Patent Reform Act of 2006

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In April several large multi national corporations induced the simultaneous filing in the House and Senate of a so called “much needed” patent reform bill (H.R. 1908, S. 3818). Unfortunately this so called reform has the goal of reducing the strength of patents thereby making it easier for infringers to escape punishment. Many of the companies backing this bill have major patent portfolios, but fear universities, small companies and individuals that may develop competing technology. As you are well aware, one of the few remaining areas where the U.S. excels in the world economy is development of intellectual property that keeps the U.S. high tech industry afloat. Much of that IP is created by university researchers, small inventors who work in their garages, kitchens and spare bedrooms and small business founded by small inventors and their backers.

Many large corporations have been built by their ability to protect their IP don’t want to share IP protection provided by the U.S. Constitution with these small entities. Article I, Section 8, Clause 8 of the U.S. Constitution provides that:

Congress shall have the power... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. (Emphasis added)

Note that the Constitution provides these rights to Authors and Inventors, not just to big multi national corporations. The Constitution also provides that the Authors and Inventors shall have the exclusive right to their Writings and Discoveries. Nothing in the Constitution limits patent rights to only big corporations or only those that manufacture and nothing says the patent owner is required to grant compulsory licenses on terms dictated by the infringer.

The right to a patent and its protection is available to all, including researchers who don’t produce any product but profits by licensing, small inventors who wish to profit by licensing or selling their patents, small companies who want to keep and use their ideas to grow, and IP licensing companies who purchase patents and profit by licensing them to others.

Large corporations, having been caught stealing the patented inventions of others, often refer to those who engage in such non-manufacturing business activities as patent trolls and claim the patent system is broken. Nothing could be further from the truth. The creation and exploitation of IP by these various business methods is nothing more than smart business practice by investors who chose to wisely invest and profit. Many large corporations like IBM and Texas Instruments make hundreds of millions of dollars every year from such “patent troll” activities.

The basic problem the researcher, inventor or small business faces is that it is virtually impossible to raise the capital needed to bring an invention to market and effectively compete in a timely fashion unless that invention can be protected. Usually the only way the researcher or small inventor can be successful with his invention is to license it to an existing manufacturer or intellectual property promoter. Unfortunately without strong patent protection such licensing would be virtually impossible. What manufacturer would license a patent if their competition could simply copy their product, with no downside liability other than to have some court eventually order them to pay a royalty which they would have paid in the first place? It would be a winning situation for the thief and a losing situation for the patent owner.

Infringement is a serious problem for a patent owner. Infringement is nothing more than theft, and because this kind of theft is not a criminal matter, the only recourse to the patent owner is to bring a civil lawsuit to collect for damages which the theft has caused. As you are aware from some highly publicized cases, many large corporations have been found guilty of this theft and have had to compensate the patent owners for the damage caused by that theft. These same corporations are now engaged in a publicity campaign to convince the public and even elected officials like you that the patent system is broken.

In reality there is nothing broken, but to the contrary these willful infringers want to have Congress take the teeth out of patents so they can continue with their theft without having to pay the consequences. The so called patent reform bill contains several provisions which are very beneficial to large corporations and willful infringers and highly detrimental to individuals and small business. For example, changing from a first to invent to a first to file system greatly favors large corporations who have patent attorneys on staff and harms the individual of limited means who must often save and borrow to hire a patent attorney. Another example is limiting the damages for infringement to some portion of the price of the infringing product. American Justice demands that those who are wronged are properly compensated. This proposed change to the way damages are calculated is like saying that the penalty for stealing is limited to the money the thief gets when he fences the stolen property. The proposed limitations on willful infringement do nothing more than make it easier to steal patented inventions.

This so called patent reform is nothing more than a thinly disguised effort by those who want to steal with impunity to change the law to make their theft easier. I strongly urge you to oppose any so called “patent reform” which would in any way limit the rights of patent owners. Strong, definite and easily enforced IP protection laws are necessary for the U.S. economy. Any such “reform” which weakens IP protection would have serious consequences for universities, researchers, small inventors, the small businessman and the United States’ ability to compete in the world economy.

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