In a new publication – “Patent Reform & Industrial Structure” -- from the Progress & Freedom Foundation, James V. DeLong provides a must-read overview on the challenges facing patent reform today.
DeLong first sums up the major issues being kicked around, including the definition of “nonobviousness;” delays, funding, incentives and other problems facing the USPTO; involvement of outside parties in the patent process; enjoinment and damage assessments; venues for patent lawsuits; and jury trials. He then proceeds to place all of this within the context of today’s varied and dynamic market structure for invention, in particular struggles between invention shops and downstream firms, and between large corporations and the small inventor. DeLong ably raises the points made by each side.
He makes the case that reforms are needed, but that with each issue addressed there not only exist current problems, but potential risks with each reform proposal. Patent reform seems ideally designed for those economists apt to say “on the one hand … but on the other hand…”
The entire paper is worth reading , with three key points worth highlighting here:
• “… no distinction between the rights of integrated firms and those of invention shops is viable. In the context of injunctions, where the efforts to draw this distinction are rife, whether the patent holder is practicing the patent or licencing it should be irrelevant; in either case, it has the right to exclusivity. Other factors, such as whether the patentee lay in wait until a firm committed capital or the availability of information about the existing patent, are relevant to the equity of an injunction.”
• Regarding patent law and policy: “If standards are clear and incentives appropriate, then one procedure plus an appeal is enough. If they are not, additional procedures add expense and quirkiness to the system without improving quality.”
• “The key characteristic of any form of property that provides the foundation for a commercial system is that it be clearly defined. The history of tangible property, including tangible property that takes such intangible form as electronic blips in computerized systems of account, is characterized by increasing degrees of specificity. The primary problems with the patent system seems to be that it has not undergone a comparable reform, and thus we are having great difficulty in using it as the foundation of a disaggregated industrial system based on the market.”
Raymond J. Keating
Chief Economist
SBE Council
November 12, 2006
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