the pro forma settlement has each side paying their own costs. Potential licensees will pay millions in litigation costs before they are are wiling to negotiate a license - to them, anything that costs less than a license is just "good business" - even when any reasonable person could see that extending litigation would be fruitless. It is only when they've exhausted all the time leading up to trial that it becomes time for licensees to come to the table - since there is no penalty for delaying negotiations by extending litigation - in fact, since it delays payment, it can be seen as reducing expenses.
REAL reform would be to have a "safe harbor" where patent holders and patent infringers can realistically negotiate licenses. In order to do so, infringers have to provide truthful information about production volume and projected volume, and patent holders would have to provide truthful information about previous license arrangements. Upon entering a good-faith negotiation, both sides need to have the facts at hand to make a fair settlement. If one side or the other fails to negotiate in good faith, such a fact should be material to a resulting lawsuit. Having a penalty at trial for forcing the patent holder to file suit in order to negotiate a license instead of engaging in good-faith negotiations is the way to avoid lawsuits in the first place. Likewise, forcing patent holders to negotiate first instead of filing suit first also avoids expensive lawsuits.
If we are to value intellectual property fairly, reducing the "friction" in negotiating intellectual property licenses is key. At the moment, even for patents which have been examined by the patent office, "examined" by bringing those patents to court in prior cases, and re-examined by the patent office with senior patent examiners, and ruled on by patent appeal boards with several senior patent officials, the cost of litigation to negotiate a license can be tens of millions of dollars. What this means is that if you have a patent worth less than tens of millions of dollars, you can't get _anything_ of value for your patent. If your patent is more valuable than than, it's still a tremendous drag on patent value.
The current system is rewarding lawyers, not inventors, and the AIA and these further "reforms" are making the problem worse.