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MYTH: Patent reform will weaken America’s global economic standing

FACT: The opposite is true: patent reform will strengthen America’s global competitiveness; doing nothing will weaken it. As the Council on Foreign Relations reported in 2006, “Failure to rein in the patent regime could have global repercussions. To hinder innovation is to hinder the dynamic competitiveness of U.S. companies. … [S]ignificant problems with patents put the U.S. system at a disadvantage vis-à-vis more balanced and less costly foreign [patent systems].”

The U.S. patent system has not been significantly updated since 1952. Most of the technology and products we use today are more complex than they were fifty years ago and contain hundreds, if not thousands of different patents to make up a singular device. While the current law works well for long established technologies, both the National Academy of Sciences and the Federal Trade Commission have concluded that the law needs to be changed to keep pace with modern times. Patent reform will update the laws to ensure quality is maintained in the granting of patents and the rights are fairly enforceable.

To ensure American companies continue to grow and innovate new products, Congress needs to enact reforms to the current U.S. patent system to curb abuse and allow quality patents to be granted. Only Congress has the authority and the responsibility to ensure that the U.S. patent system is meeting the needs of the 21st century economy in order to compete in the global marketplace and also ensure that it is meeting our country’s current need for economic growth and job creation.

Clarifying the Reasonable Royalty Standard Will Increase Innovation

At last week’s White House “jobs summit,” the Administration made it clear that job creation is a top priority. Finding ways to promote innovation and encourage bringing new products to market will allow companies to create jobs and build up our economy.

To ensure that the technology sector continues to grow and invent new products, Congress and the Administration need to reform the current U.S. patent system. One essential change needed to the current patent system is to create clear and practical rules that eliminate existing incentives for speculative lawsuits.

This is the only way to uphold the President’s pledge to reduce “uncertainty and wasteful [patent] litigation that is currently a significant drag on innovation” and to unleash innovation that will spur economic growth is for the Administration to express its strong support for clarification of the standard governing calculation of reasonable royalty damages as an essential element of patent reform legislation.

Technology companies are a particular focus of these litigation syndicates, also known as non-practicing entities (NPEs), activity. A survey of leading technology firms revealed that NPEs were the source of 88% of the patent claims asserted against those companies. The number of claims has skyrocketed in the last four years, with royalty requests up 650% and lawsuits nearly doubling. Their abusive claims target the complexity of technology products; and the prevalence of voluntary standards to allow technology products to interact allows the syndicates to join dozens of companies as defendants in the same lawsuit.

NPEs exploit the vague standard for reasonable royalty damages. The rules governing today’s lawsuits were adopted fifty years ago when claims virtually always were asserted by one product manufacturer against the manufacturer of a competing product. The principal measure of damages sought was lost profits. The legal standard governing the calculation of reasonable royalty damages consists of a vague, fifteen-factor test. Numerous neutral academics have recognized that this standard provides no real guidance to a jury.

Dr. Everett Ehrlich, former official in the Clinton Administration, has estimated that the total cost of patent litigation for technology companies is $4.6 billion per year, an amount that has doubled over the past four years. Even if only half of these costs are unjustified, that is $2.3 billion dollars that is being diverted away from research and development, innovation of new products and most importantly the creations of jobs.

CPF on Job Creation

This week, President Obama is focusing on the need for job creation in the U.S. by hosting a “jobs summit.” It is important that the Administration continue to find ways to promote job growth and encourage innovation in all industries.

The technology industry has been able to thrive during these difficult economic times but in order to continue to grow, innovate and compete in a global marketplace the patent system needs to be modernized to reflect a 21st century economy. The current patent litigation system has had an adverse effect on innovation within the technology and other communities. By curbing abuses in our patent system, American companies could invest more in innovation, develop new products and create new jobs.

As economic indicators begin to improve, we need to focus on creating jobs and stimulating the U.S. economy to ensure that we stay on the road to recovery. Noted economist Dr. Everett Ehrlich recently released a report that projected 100,000 new high tech sector jobs could be created if Congress passes the Patent Reform Act (H.R.1260) as introduced. Dr. Ehrlich’s report also warned that if Congress failed to enact meaningful reforms to the patent system, the economy could lose another 150,000 high tech jobs.

We are in the midst of a period of record setting job losses. The Patent Reform Act of 2009 (H.R. 1260) will spur job creation, foster innovation and bring new products to market in important American economic sectors like High Tech. The White House “jobs summit” illustrates the need to enact job creating public policy like H.R. 1260. In this economic environment, public policy that results in job creation is imperative and welcomed by American companies trying to compete in a global marketplace. Reform is essential to maximize job growth, spur innovation, promote competition, improve consumer satisfaction and increase U.S. global competitiveness.

MYTH: Reform Will Make Inventors More Vulnerable to Infringers and Weaken the Enforceability of Validly Issued Patents

FACT: The nature of the patent system has fundamentally changed since Congress last made significant updates to the system, more than 50 years ago. As Supreme Court Justice Anthony Kennedy explained in a concurring May 2006 eBay decision, "In cases now arising...the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees." The current abuses of the system require reform to protect inventors and innovators against unjustified patent infringement lawsuits.

Patent reform will benefit small, medium and large businesses as well as individual inventors by strengthening the patent system to protect innovators from companies that seek to exploit imbalances in the patent system. Reform of both the willfulness standard and the procedure for litigating willfulness claims is essential to restoring balance in the litigation process, especially for inventors and small companies. Under current law, it is easy for plaintiffs to allege that defendants “knowingly” infringed on a patent. Conversely, it is difficult, time-consuming and exceptionally expensive to prove that willful infringement did not occur.

Modernization of the patent system that clarifies the law on willful infringement, sets up a process to challenge patents before expensive court battles and stops abuse from unjustified patent claims, will allow U.S. companies and innovators to create new products that will in turn stimulate the economy. H.R. 1260, the Patent Reform Act of 2009, will make the patent system more efficient and more effectively promote innovation and job creation in the high tech and other economic sectors.

MYTH: Patent Reform Needs No Congressional Action

FACT: The Court’s ability to effect needed changes is limited because it is restricted by the language Congress enacted more than 50 years ago. Only Congress has the authority and the responsibility to ensure that our patent system is meeting the needs of the 21st century economy and the current need for economic growth and job creation.

Since our economy and new job creation depend on innovation, a broad and growing group of institutions and experts on innovation and competitiveness, including the Center for American Progress, the National Academy of Sciences, the Federal Trade Commission, the Council on Foreign Relations and legal scholars from the nation's top universities, are calling for reform to our patent system to spur innovation and economic growth. The editorial boards of the nation's most prominent publications, including the New York Times, Wall Street Journal and the Los Angeles Times, have called for congressional action to modernize our patent system that hasn’t seen significant reform in over 50 years. A half a dozen Supreme Court cases, each of which has been decided in ways that cure imbalances in the patent law, have signaled the need for reforming our patent system.

Passing the Patent Reform Act of 2009 (H.R. 1260) is critical to creating new jobs and maximizing innovation throughout the United States. We can no longer afford the status quo. Opponents of patent reform prefer the status quo that favors litigation over change that favors innovation. Modernizing our patent system will create jobs, stimulate innovation and improve our global competitiveness to ensure that our countries innovators stay on top.

CPF Calls for the Modernization of the Patent Litigation System

Patents were established to encourage innovation, stimulate the economy and create jobs. Today’s inventors and innovators are hampered by a litigation based cottage industry that has delayed new products, and has turned scientists at America’s leading innovative companies into full-time court witnesses.

In January, Dan McCurdy of Science Progress released the report Patent Trolls Erode the Foundation of the U.S. Patent System. McCurdy talks about the effect of Non-Practicing Entities (NPEs), companies that do not make products but buy patents solely to litigate damages and settlements based on overly-broad patents, on the patent system. “By far, the most significant and destabilizing change in the patent environment since 2003 has been the dramatic increase in the growth, financing, and patent acquisitions of so called non-practicing entities, or ‘patent trolls.’”

When new trends begin that hurt the well being of American businesses, it affects our nation’s economy, job growth and innovation. NPEs have changed the original intention of patents, to allow innovation, now is the time to correct the damage they have done before it is too late. NPEs thrive on the uncertainty in the way damages are calculated, which creates risk and unpredictability about what courts and juries will award as compensation.

Reforming the patent litigation system, by providing a modern standard for calculating damages should be developed based on the fair share of the patent’s contribution to the value of a product and not on the value of a whole product made up of numerous other components. In a recent article by Rob Preston of Information Week, he affirms this point by stating, “not every tech patent is for trivial work and not every suit is frivolous, but reasonable guidelines must prevail on what can be patented and how much patent holders can collect in damages.”

