Earlier in September Congress finally passed and the President signed the patent bill (America Invests Act). This of course does not mean that all the fights are over. Companies will continue to pursue IP legal actions as part of their strategies. And there are left over public policy issues. For example, the issue of patent fee diversion will continue to linger. In addition, people will continue to argue whether the bill is a good thing or a bad thing.
But as one commentator said, the bill closes out a policy agenda from 10 years ago. So now it is time to start thinking about the next set of issues. As was noted at our intangibles and economic growth conference (see earlier posting and Athena white paper New Building Blocks), the innovation ecosystem has moved to a collaboration model. It was also noted that the patent system, designed for the industrial era, is not necessarily up to the task of an open innovation/collaboration driven model.
A report from the Federal Trade Commission from March (The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition) takes direct aim at this shift to greater collaboration, in all its forms — open innovation, technology transfer and the issue of ex post patent transactions.
The report lays out a fundamental intersection between patent and competition:
Competition among patented technologies at every stage of the innovation process helps generate lower prices, more choices and higher quality products for consumers. Products compete to be purchased by consumers. Developed technologies compete in technology markets to be chosen for incorporation into products. Early-stage technologies compete for development funding. By aligning the patentee’s market reward with consumer preferences, competition in product and technology markets encourages investment in those inventions that are more likely to be valued by consumers. When patent law facilitates and does not distort this competition, it aligns with competition policy to the benefit of consumers.
The report focuses on two issues: notice (what I would call the transparency of the patent claims) and enforcement remedies. The report notes a number of problems with notice, including difficulty interpreting the boundaries of issued claims, dealing with claims that may issue from pending applications and difficulty of identifying and reviewing published patents.
As the report notes:
Trade-offs between notice and scope pose particularly thorny issues, and it is vital that they be approached with a full understanding of the notice implications. Divergence in the extent and nature of notice problems among industries also poses challenges. We look for ways to improve notice in problem areas without impairing the patent system elsewhere and without sacrificing the benefits of a unitary patent system, with doctrines applicable across technologies.
On enforcement remedies, the report states:
Effective patent remedies are critical to the patent system’s incentives to innovate. Patent infringement interferes with a patentee’s ability to realize its patent’s value in the marketplace. Remedies protect the ability of patentees to earn returns in the market by stopping and deterring infringement in the case of injunctions, and by making patentees whole through damage awards when infringement has occurred. As explained in Chapter 4 [of the report], to perform that role, patent remedies should seek to replicate the market reward that the patent holder would have earned absent infringement.
I won’t go into all the recommendations — it makes a lot of technical suggestions. Most of them are aimed at the PTO and the courts. But if you want to understand the next wave of patent reform (if there is one), this report provides a good guideline to the issues and possible solutions.