BSA TechPost

A fair, balanced and effective patent system is indispensible in promoting investment in research and development, job creation, global competitiveness and economic growth — goals that lawmakers from across the ideological spectrum can support. Yet US patent law has not been comprehensively modernized in more than 50 years.

Led by Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Ranking Member Chuck Grassley (R-Iowa), the full Senate is now slated to consider the Patent Reform Act of 2011 (S.23). This debate presents an opportunity to forge a new consensus on a reform bill that addresses the most pressing problems with the US patent system as it stands today.

The legal landscape has changed since the Senate took up the patent debate six years ago. Since then, the Supreme Court and Court of Appeals for the Federal Circuit have, through a series of important decisions, provided greater clarity in the law. This has helped curb abuses, rendering some provisions of the current bill unnecessary at this time.

After significant debate among a broad range of stakeholders, BSA believes consensus — and true benefits for inventors of all sizes, across all sectors of the economy — can be now secured by carefully crafting a bill to tackle six key issues:

1.) Funding the US Patent and Trademark Office (USPTO)
The USPTO needs the freedom to set its own fees in order to reduce the time in which patent applications remain pending, enhance patent quality and improve the overall efficiency of the Office’s operations. These user fees, paid by innovators to fund the essential services the USPTO provides, should not be diverted for other government purposes.

2.) “Weeding out” bad patents
A post-grant review system for patents should be established to provide an early opportunity to challenge newly issued patents and thereby improve overall patent quality. Also, the inter partes reexamination process should be made more effective by removing existing disincentives and avoiding new barriers to instituting a reexamination.

3.) Allowing third parties to submit prior art
Third parties should be allowed to submit prior art for the Patent Office to consider in connection with published patent applications that are pending. This opportunity would enlist the public as a partner with the USPTO in promoting patent quality.

4.) Putting an end to the cottage industry of “false-marking” litigation
There has been a rise in aggressive litigation alleging “false marking” of products containing patented inventions. The damages regime for these false-marking cases should be changed to prevent outsized awards where no one has suffered any actual harm. 

5.) Adopting a “first-inventor-to-file” system
The US should join the rest of the world and adopt a “first-inventor-to-file” system.

6.) Non-discrimination between types of inventions
Innovators in the United States increasingly face attempts by foreign governments to restrict the availability of patents in key areas of technology. For many years, US officials have fought against such initiatives, recognizing their impact on US competitiveness. Accordingly, the Senate should reject provisions written so broadly as to ban patenting of any product that contains, for example, a tax-planning feature. Such an exclusion from patentability would invite ill-advised carve-outs from patent protection that would ultimately harm US innovation and competitiveness in the global marketplace.

Much has changed in the last 50 years. It’s time for US patent law to catch up. These six elements can form the basis for much-needed reform.

Want to bring down the US trade deficit? One easy way is to reduce software piracy.

At last count, the packaged-software industry was contributing a surplus of nearly $37 billion to the US balance of trade — and that was with one hand tied behind its back, because another $30 billion worth of sales are lost annually to software piracy.

If we bring software piracy rates down, all the job-creating, economy-growing benefits of open markets and free trade will follow. That is why it is so important for new trade agreements to include robust intellectual property protections.

Last fall, 37 countries, together accounting for more than half of world trade, worked out the Anti-Counterfeiting Trade Agreement (known as ACTA), which commits its signatories to criminalize end-user software piracy. It is just one recent example of how trade policy can help advance broad agreement on issues like IP protection. This year brings another such opportunity in the Trans-Pacific Partnership (TPP), a prospective multilateral pact between the United States, Chile, Peru, New Zealand, Australia, Malaysia, Brunei, Vietnam and Singapore. The Obama administration has rightly made it a priority for 2011.

Excluding the US, the other eight parties to the TPP represented a combined packaged-software market of $8.4 billion last year — a figure that could have been nearly $2 billion higher if not for the effect of software piracy. The direct impact of that piracy on US software sales and exports came to more than $1.1 billion. Unfortunately, two of our TPP negotiating partners, New Zealand and Chile, appear to have embarked on a misguided effort to use the TPP as an occasion to roll back or dilute IP protections.

New Zealand’s actions are especially upsetting because it is also working on a domestic patent law that would deny protection for software-related inventions — in direct violation of commitments it made to the World Trade Organization under the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In a similar fashion, Chile has failed to implement numerous IPR obligations in its FTA with the United States.

As I wrote recently in a letter to US Trade Representative Ron Kirk, if these trading partners are unable or unwilling to live up to their existing obligations, then they should have no place at the table in crafting new obligations in the TPP. There is too much at stake.

What a difference a year makes.

In case you missed it, US Intellectual Property Enforcement Coordinator Victoria Espinel has released the first annual report outlining the Obama administration’s progress in implementing its strategy on intellectual property. It is just one report, but it speaks volumes.
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