America’s leading innovators spend hundreds of millions of dollars fighting unjustified infringement claims based on broadly worded patents, diverting those resources from innovation, product development and job creation. The Coalition for Patent Fairness (CPF) supports clarification of the reasonable royalty standard for calculating damages based on the fair share of the patent’s contribution to the value of a product. Approving the Patent Reform Act of 2009 (HR 1260) would provide those needed reforms and encourage innovation and job creation over litigation.

CPF Supports Comprehensive and Balanced Patent Reform

The Coalition for Patent Fairness (CPF) is a broad range of companies and trade associations that have come together to reform the current patent system. CPF believes that strengthening the patent system is essential for the creation of new American jobs and the restoration of our competitiveness in the global marketplace. In order to address deficiencies in our patent law, comprehensive balanced bipartisan patent reform legislation is urgently needed to modernize and to strengthen the U.S. patent system – a system that is overburdened; too often fails to maintain high patent quality and hinders the speedy and fair resolution of disputes. Patent reform and modernization is essential to maximize job growth, spur innovation, promote competition, improve consumer satisfaction and increase U.S. global competitiveness.

Comprehensive and balanced patent reform should

ASSESSING WILLFUL INFRINGEMENT: The standards for assessing "willful infringement," which can trigger a tripling of ordinary damages, should be reformed. Willful infringement damages should only be awarded in situations of truly egregious conduct.

FAIR DAMAGES CALCULATION: A modern standard for calculating damages should be developed based on the fair share of the patent’s contribution to the value of a product and not on the value of a whole product made up of numerous other components.

POST GRANT REVIEW: The system should promote quality patents by providing a meaningful second chance for PTO’s experts to review potentially problematic patents in a timely manner and should promote better information sharing with examiners in order to improve the process and to increase innovation.

RESTRICT FORUM SHOPPING: Cases should be brought in courts with some reasonable connection to the case without “forum shopping” for the court with the highest success rate for plaintiffs.

CPF Supports Deterring Forum Shopping

Current law (28 U.S.C. § 1400) provides that a case may be filed in any district in which the defendant has committed an act of infringement; companies whose products are distributed nationwide therefore may be sued in any judicial district in the country. As a result, entities bringing litigation against American companies "shop" around to find jurisdictions that are favorable to plaintiffs and file in those jurisdictions.

Allowing venue shopping preserves a loophole for plaintiffs to choose courts that are most likely to issue injunctions and to deliver disproportionate damages. CPF believes that lawsuits should be resolved in a jurisdiction that has a connection to the underlying claim.

Forum shopping is the norm in patent litigation today. Non-Practicing Entities (NPEs) raise large funds to purchase patents, without any plan to turn them into marketable products and services. NPEs use their funds to support litigation that seeks large damage awards or settlement fees. Current law allows the system to be abused by providing NPEs the ability to file suit in favorable jurisdictions with no connection to the underlying claim. This is a competitive advantage in the courtroom for the plaintiffs. In one jurisdiction, the Eastern District of Texas, NPEs were plaintiffs in 94% of cases involving NPEs – that’s 332 cases out of a total of 352 cases.

The patent litigation system has had an adverse effect on innovation and job creation. When a plaintiff files a lawsuit in a court with a history of favorable results, combined with the vague standard for calculating reasonable royalty damages, the threat of huge award verdicts increases greatly, forcing companies large and small to choose between risking huge awards or settling the cases and agreeing to unjustified licensing agreements. The scenario encourages abuse in the form of more litigation. As a result, scientists and innovators are diverted from creating and developing new products and to spend time in court proceedings to defend their patents.

The Coalition for Patent Fairness (CPF) supports patent reform that provides clarity and fairness on the issue of venue shopping. The Patent Reform Act of 2009, H.R. 1260, addresses this problem by limiting plaintiffs’ choice of forum to jurisdictions with a relationship to the underlying controversy: the federal judicial district where the defendant has its principal place of business, is incorporated or has a regular and established physical facility that the defendant controls and that constitutes a substantial portion of the operations of the defendant. Educational institutions (and their patent-holding affiliates) as well as individual inventors may bring claims in the jurisdiction in which they reside. Importantly, the bill includes a provision barring a party from “manufactur[ing] venue by assignment, incorporation or otherwise to invoke the venue of a specific district court.” These provisions will eliminate forum shopping and restore fairness to our judicial system.

Patent Reform is Urgently Needed to Spur Innovation

In order to address deficiencies in our patent law, comprehensive and balanced patent reform legislation is urgently needed to modernize and to strengthen the U.S. patent system.

The patent system is overburdened and too often fails to maintain high patent quality and hinders the speedy and fair resolution of disputes. Opportunistic lawsuits take investment away from job creation and innovation. Small, medium and large U.S. companies are forced to dedicate valuable time and resources to respond to questionable patent infringement lawsuits, time and resources spent away from job creation and innovation. Such litigation creates additional risks to innovators: it slows down innovation and drives up costs for consumers.

The current U.S. patent system has allowed innovation to become secondary. Since the patent system has not been significantly reformed in over 55 years, there are not enough resources to be able to maintain high quality patents for such advanced products. Engineers are spending more time testifying in courtrooms than focusing on good science, new products and imaginative solutions in labs.

Last month, President Obama spoke about the need for innovation and sustainable growth at Hudson Valley Community College. Obama discussed the need “to foster markets that value and promote risk-takers and idea-makers who've always been the center of our success,” including reforming and strengthening our intellectual property system.

Innovation is key to strengthening our economy. CPF members are 21st century companies forced to comply with a 19th century system that stifles innovation and job creation for the modern economy. Patent reform and modernization is necessary to promote competition, improve consumer satisfaction and increase U.S. global competitiveness. A modern and efficient patent system is imperative to continued innovation and job creation in the high tech and other economic sectors.

Assessing Willful Infringement

CPF supports the willfulness infringement provisions included in both H.R. 1260, the House Judiciary Committee’s Patent Reform Act of 2009 and the Senate Judiciary Committee’s approved version of the bill S.515. We oppose any efforts to weaken these provisions in negotiations between Senate leaders and the Administration.

The current law allows the courts to impose punitive increased damages (up to three times actual damages) in cases involving willful infringement. However, the standard on which they may be awarded under current law is far less than what is required for punitive damages in other areas of law.

There is little case law available that clarifies the definitions of willfulness. Due to the lack of specificity, willfulness claims can be used to coerce settlement due to the uncertain nature of the law and juries can be persuaded to find willfulness in factual circumstances in which it is not justified. Willful infringement damages should only be awarded in situations of truly egregious conduct. Under current law, it is easy for plaintiffs to allege that defendants “knowingly” infringed on a patent. Conversely, it is difficult, time-consuming and exceptionally expensive to prove that willful infringement did not occur.

The uncertainty about willfulness has also led to the undermining of one of the fundamental points of the patent system: disclosing the invention to the public. To avoid “knowledge” and charges of willfulness, too many companies now instruct their employees to avoid reading patents. This, too, can lead to reduced patent quality.

CPF supports H.R. 1260 as introduced because they would make clear that multiple damages should be imposed only when there is evidence of reprehensible conduct, such as copying the patent or violating a prior court order. Reform of both the willfulness standard and the procedure for litigating willfulness claims is essential to restoring balance in the litigation process.

Members of Senate High-Tech Task Force Ask Senate Judiciary Leadership Not to Weaken the Patent Reform Act of 2009

WASHINGTON, DC – September 30, 2009: Today, five members of the Senate Republican High-Tech Task Force sent a letter to Senate Judiciary Chairman Patrick Leahy and Ranking Member Jeff Sessions asking them to oppose efforts to weaken the Patent Reform Act of 2009.

“It has been suggested in some circles that the tech industry is open to modifications of the key provisions of the Senate Bill, S.515. In fact, the members of the Coalition for Patent Fairness (CPF) are concerned about efforts to weaken the Senate Judiciary approved bill and oppose such efforts. CPF members expressed appreciation for the principled stand in favor of a strong bill reflected in the High-Tech Task Force letter,” the Coalition for Patent Fairness said.

CPF believes in a strong and fair patent system that fosters innovation and job creation that will improve the quality of patents and ensure that small, medium and large companies have the ability to protect their intellectual property and create new products. A recent study by noted economist and former U.S. Department of Commerce official Dr. Everett Ehrlich determined that the damages reform provisions in the original Senate bill would create 100,000 new high tech jobs and that doing nothing would result in the loss of 150,000 current high technology sector jobs. Legislative reform is critical to enable the patent system to promote, rather than inhibit innovation and economic recovery.

