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Patent Reform? Or Will it be Patent Riot?

Garry Boyd
From an Intellectual Capital Perspective

Issue 65: October 2007
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In that most majestic of democracies, the good old USA, those that are employed by Uncle Sam to make decisions on not only how Americans do business and survive in the most commercially combative environment on the plant, but influence other nations by their behaviour, are close to inciting a commercial civil war.
The US patent office is facing off against the Pharmaceutical Companies in a battle where there may not be a winner, but plenty of long term angst, of which the residual could well be felt in this country.

Core to the issue is two bills before both the Senate and House that, if passed, will change the manner in which damages are calculated.
This will make the task of proving infringement harder, thus diminishing the opportunity to gleefully seek and accept eye-watering damages.

Even though the entire value of a patent may be argued by some as being subjective, the new measures will not allow for the entire value to be calculated when damages are being considered.

These changes may well suit the high tech developers, as many such innovations are dependent on a series of patents, any of which may cause litigation to commence, or at least be considered and threatened.

The drug companies are far less enthusiastic, as they live and breathe on profits from originator drugs, and these changes could well be encouragement for generic providers to convince themselves that there is no point in maintaining patience until a particular patent expires. Certainly this will require a financial war chest, but ultimately, it may be that the price of infringing is cheaper than waiting.

Clearly no good can come from this, as research and development policies will be adversely affected.
Perversely, these changes are designed to ease the burden of work in the patent office, which is seriously “cart before the horse” stuff.

This writer has previously spoken of the ever increasing workload in the patent office, and the changes to the “first to invent” policy.

To ease the burden of work confronted by the US patent office by pitting generic providers against pharmaceutical companies and the patent office itself does not make for particularly good business sense.
Sure, a few bureaucrats may  rub their hands in glee, but at potentially an extraordinarily high cost.

I note without humour that the collective nouns for bureaucrats and economists are respectively “a bloat” and “a clashing”.
Both appear to be stunningly appropriate in this context.
The US patent office employs some 5000 patent examiners to peruse 450,000 patent applications annually.
Instead of trying to push a couple of bills through that may ease this workload, maybe the “bloats” should be considering how to rid the patent office of frivolous applications.

During 2006, there was 100 cases that argued the first to file was not the inventor. The success rate of challengers was an unimpressive 1%, being one only! Or, maybe it was impressive, as 99 challenges failed.
I guess this demonstrates the point that it is a calculated risk to infringe. Unfortunately, the odds of infringers succeeding will improve if the bills under consideration are passed.

Patent Attorney’s have long possessed a license to print their own money, usually by virtue of longstanding associations with international entities.
As a casual observer of these matters I fear a decline in standards in the years to come as a consequence of “discounting” becoming de rigueur.
It will be a shame if these professionals sink to the depths of some in our own industry.

The same problems exist, high volume, competition, customer urgency and dependency on the bureaucratic process.

It’s all too familiar, isn’t it?

Garry Boyd.

October 2007.


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