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Patent Reform: Would Reform Be a Step Backwards?
The last decade has seen a rise in what many feel is abuse of the patent system. Patents which are frivolous, patents on techniques that many feel are obvious or well-known concepts, and patent on business processes. While many people have strong feelings that the whole system badly needs reform, there is a great divide about how best to reform the system.
One piece of legislation for patent reform is now under consideration. And many large high-tech companies are backing the proposal. But on closer examination, smaller companies and entrepreneurs appear to be the losers with this legislation.
The proposed legislation is called the Patent Reform Act of 2009 (HR 1260 and S515). This bill would change the way that damages could be collected. In cases of patent infringement, the amount of damages would be reduced. The effect of reduced damages could only encourage companies to infringe on known patented intellectual property.
Today small companies are much likelier to litigate against infringements to their patents than large companies. Often because patents held by small companies are core to their business and provide clear differentiation from other companies, patents have a much greater importance to smaller companies. Without a large deterrent to patent infringement, large companies may feel that they have little to lose.
Patents have been useful for small technology companies in securing start-up financing. But without strong legislation backing their patents, investors may be less confident in backing new companies.
Patent reform should focus instead on reducing frivolous patents and improving the review process that determines whether patents get awarded.