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

Contact: David DiMartino dd@bluelinesc.com
For more information, visit http://www.patentfairness.org.

High Tech Supports Post Grant Review

The objective of post grant review for patents is to ensure quality. Quality is achieved through a vigorous examination of the merits of a patent application. In cases where over-broad patents are issued, quality can be achieved by challenging the validity of a patent in the courts and through less expensive and more efficient administrative procedures at the Patent and Trademark Office. The Coalition for Patent Fairness (CPF) believes that the post grant review provisions of the Patent Reform Act of 2009, H.R. 1260 will improve the quality of patents and ensure that small, medium and large companies have the ability to protect their intellectual property and products.

CPF, a broad range of small, medium, and large high tech companies and trade associations, believe that post-grant review as written in H.R. 1260, will improve the existing process for challenging questionable patents, will lead to better patent quality and will benefit everyone: patent holders, patent users and consumers. Allowing third parties to institute a reexamination of patents early in the process will clarify the breadth and applicability of the patents, thereby leading to fewer later challenges. Any patent reform proposals considered by Congress or entertained by the White House should establish a new administrative procedure for review of patent decisions so that wrongfully issued patents can be effectively reviewed and redressed within the PTO, rather than in the courts through costly and lengthy litigation battles.

In order to address deficiencies in our patent law, comprehensive and balanced patent reform legislation is urgently needed to modernize and to strengthen the U.S. patent system. The current system too often fails to maintain high patent quality and hinders the speedy and fair resolution of disputes. Patent reform and modernization is essential to maximize job growth, spur innovation, promote competition, improve consumer satisfaction and increase U.S. global competitiveness.

Obama Sees Innovation as Way to Stimulate US Economy

Monday, President Obama renewed his commitment to supporting innovation as a key job creator and element of economic recovery.

During a speech at an upstate New York Community College, the President underscored his position on protecting intellectual property rights as a means for economic growth. The president also assured the audience that his Administration is committed to making sure that the United States Patent and Trademark Office has the resources, authority, and flexibility to administer the patent system effectively and to issue high-quality patents on innovative intellectual property, while rejecting claims that do not merit patent protection.

“We applaud President Obama for his remarks today on how innovation will spur job creation and will play a part in the Administration’s overall economic policy,” the Coalition for Patent Fairness said. “Ensuring the quality of patents will strengthen the system, discourage abuses in litigation and enable American companies to dedicate more resources to innovation and the creation of new jobs, which will in turn stimulate the economy.”

A recent independent study by economist Dr. Everett Ehrlich projected the potential economic impact of H.R. 1260, the Patent Reform Act of 2009. Dr. Ehrlich found that as written, including the reforms for instituting fairness in the damages process by establishing guidelines that allow inventors to recoup the true value of their invention in legitimate infringement cases, the Patent Reform Act would create 100,000 new high-tech sector jobs over the next five years. Dr. Ehrlich also warned in the report that if Congress failed to do anything and maintained the status quo, 150,000 more jobs could be lost over the same timeframe.

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

Myth vs. Fact: Who Benefits From Patent Reform?

MYTH: Patent reform will only help big technology companies.

FACT: Patents affect every industry and companies of every size. The Coalition for Patent Fairness is a broad range of small, medium, and large companies and trade associations have come together to reform the current patent system to support innovation and job creation. The major tenets of patent law have always applied the same standards to all types of inventions whether the discovery covers beds, shoes, airplanes, biotechnology, software or flatware. With patent reform, that will continue.

The Patent Reform Act of 2009 (H.R. 1260) preserves the two century old tradition of the patent law. It contains no special rules that apply to some inventions and not to others. H.R. 1260 would update the law to ensure quality is maintained in the granting of patents and that rights are fairly enforced. These changes are sensible and balanced. They follow the trend established by half a dozen Supreme Court cases, each of which has been decided in ways that cure imbalances in the law. H.R. 1260 is the proper expression of Congress’s role as the entity charged with ensuring our laws are modern and up to date.

Opponents of patent reform repeatedly have tried to paint reform’s proponents – especially the Coalition for Patent Fairness – as companies seeking to weaken protections against infringement because they themselves do not create new inventions. In fact, CPF members are among our country’s top innovators.

That fact is confirmed by the Intellectual Property Owners Association’s just-released list of top US recipients of US patents: five CPF members (Microsoft, Intel, Hewlett-Packard Co., Micron Technology, and Cisco) are among the top 25 patent recipients and twelve of the fourteen core CPF members are in the top 300.

CPF companies see the patent system from the perspective of leading inventors as well as from the perspective of companies commercializing useful products and services and bringing them to market. CPF companies, along with all companies that invent products, rely on a strong, balanced patent system. The patent law has not been substantially revised since 1952, before the invention of the microprocessor, cell phones, transistor radios, biotechnologies and personal computers. The time to make our patent system modern, help inventors continue to create new products and build up our economy is now.

H.R. 1260 Will Create Jobs and Stimulate the Economy

As economic indicators begin to improve, we need to focus on creating jobs and stimulating the U.S. economy to ensure that we stay on the road to recovery.  Noted economist Dr. Everett Ehrlich recently released a report that projected 100,000 new high tech sector jobs could be created if Congress passes the Patent Reform Act (H.R.1260) as introduced. Dr. Ehrlich’s report also warned that if Congress failed to enact meaningful reforms to the patent system, the economy could lose another 150,000 high tech jobs.

By curbing abuses in our patent system, American companies could invest more in innovation, develop new products and create new jobs. The Patent Reform Act of 2009 (H.R. 1260) will spur job creation, foster innovation and bring new products to market in an important American economic sector: High Tech.

Federal statistics indicate that more than 2 million jobs have been lost in the first 7 months of this year. Our country and economy cannot afford to lose any more jobs.  The chart below is based on the unemployment numbers from the Bureau of Labor Statistics (BLS) and illustrates the need to enact job creating public policy like the Patent Reform Act of 2009 (H.R. 1260).

NPEs: Abusing the Patent Litigation Process

With little fanfare or notice from court overseers, a new, burgeoning litigation based cottage industry has emerged.  This new industry has hampered innovation and job creation, has delayed new products, and has turned scientists at America’s leading innovative companies into full-time court witnesses.

Non Practicing Entities (NPEs) exist solely to litigate damages and settlements based on over-broad patents. They do not engage in research, do not innovate, do not create jobs and do not bring new goods and products to market. NPEs thrive on the uncertainty in the way damages are calculated, which creates risk and unpredictability about what courts and juries will award as compensation.   Litigation exploiting over-broad patents discourages innovation by tying up in court America’s leading innovators. Instead of developing new products, they are defending their existing technology in court.

In the past seven years, the number of defendants sued in patent litigation annually has nearly doubled (from 5,000 in 2000 to 9,000 in 2007), even though the number of lawsuits has not changed dramatically (remaining in the 3,000-3,500 range). Indeed, it is not unusual for a single suit to name a dozen or more companies. Below are examples of cases filed that provide confirmation of the NPEs’ strategy:

• Odom v. Attachmate Corporation et al., a suit against 28 software companies alleging infringement of a patent relating to the manipulation of software tool groups;
• Aldav, LLC v. Clear Channel Communications et al., a suit against 13 large broadcasting companies alleging infringement of a patent relating to internet radio advertisements;
• Implicit Networks v. HTC Corp. et al., a suit against 6 large consumer electronic manufacturers relating to touch screen controls;

Additionally, written testimony before the Senate Judiciary Committee earlier this year revealed startling data on the role of NPE’s in hampering innovation and job creation. According to this testimony:

• NPEs filed 88% of patent suits against America’s leading technology companies over the past 5 years.  
• Infringement cases against America’s leading technology companies have increased 70% over the last five years.
• Licensing fee requests to America’s leading technology companies - usually a precursor to litigation – have increased 650% since 2004.

This evidence demonstrates that NPE filings are on the rise and hampering innovation and job creation in the tech sector. Reforming the patent litigation system, by providing clarification of the standard governing calculation of reasonable royalty damages, is the only way to vindicate the President’s pledge to reduce “uncertainty and wasteful [patent] litigation that is currently a significant drag on innovation” and to unleash innovation that will spur economic growth. Approving the Patent Reform Act of 2009 (HR 1260) would provide those needed reforms and encourage innovation and job creation over litigation.  

Number of the day: 88% of patent suits filed against tech companies are filed by non-practicing entities.

