Patent reform back on the docket — but should it be?

The fight for patent reform has returned like a hardy perennial. And just as the seasons tend to bear some resemblance from year to year, so does the fight over patents. For starters, consider one of the key bills, Republican Rep. Bob Goodlatte’s “Innovation Act,” which is a carbon copy of the same bill that failed to pass in the 2013 Congress. The fissures in Congress over the bill are virtually identical: it will likely pass the House and stall in the Senate, where certain Senate Democrats have taken objection with what they feel are too-aggressive provisions in the proposed legislation.

Rep. Bob Goodlatte, right, chairman of the House Judiciary Committee, and Rep. Trey Gowdy during a news conference on Capitol Hill. (Mark Wilson/Getty Images)
Rep. Bob Goodlatte, right, chairman of the House Judiciary Committee, and Rep. Trey Gowdy during a news conference on Capitol Hill. (Mark Wilson/Getty Images)

Here’s Goodlatte in a statement on the bill’s re-introduction: “In recent years, we have seen an exponential increase in the use of weak or poorly granted patents by patent trolls to file numerous patent infringement lawsuits against American businesses with the hope of securing a quick payday … With our current patent laws being abused in ways that are threatening the survival of American innovation, the Congress must act to curb abusive patent litigation.”

Must it act? A close look at the data suggests it may not need to. According to Lex Machina, a provider of data and analytics systems to companies and law firms, total patent case filingswent down 18 percent last year, from 6,083 new cases in 2013 to 5,010 cases in 2014. Though 5,000 cases is not insignificant, the fact that total cases decreased could be a critical argument against aggressive patent reform.

What might have caused the decline? For one thing, both the Supreme Court and the Federal Circuit Court provided clearer direction on patent law in 2014, including some cases that spoke directly to the issues Goodlatte’s bill seeks to address. In one key case, Alice Corp. v. CLS Bank International, the court held that applying abstract ideas to a computer was not enough to convert those ideas into a patentable invention. According to Stanford University Law Professor Mark Lemley, an advocate of reform, the Alice decision and other court actions may have obviated the need for much of what Congress was poised to do. Professor Lemley notes that “a lot of the business model that was driving the growth in litigation which involved suing everybody in the industry with this very broad, general patent is just less attractive than it used to be.”

His view may have some support among the innovators themselves. In a Silicon Valley Insiders poll conducted last year by the Atlantic, patent reform was cited as one of the “biggest barriers to innovation in the United States” — but only by 8 percent of the 50 panelists. Immigration policies and education were both well ahead, at 16 percent and 14 percent respectively. Of course, that hasn’t stopped the big tech firms, including Apple, Microsoft, Adobe and Oracle, among others, from advocating for the strongest possible protections for intellectual property. But that’s to be expected: even if cases are down and the law is moving in the right direction, 5,000 lawsuits per year still represent real costs to the largest firms, and their bottom line is still put at risk with every new attack from a patent troll.

But pay attention to another group of technologists, the Alliance of U.S. Startups and Inventors for Jobs (USIJ), whose members include medical start-ups, incubators, and some small tech firms. This past week, the USIJ came out strongly against Goodlatte’s bill, which they warned “would cause many venture capitalists to avoid investing in innovative startups that are increasingly dependent on their patent portfolios” because of provisions in the bill that would require companies tied to the losing side of a patent infringement suit to help defray legal costs. For them, according to a letter they delivered to Goodlatte and House leadership and which was obtained by Politico, the possibility of patent reform is a victory for “large, entrenched companies” at the expense of venture-backed start-ups.

For a legislator seeking to be on the right side of “innovation,” this presents a quandary: It’s rare that there’s daylight between a firm like Apple and a group of venture capitalists looking to fund the next Apple. But that itself may be an argument in favor of waiting on patent reform, at least until there is more data available to indicate whether or not judicial actions have had a meaningful impact on the system at large.

It’s an argument that the Silicon Valley types may have made — without fully knowing it. Consider again the Atlantic’s poll of Silicon Valley insiders. What did these titans of the new economy believe to be the number one barrier to innovation in the United States? Government regulation and bureaucracy.

Originally Posted at The Washington Examiner

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