Why do bad things happen to good patents?

Never one to miss the chance to sample something unfamiliar to him, the IPKat has been sampling the website of the Innovation Alliance -- a US-based body whose tagline ("Improving Patent Quality * Improving Innovation") suggests that it is endowed with unimpeachable aims. The Alliance's principles tell us a good deal more:

"An Innovation Ecosystem Drives the American Economy [the IPKat doesn't want to be pedantic, but innovation is not the sole driver: and it can be an expensive and wasteful ecosystem in some sectors too ...]

Our nation’s economic strength is dependent upon a thriving community of research institutions, entrepreneurial companies of all sizes, and venture capital firms interacting together. To support this innovation ecosystem, we must maintain a patent system that protects both emerging companies, whose business models are patent dependent, and focus on developing inventions that enable new products and services but don’t engage in manufacturing, and larger organizations that seek relief from frivolous litigation.

Patent Reform Must be Targeted and Balanced for the Innovation Ecosystem to Thrive

Maintaining a strong patent system that supports innovative enterprises of all sizes and business models requires targeted, balanced reform as opposed to the massive restructuring of a functioning system that has served us well for decades [good point: but the bits that work the best are the bits that are the least newsworthy]. Changes to our patent laws should be narrowly focused on
* Improving patent quality [agreed -- though this term sadly has no single generally accepted definition];
* Enhancing certainty [this can't be sufficiently emphasised -- and even a well-known and generally accepted concept such as the need for non-obviousness can have a hugely destabilising impact on the level of certainty that investers expect] and
* Preserving market-based valuations of patents.
Patent reform measures should not disadvantage emerging, pro-innovation, patent-dependent businesses and their surrounding ecosystem.

Patent Reform Should Focus on Improved Patent Quality

The patent system is not fundamentally broken or in need of sweeping reform but can and should be improved through a legislative focus on improving patent quality. Frivolous litigation can be reduced through improving patent quality by
* Fully funding the U.S. Patent and Trademark Office (USPTO) [if only ... (sigh!)];
* Allowing the USPTO to retain all of its user fees;
* Encouraging the USPTO to invest in additional human and other resources [Kats, perhaps?]; and
* Revising metrics for USPTO examiners’ compensation to encourage and reward quality of examination, not quantity of applications reviewed [is it clear whether the one need exclude the other?].

The Current Law Regarding the Determination of a Patent’s Value is Appropriate

Existing law concerning the determination of a patent’s value and calculation of damages when a patent has been infringed provides courts appropriate flexibility to reach a fair conclusion on damages assessment [the Kats wonder how many European or Asian readers would agree with this assertion, at least so far as it refers to damages]. Maintaining that flexibility is critical for small companies and licensors to be able to protect their patents against larger, well-financed competitors.

Creating an Administrative Post-Grant Opposition Procedure Would Add Uncertainty and Bureaucracy

The creation of a broad post-grant opposition procedure would lead to greater bureaucracy, less certainty, further delay in securing a valid patent, and expose emerging companies to unmeritorious or commercially motivated challenges by deep-pocketed rivals [isn't the uncertainty there anyway, if the validity of a patent that can't be opposed post-grant can still be challenged in court? And if the USPTO is fully-funded and allowed to keep all its fees, perhaps dealing with post-grant oppositions would be a fun job for successful and experienced examiners before they hang up their nit-picking devices for good ...].

Inventors Must Continue to Have the Ability to Amend Pending Patent Applications

Proposals to limit the ability of applicants to amend pending patent applications (continuation applications) are overly restrictive, disadvantage smaller innovators, and may result in increased litigation [don't those restrictive proposals also promote greater certainty and reduce the risk of greater bureaucracy ...?].

The Key is Vigorous Pre-Grant Review, Not Sweeping Litigation Alteration

Fundamental alteration of litigation practice can have have a tremendous impact on thinly capitalized, emerging companies that have fueled the nation’s economic growth and which – across industries – rely heavily on intellectual property rights to attract venture capital, grow businesses and enter markets dominated by large players. A patent process that focuses on rigorous review prior to the granting of an application will better limit patent abuse than extensive litigation reform that could inadvertently disadvantage new market entrants and innovators" [But there, again, ...].

Despite his anxiety and/or cynicism regarding various issues listed above, the IPKat agrees that the existing system deserves more respect than the root-and-branch radical restructurers advocate, and that there's a lot to be said for better quality patents. Merpel is not however convinced that better patents will cause less uncertainty and litigation than bad ones. In her opinion, the factor that triggers attacks on validity is not the quality of the patent but the view of the business challenging it as to what might happen to that business, in commercial terms, if the patent was allowed to stand. This is why plenty of good patents get challenged too.

Pre-grant review here
Post-grant review here
Hugh Grant review here
Hugh Grant and cats here