“Post Grant Review” Will Enhance Patent Quality

Think of it as quality control. Most products are not brought to market without vigorous quality control measures in place. Consumers don’t like surprises which is why companies ensure the quality of their products by inspecting, testing, and reviewing them.

So why are patents, one of the lynchpins of the American economy and stalwarts of innovation, issued without a quality control process to protect consumers and inventors?

There are nearly 1,000,000 patents pending. The nature of patent applications has gotten increasingly technical, reflecting the innovation represented in the inventions. The Patent and Trademark Office is understaffed and underfunded. This has created a perfect storm threatening the quality of patents approved by PTO. Patent quality control is sorely needed.

A meaningful and balanced opposition procedure enabling third parties to challenge issued patents would enhance patent quality. Such a process would permit the PTO to take a careful look at any challenged patent in the context of an adversarial proceeding likely to bring out the strongest arguments in favor of, and against, continued existence of the patent. This process augments a patent’s initial examination and provides a second, more focused filter through which a patent may pass if it is to be used against an alleged infringer.

Today, inventors and innovators have two options when considering challenging a patent: in court or through administrative procedures. Litigation of patent cases can cost $5 million. The expanded administrative procedures – or quality control - would be much less costly than litigation, making them available to a much broader range of small inventors.

This more economical approach to challenging patents allows “small” inventors and innovators an affordable option to protect their intellectual property. Also, it puts the decision regarding patent validity in the hands of expert patent examiners instead of generalist judges and juries.

These procedures are not new, and the PTO has been administering them for some time. What the Patent Reform Act of 2009 (H.R. 1260) would do is to make these procedures more effective and fair. A post grant review process would enhance the quality of patents, protect inventors and consumers, and save hundreds of millions in litigation costs for America’s small, medium and large businesses.

Time for Fairness in Calculating Infringement Damages

Today’s inventors and innovators are hampered by a patent system that slows innovation and job creation by encouraging litigation based on broadly worded patents. America’s leading innovators spend hundreds of millions of dollars fighting unjustified infringement claims based on broadly worded patents, diverting those resources from innovation, product development and job creation.

The rise in litigation can be attributed to two factors: first, the U.S. Patent and Trademark Office is processing patent applications of an increasingly technical nature resulting in broadly worded patents being approved; and second, a litigation system that provides no guidance to the courts regarding the calculation of damages in legitimate infringement cases is leading to an increase in unjustified infringement claims.

The House Judiciary Committee is now considering legislation that would address these factors and additional challenges faced by today’s Patent and Trademark Office.  The Patent Reform Act of 2009 (H.R. 1260) would provide clear guidance to the courts on how to fully and fairly compensate inventors and innovators for legitimate infringement claims, in particular how judges and juries should go about  calculating the value that the plaintiff’s invention contributes to the defendant’s product.  The underlying issue isn’t frivolous litigation, the issue is uncertainty in the way damages are calculated, which creates risk and unpredictability about what courts and juries will award for compensation. 

Today’s products are made up of thousands of component parts, which may involve hundreds of thousands of patents.  In many cases where an infringement claim involves only a small part of the whole product, plaintiffs base their “reasonable royalty” claims on the value of the entire product, rather than on the value of the specific feature or functionality produced by the infringing product or process.  Because the courts lack specific guidance on calculation of damages the resulting unpredictability provides opportunities for litigation syndicates to seek unjustified awards, and extract unmerited settlements due simply to the risk created by an uncertain system.

The Coalition for Patent Fairness (CPF) supports clarification of the reasonable royalty standard for calculating damages based on the fair share of the patent’s contribution to the value of a product and not on the value of a whole product made up of numerous other components.

CPF member companies and organizations are among the leading patent holders and innovators in the world and depend greatly on a strong patent system that protects inventors and innovators and provides fair and full damages for legitimate infringement claims. H.R. 1260, the Patent Reform Act of 2009, would provide needed reforms to a patent system that hasn’t been significantly updated in more than 60 years. A modern and efficient patent system is imperative to continued innovation and job creation in the high tech and other economic sectors.

Patent Reform and the Economy

The recent confirmation of David J. Kappos as Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office signals that the PTO may soon see some needed reforms to address the challenges facing the U.S. patent system and America’s small, medium and large companies operating within that system. President Obama has made patent reform a central part of his Innovation “Agenda” to spur innovation that will lead to job creation. In this economic environment, public policy that results in job creation is imperative and welcomed by American companies trying to compete in a global marketplace.

Noted economist Dr. Everett Ehrlich recently released a report that projected 100,000 new high tech sector jobs could be created if Congress passes the Patent Reform Act (H.R.1260) as introduced. Dr. Ehrlich’s report also predicted that 150,000 high tech jobs would be lost if Congress failed to enact meaningful reforms to the patent system. We are in the midst of a period of record setting job losses. The Patent Reform Act of 2009 (HR1260) will spur job creation, foster innovation and bring new products to market.

Intellectual property continues to expand its role as a critical source of economic value to American companies and society. Patent protection for intellectual property has become a business imperative for American companies as a result from a combination of legal and market place developments:

• Patents provide critical protection for distinctive products that may have been difficult to invent but could be easily replicated in the absence of the protections provided by a patent.
• Patents ensure that companies have the opportunity to be compensated for their contributions to advances in their field.
• Patent protection enables innovators to license or otherwise share key products with customers, partners and even competitors, while still preventing third parties from “free-riding” on their innovation.
• Patents can encourage cross-fertilization of products through cross-licensing.
• Collectively, patents provide a repository of accumulated knowledge that allows new generations of innovators to learn and, in some cases, design new solutions that further advance the body of knowledge.

Without question, patent reform and modernization will allow American companies to dedicate more resources to research and development. Reform is essential to maximize job growth, spur innovation, promote competition, improve consumer satisfaction and increase U.S. global competitiveness.

Number of the week: 100,000 new jobs created by the Patent Reform Act (H.R. 1260).

CPF statement on the confirmation of David J. Kappos for PTO Director

WASHINGTON, DC – August 6, 2009: The Coalition for Patent Fairness (CPF) issued the following statement regarding the confirmation of David J. Kappos as Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office:

“In selecting David Kappos to lead the Patent and Trademark Office, President Obama chose an experienced, capable, and widely respected leader to guide the PTO through the challenges it faces today.

“The Obama Administration includes meaningful reform of the U.S. patent system in its innovation agenda and job creation initiative.  We look forward to working with Mr. Kappos to enact reforms that address abuse of the patent system by entities that exist simply to litigate patents for profit through exorbitant damages awards, that will promote American innovation and new product development, spur job creation and enhance the ability of American companies competing in the global marketplace.

“We are pleased that the Senate has confirmed his nomination unanimously and swiftly so that he can begin to address the challenges facing the PTO.”

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

CPF supports bill to prevent PTO furloughs

WASHINGTON, DC – July 7, 2009: The Coalition for Patent Fairness (CPF) issued the following statement regarding legislation offered by House Judiciary Chairman John Conyers and Ranking Member Lamar Smith to provide funding for the United States Patent and Trademark Office to prevent pending furloughs:

“CPF supports efforts in Congress to ensure that the U.S. Patent and Trademark Office has the resources it needs to review patent applications in a timely manner in order to facilitate innovation and job creation. With this legislation, Chairman Conyers and ranking Member Smith have put forward a responsible solution to ensure the PTO continues to operate and that pending layoffs that will lead to additional delays in patent processing do not occur.

“CPF also supports broader reform to ensure the U.S. patent system remains the premier patent system in the world. CPF supports comprehensive and fair patent reform legislation that will foster job creation, support innovation, protect patent integrity, speedily resolve disputes and curb abuse of the patent system.”

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

CPF statement on the nomination of David J. Kappos for PTO Director

WASHINGTON, DC – June 18, 2009: The Coalition for Patent Fairness (CPF) issued the following statement regarding the nomination of David J. Kappos as Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office:

"We applaud President Obama's nomination of David J. Kappos to serve as Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (PTO). Mr. Kappos has the background and experience needed to lead the U.S. Patent Office at a time when it faces significant operational challenges in an ever-evolving competitive global marketplace.

“The PTO has an important role to play in fostering an economic environment that promotes American innovation and global competitiveness, spurs new product development and creates jobs here in the United States. As leading U.S. patent holders, we look forward to the opportunity to work with Mr. Kappos in helping the PTO fulfill that important responsibility. We support President Obama’s call for reforms to the US patent system that will spur innovation and job creation.”

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

"Everyone thinks that these patent lawsuits are hurting only the big companies."

Those are the words of Jeff Kelling of FotoTime, a three person photo sharing company in Dallas, recounting the impact of a non-practicing entity’s lawsuit on his small business’ ability to grow and create new jobs.

Non-Practicing Entities (NPEs) are patent holding companies that create no products, sell no goods and offer no services. They exist solely to litigate their patents against operating companies.

Mr Kelling was featured in Joe Mullin’s Patent Litigation Weekly column on May 29, focusing on infringement suits against small businesses:

"Creating and sharing images—drawings, paintings, photographs—are among the most ancient of human activities, and throughout history, technology that makes that sharing possible has been embraced as rapidly as it appears. Today, that technology takes the form of software applications for computers and cell phones.

"That all helps explain why the collection of scrappy entrepreneurs who run small and medium-sized photo-sharing companies didn’t always think about patents as they built up their businesses.

"But patents are certainly on their minds now that they’ve been sued for infringement by a company they've never heard of, in a place they've never thought about, in a case that illustrates how the surge in lawsuits by patent-holding companies isn’t just taking a bite out of big companies—it’s hitting small businesses.

"You can't imagine the stress this caused, me thinking the company I put 10 years of effort into could have folded because of this," says Jeff Kelling, a partner in Texas-based software maker FotoTime.

Mr. Kelling’s experience was outlined in a company letter to the Senate Judiciary Committee in March:

"all of our hard work and dreams were almost ruined in the summer of 2008 when we were sued for alleged patent violations by a company called FotoMedia. We felt strongly we were not in violation of any of the patents owned by FotoMedia...In our estimation patent litigation would have cost between $5 million and $10 million...[and] would have taken 1 to 2 years. As a small business we could afford neither the dollar cost of the litigation nor the cost on manpower to fight it. In the fall of 2008, with little hope for a resolution and facing overwhelming costs, we decided to cut our losses and settle...the costs of the settlement have created a financial burden that potentially could cause us to go out of business..."

Unfortunately, FotoTime’s experience isn’t unique. The same NPE that sued them sued 60 other small businesses hoping for the same outcome: settlement over litigation, forcing the businesses to pay them instead of their lawyers.

In April, another small business caught up in the same NPE lawsuit, submitted a letter to the Committee on the Judiciary in the House of Representatives. Chris McAskill of California-based and family owned SmugMug, Inc, a small business with 47 employees wrote about his company’s experience with NPE litigation:

"For six years we lived the American dream, thriving among corporate giants through hard work and ingenuity. We were certain the battle was won in the marketplace via fierce customer loyalty. What we didn’t see coming was the exponential rise of companies that invent patents for the sole purpose of suing, as opposed to patenting inventions with the dreams of seeing them in commercial products.

"I have spoken to dozens of small companies, who, like us, first learned of what seem like unbelievably obvious patents (attaching photos to email) by being named in lawsuits. And just like that, we were presumed guilty unless we could find millions of dollars and years to prove our innocence. But small companies have neither the money nor legal firepower, so we are forced into crippling settlements, priced just below the cost of defense.

"It shakes me to my core to hear lawyers tell me, ‘Chris, the only real legal solution short of patent reform is to take your software and leave America.’ I know some industries fear changes to patent law for reasons I deeply respect. But it is not in anyone’s interest to allow patent abuse..."

CPF members are small, medium and large businesses advocating for fairness in the U.S. patent system, including fairness in awarding damages for legitimate infringement claims. See, reforming damages will remove the potential financial windfall incentive for companies like FotoMedia that offer no products or services and exist simply to initiate litigation against operating businesses. NPEs like FotoMedia and other companies that buy patents for the purpose of competition in the courtroom not in the marketplace slow innovation, hamper new product development and prevent the creation of jobs. We are working to fix the system so that legitimate infringement is enforced and penalized while innovation is unleashed, creating new products and new jobs.

BizTimes.Com: "Scam artist patent trolls can create major headaches for some companies."

BizTimes chronicles the tactics used by NPEs to exploit the existing flawed infringement damages system. Top executive from GE Health Care calls NPE activity "extortion."

What is clear from this article is that the NPE problem is growing and the tactics used to exploit loopholes in the damages system need to be addressed.

The Coalition for Patent Fairness supports strong reforms to the U.S. patent system, including reforms to ensure damages awarded in legitimate infringement claims fully compensate inventers for the true value of the contribution of their invention to the overall product.

CPF Companies Continue to be Leaders in Innovation

Opponents of patent reform repeatedly have tried to paint reform’s proponents – especially the Coalition for Patent Fairness – as companies seeking to weaken protections against infringement because they themselves do not create new inventions. In fact, CPF members are among our country’s top innovators.

That fact is confirmed by the Intellectual Property Owners Association’s just-released list of top US recipients of US patents: five CPF members (Microsoft, Intel, Hewlett-Packard Co., Intel, and Cisco) are among the top 25 patent recipients and twelve of the fourteen core CPF members are in the top 300.

CPF companies see the patent system from the perspective of leading inventors as well as from the perspective of companies commercializing useful products and services and bringing them to market. They realize that the current patent litigation rules are being abused by patent litigation syndicates, which neither invent nor produce anything, to divert into litigation costs and unjustified license fees billions of dollars desperately needed for research and development, destroying jobs and hurting our economy. And they know that targeted adjustments in current law will eliminate these abuses and increase R&D while preserving strong incentives for continued invention that enable these companies to lead the world in innovation.

President Obama Announces New Science and Technology Advisory Team

President Barack Obama announced the President’s Council of Advisors on Science and Technology (PCAST). PCAST is an advisory group of the nation’s leading scientists and engineers who will advise the President and Vice President and formulate policy in the many areas where understanding of science, technology, and innovation is key to strengthening our economy and forming policy that works for the American people. Two member companies from the Coalition for Patent Fairness have representatives that have been selected to serve on PCAST, Eric Schmidt from Google Inc. and Craig Mundie from Microsoft Corporation. The full membership of PCAST can be found here.

President Barack Obama said, "This council represents leaders from many scientific disciplines who will bring a diversity of experience and views. I will charge PCAST with advising me about national strategies to nurture and sustain a culture of scientific innovation." President Obama understands that in order to create more American jobs, he needs to allow innovation to play a central role in this country.

Earlier this year, President Obama made patent reform a central part of his innovation "Agenda" to spur innovation that will lead to job creation. The Coalition for Patent Fairness applauds the President’s efforts to enhancing U.S. innovation, job creation, and competitiveness in the global market in order to ensure economic recovery.

CPF Applauds the House Judiciary Committee on their Commitment to Enact Fair Damages Provisions

April 30, 2009 – Washington, DC: The Coalition for Patent Fairness (CPF) applauds the senior members of the House Judiciary Committee for calling on the need for fair damages provisions as part of the Patent Reform Act of 2009, during a Judiciary Committee hearing today on the legislation.

It is important for the Committee to recognize that this is not an abstract debate about legal rules. Reform is urgently needed because the very real costs that unjustified lawsuits—and the unjustified claims that may be settled before they even turn into lawsuits—impose upon companies such as Cisco are hurting our economy," said Mark Chandler, general counsel for Cisco Systems, Inc. in his written testimony.

Chandler’s statement also addressed the urgency to put an end to abuse by NPEs in order to help companies reinvest in the innovation of new products and services that would create more U.S. jobs. Chandler noted a recent survey of leading technology companies revealed that that 88% of the licensing demands and lawsuits against those companies came from NPEs. That is consistent with other data in a recent study by Dan McCurdy published by the Center for American Progress, showing that the amount of litigation involving NPEs in patent lawsuits quadrupled in level between 1994 and 2002.

David Simon, chief patent counsel for Intel Corporation and a witness before the Committee today, brought to light the current abuse in patent litigation. Simon explained in his written testimony that non-practicing entities (NPEs), businesses that do not create or sell products or services but rather demand royalty payments from companies that do create or sell goods or services, have targeted their patent claims against technology companies. Simon’s testimony included:

"... because the presence of hundreds, if not thousands, of components technology-related products and the tendency toward standardization that allows technology products to interact—as well as the widespread use of technology by companies throughout the economy—allows NPEs to assert claims against multiple defendants based on alleged infringement of the same patent. That increases exponentially the potential ‘return’ on each patent purchased by the NPE and each claim and lawsuit in which the NPE ‘invests.’"

Patent Reform is needed in order to protect U.S. inventors and innovators from unjustified lawsuits and to allow them to continue to create products and services that will help the U.S. economy grow by creating much needed jobs. CPF calls on the House to pass the Patent Reform Act of 2009 (H.R. 1260) with fair damages provisions.

The Coalition for Patent Fairness, a coalition of small, medium and large companies from the technology, media and other sectors, are among the leading patent holders and innovators in the world and depend greatly on a strong patent system that protects inventors and innovators and provides fair and full damages for legitimate infringement claims. Abuse in the current system has forced resources for research and job creation to be put towards defending unjustified patent suits. CPF is dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

Patent Reform and the Economy

The Coalition for Patent Fairness (CPF) is calling on the House Judiciary Committee to approve strong reforms to the way damages are awarded in patent litigation cases, seeking reforms that ensure fairness in compensation for patent holders in legitimate infringement cases and curtailing opportunistic claims based on poorly written patents.

The House Judiciary Committee is conducting a hearing on the Patent Reform Act of 2009 (H.R. 1260) this morning. CPF issued the following statement:

"The Coalition for Patent Fairness calls on the House Judiciary Committee, led by Chairman John Conyers, Jr. and Ranking Member Lamar Smith, to enact the same tough damages provisions as part of the Patent Reform Act that were passed last year through H.R. 1908.

"CPF member companies and organizations are among the leading patent holders and innovators in the world and depend greatly on a strong patent system that protects inventors and innovators and provides fair and full damages for legitimate infringement claims. Economic data released last month shows that the Patent Reform Act of 2009 (H.R. 1260), as written, would create approximately 100,000 new jobs over the next five years and that the status quo would result in the loss of 150,000 jobs over the same period. The House Judiciary Committee can help American companies during these tough economic times by passing H.R. 1260, the Patent Reform Act of 2009, including the strong reforms of the litigation and damages system, to allow companies to invest in innovation, bring new products to market, and, in turn, create additional U.S. jobs."

Patent Reform and the Economy

Tomorrow the House Judiciary Committee will hold its first hearing on the Patent Reform Act of 2009 (H.R.1260).

President Obama has made patent reform a central part of his Innovation "Agenda" to spur innovation that will lead to job creation. A recent report by Dr. Everett Ehrlich projected that the Patent Reform Act (H.R.1260), as introduced, could create as many as 100,000 new high tech sector jobs over the next five years. Dr. Ehrlich predicted that 150,000 high tech jobs would be lost if Congress failed to enact meaningful reforms to the patent system.

Number of the day: 100,000 new jobs created by the Patent Reform Act (H.R. 1260).

Innovation At Risk

In a report entitled "Innovation at Risk", Federal News Radio reports on the backlog and potential funding shortfall at the Patent and Trademark office. In this report, Professor Mark Lemley says that 450,000 patent applications are filed each year on top of a backlog of one million applications. Lemley says that even if filings stopped today, it would take the PTO two years to catch up with the backlog.

The report also includes information from BusinessWeek which predicts that funding for the PTO is threatened by a potential drop in fees used to fund the office.

Tomorrow the House Judiciary Committee is taking up HR 1260, the Patent Reform Act of 2009. That bill would address these problems and the problem of opportunistic lawsuits that drive up costs and divert resources from the laboratory to the courtroom, stifling innovation and job creation.

Patent Reform Bill (HR 1260) Will Create Jobs by Curtailing Abuse of Litigation and Addressing Growing Problem of NPE’s

The current patent system has created a litigation based cottage industry of non-practicing entities (NPEs), companies that make no products and provide no services to consumers and exist solely to generate fees and settlements through litigation of often dubious patents.

Written testimony before the Senate Judiciary Committee last month revealed startling data on the role of NPE’s in hampering innovation and job creation. According to this testimony:

• NPEs filed 88% of patent suits against America’s leading technology companies over the past 5 years.
• Infringement cases against America’s leading technology companies have increased 70% over the last five years.
• Licensing fee requests to America’s leading technology companies - usually a precursor to litigation – have increased 650% since 2004.

This evidence demonstrates that NPE filings are hampering innovation and job creation in the tech sector. Meaningful reform will enable American companies to dedicate more resources to innovation and the creation of new jobs, which will in turn stimulate the economy. Opponents of patent reform prefer the status quo that favors litigation over change that favors innovation. Passing the Patent Reform Act of 2009 is critical to creating new jobs and maximizing innovation throughout the United States.

Number of the day: 88% of patent suits filed against tech companies are filed by non-practicing entities.

The House Judiciary Committee Hearing on the Patent Reform Act of 2009

On Thursday, April 30th at 10am, the House Judiciary Committee will hold their first hearing on the Patent Reform Act of 2009 (H.R. 1260).

Judiciary Committee Chairman John Conyers and Ranking Member Lamar Smith are cosponsors of the House version of the bill. The House has an opportunity to reinstate fairness in the patent system, establish balance and stronger protections for inventors and innovators and create new jobs by passing strong damages reforms. Last Congress the House passed these provisions and it is our hope that they adhere to that position.

Passing H.R. 1260 is critical to maximizing innovation throughout the United States.

Fact of the day: The House passed the Patent Reform Act (H.R. 1908) with strong damages provisions last Congress.

House Judiciary Committee Hearing on Patent Reform Act Set for Thursday

The House Judiciary Committee has set a hearing on the Patent reform Act of 2009 (HR 1260) for Thursday, April 30 at 10 am.

Judiciary Committee Chairman John Conyers and Ranking Member Lamar Smith are cosponsors of the House version of the bill. The bill, including the needed damages reforms that have been projected to create 100,000 new jobs and would curtail abuse by non-practicing entities, cleared the House Judiciary Committee and was approved by the full House of Representatives last Congress.

CPF support this legislation and applauds Chairman Conyers and Rep. Smith for scheduling this hearing.

CPF Members Top the 50 Most Innovative Companies List

Earlier this month BusinessWeek and Boston Consulting Group released their annual list of the 50 Most Innovative Companies.

Based on a global survey of business leaders, 5 of the top 10 companies identified as the "most innovative" in the world are members of the Coalition for Patent Fairness;

• Apple (1)
• Google (2)
• Microsoft(4)
• Hewlett-Packard (7)
• Research in Motion (8)

The U.S. patent system hasn’t undergone a significant modernization of its practices and policies since 1952 and as a result is struggling to keep pace with the modern economy and the increasingly technical nature of patent applications. Due to the backlog, there are 1.2 million patents pending today, with more than 400,000 patent applications filed each year. It can take up to 44 months for a technology based patent application to be completed by the PTO.

As leading innovators, these companies support the Coalition for Patent Fairness effort to modernize the U.S. patent system so it promotes more innovation and job creation. These CPF companies are recognized leaders in their field and support a strong patent system that protects inventors, improves patent quality, and helps American companies innovate and bring new products to market.

Opportunistic lawsuits take investment away from job creation and innovation. Small, medium and large U.S. companies are forced to dedicate valuable time and resources to respond to questionable patent infringement lawsuits, time and resources spent away from job creation and innovation. Such litigation creates additional risks to innovators: it slows down innovation and drives up costs for consumers. Because of these lawsuits, engineers are spending more time testifying in courtrooms than focusing on good science, new products and imaginative solutions in labs. Modernizing our patent system will create jobs, stimulate innovation and improve our global competitiveness to ensure that our countries companies stay on top.

techdirt: Guy Claims His Patent Covers Everyone Making Computers, Cell Phones, Hard Drives, DVD Players, HDTV & MRIs

Mike Masnick over at techdirt covers the story of Gregory Bender, who after holding a patent for more than 15 years has filed 22 lawsuits against 28 different companies. Read below and comment over at techdirt.

Joe Mullin has been digging into the saga of Gregory Bender -- a guy no one seems to know anything about, but who just a few weeks ago started suing some big name companies, such as Broadcom, Freescale, AMD and National Semiconductor for patent infringement. A week later, he had also sued IBM, Agilent, Cirrus Logic, Siemens, Nokia, Sony, Motorola, and ST Microelectronics. Apparently that wasn't enough, as a week later, he filed new lawsuits against AT&T, AT&T Mobility, Sony-Ericsson, Panasonic, Samsung, Toshiba, Hitachi, Seagate and Western Digital. At latest count, in the last month or so, he's filed 22 lawsuits against 28 different companies.

The patent in question? It's for a buffered transconductance amplifier, and Bender is claiming that basically all computers, mobile phones, hard drives, DVD players, HDTVs and MRI machines violate the patents. Bender may or may not have a valid claim... but the patent was granted in 1992, and it appears it will expire at the beginning of August, so it's not entirely clear why Bender waited until now to sue -- or what he's been doing with his life in the interim. Mullin's questions concerning that were answered with a: "He is a private person. He does not want publicity." Then, perhaps he shouldn't have sued pretty much every high tech company out there claiming they owe him money...

Experts Weigh in on Need for Patent Reform

An article written by Julie Bort of Network World demonstrates that a collective group of experts agree there is an urgent need for patent reform by Congress.

The Patent Reform Act, as introduced in the House and Senate, is projected to create 100,000 new jobs according to an economic study by Dr. Everett Ehrlich. The Ehrlich report examined the damages reforms proposed by the bill and determined that by reducing unjust lawsuits and instituting fairness in how damages are awarded in legitimate infringement claims, American companies could invest more in innovation and subsequently create 100,000 new jobs. Excerpts below underscore the need to modernize the patent system and find ways to improve the quality and integrity of patents issued by the PTO.

Michael Meurer, professor of law at Boston University stated "software patents are four times more likely to be litigated than patents covering an industry for which patents work relatively well, [such as] chemical processes."

Meurer continues on to explain the reason why software patents are more likely to be litigated.

"The result of a particular piece of code can be replicated in lots of ways. A patent would cover the code, the feature and new uses of the feature not yet conceived. For instance, if you patented software for voice recognition for a mobile application and someone used your code to make a voice activated child's toy, you would be entitled to license fees. Because software runs everything these days, a quarter of software patent infringement lawsuits are brought by companies that are not even in the same industry. Given that nearly 158,000 patents were issued in 2008 alone, searching years of active patents to ensure a new software invention would not infringe is impossible. "

Threats of litigation are often enough to convince a company to sign a licensing agreement since it is difficult to determine prior patents other than at the expense of a lawsuit. Broadly written patents that vaguely define the scope of the claim are therefore heavily rewarded in court. Poorly vetted patents combined with the lack of guidance for the courts on calculating damages in infringement cases have sparked the rapid expansion and activity of non-practicing entities (NPEs), which are companies that seek to monetize the value of broad, poorly defined patents. NPEs do no research themselves, make no products, and provide no services to consumers, and exist simply to abuse the system by initiating litigation in the hopes of securing settlement fees or large awards in court.

In order to stop abuses by NPEs in the patent system Mark Lemley, professor of law at Stanford University suggests:

"...that the courts should impose limits and guidelines for monetary awards -- making patent litigation less profitable. Perhaps outright reverse engineering would get bigger awards than infringement claims based on vague software descriptions. This will encourage patent attorneys to write better patents. And that would reduce the overall litigation, and the cost of e-discovery."

John Duffy, professor of law at George Washington University, believes:

" ...that patent reform should include an expansion of the doctrine of obviousness. This doctrine says that an invention should be sufficiently unique -- i.e. not obvious -- to be granted a patent. A solution is obvious if many people would think of it to solve the problem. This would make it harder to obtain patents of all kinds, software especially."

According to Bort’s article, experts all suggest that:

"The Patent and Trademark Office rules be changed so that patent examiners are held more accountable for the patents that they grant. When patents are challenged and overturned, examiners today are out of the loop. Examiners with a low rate of overturned patents could perhaps be paid more, or be rewarded with other incentives. "

The experts all agree the patent system needs to be modernized in order to stop abuses in the current system. In this current economic environment it is important to update the patent system to eliminate unjustified burdens on innovation and to create jobs throughout the country.

Patent Reform as a Job Creation Engine

The American economy lost 663,000 jobs in the month of March bringing the total recession job losses to 5.1 million – according to a federal report issued today. Federal statistics indicate that more than 2 million jobs have been lost in the first quarter of this year.

The Patent Reform Act, as introduced in the House and Senate, is projected to create 100,000 new jobs. An economic study by Dr. Everett Ehrlich examined the damages reforms proposed by the bill and determined that by reducing unjust lawsuits and instituting fairness in how damages are awarded in legitimate infringement claims, American companies could invest more in innovation and create 100,000 new jobs. The Ehrlich report warned that if Congress failed to reform the damages system, the economy could lose another 150,000 jobs.

Opponents of reform sought to weaken the job creation reforms in the bill, reducing the economic impact of the legislation. With our economy losing jobs at such an alarming rate, Congress should consider reinstating the stronger damages reforms in order to create 100,000 badly needed jobs.

Yesterday, the Senate Judiciary Committee, on a 15-4 vote, approved a modified version of the Patent Reform Act. The Committee’s approval is an important step forward in the legislative process for the bill and for supporters of patent reform, like CPF. This is just the first step in the legislative process. The legislation must continue through the legislative process and CPF looks forward to working with Senators and the House Judiciary Committee to make additional improvements to the bill.

CPF: Committee Action on Patent Reform Bill an "Important Step Forward" on Meaningful Reform

Coalition of leading technology companies applauds Senators Leahy, Feinstein, Specter and Hatch for leadership on reform

April 2, 2009 – Washington, DC: The Coalition for Patent Fairness (CPF) today praised the Senate Judiciary Committee for taking an "important step forward" in addressing long-overdue reforms to the U.S. Patent System. The Judiciary Committee, under the leadership of Chairman Senator Patrick Leahy and Senators Diane Feinstein, Arlen Specter and Orrin Hatch, advanced S. 515, the Patent Reform Act of 2009, out of the Committee today.

CPF today released the following statement on the progress of this important legislation that will modernize the patent system that hasn’t seen significant reforms since 1952:

"The Coalition for Patent Fairness applauds Chairman Leahy for championing long-overdue reform of our patent system and also thanks Senators Feinstein, Hatch, and Specter for their leadership on these issues.

"The bill reported by the Judiciary Committee today is an important step forward in the process of revising our patent law to reflect the realities of the modern economy. It adopts the "first to file" patent system employed by our principal trading partners and empowers the Patent and Trademark Office (PTO) to take a more active role in reviewing claims that patents were improperly issued. By enacting the "gatekeeper" and venue provisions, the bill begins to address the flaws in the patent litigation system that allow patent abusers, companies that do not produce or invent anything, to force our country's most innovative companies to divert billions of dollars away from innovation and job creation into litigation costs and hold-up settlements. As leading innovators and patent holders, we believe in and rely upon a fair patent system that protects the rights of inventors and innovators to recover damages for value lost due to infringement; we oppose the use of patent litigation to tax innovation by coercing unjustified protection payments from companies bringing innovative products to market."

CPF is looking forward to continuing to work with Members of the Judiciary Committee to build on the progress made today. CPF believes that in order for the legislation to achieve the important goals listed in the statement above, several key issues remain to be addressed, including:

• Making sure that the adoption of a first-to-file system includes the essential principles needed to make that system fair, particularly the user rights for prior inventors that are a feature of just about every other first-to-file system in the world.
• Ensuring that the PTO's power to review the validity of issued patents can be employed effectively in the areas in which improper patent grants are believed to have been most frequent -- the technology and business method areas.
• Expanding the patent litigation provisions so that they effectively close the door on all of the opportunistic litigation practices employed by patent abusers.

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

Contact: David DiMartino 202-661-6368
For more information, visit http://www.patentfairness.org.

Myth vs. Fact: What Would Post Grant Review Do?

Myth: Opponents of patent reform say Post Grant Review is "troublesome"¹ and could "cause a train wreck."²

Fact: Post Grant Review will improve the existing process for challenging questionable patents which will lead to better patent quality and will benefit everyone: patent holders, patent users and consumers.

Currently, the primary way to challenge the validity of an issued patent is through litigation, a costly and difficult approach that puts the decision regarding the validity of the patent in the hands of generalist judges and juries rather than the experts at the Patent and Trademark Office. CPF supports a meaningful and balanced opposition procedure enabling third parties to challenge issued patents. Such a process would permit the Patent and Trademark Office to take a careful look at any challenged patent in the context of an adversarial proceeding likely to bring out the strongest arguments in favor of, and against, continued existence of the patent. This process augments a patent’s initial examination and provides a second, more focused filter through which a patent may pass if it is to be used against an alleged infringer.

Fact of the day: Post Grant Review will help curb abuses in the patent system.

¹ Perine, Patent Law Deal Struck Among Three on Senate Judiciary, CQ, April 1, 2009.
² Noyes, Judiciary: Commercial Interests Applaud Patent-Reform Agreement, Congress Daily, April 1, 2009.

Myth vs. Fact: What Will a Change to the Reasonable Royalty Standard Do?

MYTH: S.515’s change to the reasonable royalty standard will hurt innovation by reducing the value of all patents.

FACT: Clarifying the reasonable royalty standard is a very modest change. It simply eliminates the risk of excessive, unjustified royalty awards by revising what numerous independent experts agree is an unclear rule that gives juries and even judges no real guidance.

Moreover, S.515 does not affect the separate damages rule allowing a patent owner to recover lost profits – essentially business stolen by an infringer. That rule is applied in 40+% of all patent cases and is frequently invoked by patent holders who produce and/or sell products or services. The target of reform is the opportunistic lawsuits filed by NPEs, who can use only the reasonable royalty standard because they do not make or sell products or services and therefore cannot invoke the lost profits standard.

Finally, those who oppose reform now made the same arguments before the eBay decision about the availability of injunctions, claiming that application in the patent context of the test that applied in every other area of the law (in contrast to the Federal Circuit rule automatically granting injunctions in every case in which patent infringement was proven) would dramatically reduce the value of patents. The Supreme Court rejected the special patent rule, but the value of patents has not collapsed as predicted. S.515’s focused, measured reform of the reasonable royalty rule similarly will not have the dramatic impact its opponents claim.

Fact of the day: Explosion of NPE activity dramatically increases the significance and adverse effects of the unclear reasonable royalty standard.

Coalition for Patent Fairness Statement on Developments with Patent Reform Bill

March 31, 2009 – Washington, DC: The Coalition for Patent Fairness issued the following statement regarding the developments with the Patent Reform Act of 2009 before the Senate Judiciary Committee today:

"We applaud Chairman Leahy's leadership and the efforts of Senators Feinstein, Specter and Hatch to reach an agreement to move patent reform forward. Reports indicate much progress has been made, and we look forward to continuing progress toward resolving the remaining issues that the legislation must address in order to achieve effective patent reform."

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

Contact: David DiMartino 202-661-6368
For more information, visit http://www.patentfairness.org.

Judiciary Senators Develop Agreement on Patent Bill

According to Congressional Quarterly’s Keith Perine:

Three key lawmakers on the Senate Judiciary Committee have struck at least a tentative deal on legislation to overhaul patent laws, according to sources close to committee negotiations.

Senate Judiciary Chairman Patrick J. Leahy, D-Vt., the committee chairman and sponsor of the legislation (S 515) appears to have reached an agreement with ranking Republican Arlen Specter of Pennsylvania and California Democrat Dianne Feinstein on provisions regarding damages awards in patent infringement lawsuits.

Leahy, Specter and Feinstein are expected to announce that they have agreed to rewrite the damages section so that the judge in patent infringment cases is the "gatekeeper" for criteria used to assess damages.

The lawmakers are expected to announce their compromise at a committee markup Tuesday. The damages section has been the thorniest part of the legislation.

The markup is scheduled to resume at 10 a.m. Tuesday in 226 Dirksen.

The Economy Can No Longer Afford The Status Quo

The current patent system has created litigation based cottage industry of non-practicing entities (NPEs), companies that make no products and provide no services to consumers and exist solely to generate fees and settlements through litigation of often dubious patents.

Written testimony before the Senate Judiciary Committee earlier this month revealed startling data on the role of NPE’s in hampering innovation and job creation. According to this testimony:

• NPEs filed 88% of patent suits against America’s leading technology companies over the past 5 years.
• Infringement cases against America’s leading technology companies have increased 70% over the last five years.
• Licensing fee requests to America’s leading technology companies - usually a precursor to litigation – have increased 650% since 2004.

This evidence demonstrates that NPE filings are hampering innovation and job creation in the tech sector. Meaningful reform will enable American companies to dedicate more resources to innovation and the creation of new jobs, which will in turn stimulate the economy. Opponents of patent reform prefer the status quo that favors litigation over change that favors innovation. Passing the Patent Reform Act of 2009 is critical to creating new jobs and maximizing innovation throughout the United States.

Number of the day: 88% of patent suits filed against tech companies are filed by non-practicing entities.

O'Brien: Silicon Valley needs patent reform now

by Chris O'Brien
San Jose Mercury News
March 27, 2009

Reforming the broken U.S. patent system is on the national agenda for the fourth year in a row. While the three previous attempts crashed and burned, this might finally be the year for a breakthrough thanks to a new president and a larger Democratic majority in Congress.

And no place in the country has a bigger stake in getting this fixed, and getting it fixed right, than Silicon Valley.

Beyond the purely economic aspects of this issue, patent reform is one policy issue that cuts right to the heart of Silicon Valley's identity. This is a place of ideas, inventors, innovators and entrepreneurs. Ideally, the patent system exists to nurture, protect and, in some cases, enrich those great thinkers who develop breakthroughs both large and small.

That's the ideal, but not the reality.

What we have today is a U.S. Patent and Trademark Office that has a backlog of more than 700,000 patent applications waiting to be examined. Who knows what's in that stack of stuff? Maybe the widget that will make our computers run 10 times faster? Maybe a transporter beam?

We'll have to wait a long time to find out. Although the office has been adding 1,200 new patent examiners over each of the last three years, the average time it takes to review an application has increased slightly to 32 months.

Meanwhile, patent litigation has become a headache, though just how big of a headache remains in dispute. Giant corporations like Cisco Systems and Google complain of dramatic increases in patent litigation that is costing them millions of dollars in legal fees. No doubt some of this is the result of mischief makers, patent trolls who buy up patents and hope to force royalty payments or score a windfall in litigation.

At the same time, the University of Houston Law Center's Institute for Intellectual Property and Information Law reported that the number of patent lawsuits fell 5 percent in 2008. That's probably the result of some court decisions that clarified patent law.

But close to home, there are many companies like Tessera of San Jose, which invented a packaging technology that has allowed chip manufacturers to make increasingly smaller chips. The company spends millions of dollars each year litigating against companies it believes has infringed on its patents. It fears that anything that curtails damages will lower the value of its patents, and embolden big tech companies to infringe on its patents.

Compounding the litigation trouble, some companies filing lawsuits have engaged in "forum shopping," meaning they file in the federal district court they think is most likely to be sympathetic. That's resulted in oddities like an obscure federal courthouse in the Eastern District of Texas becoming the most popular place to file patent litigation in 2007. Many a valley attorney and executive have spent their days in a courthouse in Marshall, Texas, simply because it gained a reputation for favoring plaintiffs in patent litigation cases.

So the patent system is a mess. How can we fix it?

The good news is there is widespread agreement about many of the solutions. Let's start with those.

Even after massive hiring, the patent office needs more bodies. Many more bodies. The office is unusual in that its budget is funded by the fees paid by filers. But because patent filings appear to be down this year, hiring is slowing.

The agency needs a big infusion of money. And it needs upgraded equipment to allow for more efficient research. A stronger, more effective review process will weed out more bad patent applications on the front end, and reduce patent litigation. This may involve higher fees, though with a sliding scale for small and independent inventors.

And while the president has a lot on his plate, the patent office is stuck in neutral because a new director has not been appointed. Get one, quick, because the office needs a strong advocate.

On the legislative side, Sens. Patrick Leahy, D-Vt., and Orrin Hatch, R-Utah, have introduced bipartisan legislation that fixes a number of problems. The Patent Reform Act of 2009 would clarify the rules regarding how the patent office determines which inventor can claim to file first for a patent, something that now requires a lengthy hearing and review process. And it would end forum shopping.

Despite a lot of progress and compromise, though, the sticking point in this bill remains the same: creating fair and clear criteria for awarding damages in patent litigation cases. The issue of damages remains what Sen. Dianne Feinstein, D-Calif., called during a hearing last week the "elephant in the room."

While 50 amendments have been offered to address the issue in the bill, no one is in a better position to broker — or possibly force — a compromise than Feinstein.

Big companies want language that reduces the size of damages, while smaller companies like Tessera (and a range of other groups including labor organizations) worry that such a move will embolden big companies to infringe on their patents.

Feinstein sent these two side a clear message this week during a Senate Judiciary Committee hearing on the bill: Work it out. Now.

"Compromise is never easy, and compromise entails no one side getting everything it wants," Feinstein said to the committee. "However, up to now, I have been very concerned that the high-tech community has not demonstrated a willingness to move from its original position on damages."

These two sides have had at least four years to figure this out. Time's up. Find a compromise now.

If they can't, then Feinstein and the committee need to split the baby and get on with rebooting the patent system.

Contact Chris O'Brien at (415) 298-0207 or cobrien@mercurynews.com. Follow him on Twitter at sjcobrien and read his blog posts at www.siliconbeat.com.

Myth vs. Fact: Who Benefits From Patent Reform?

MYTH: Patent reform will only help big technology companies.

FACT: Patents affect every industry and companies of every size. The Coalition for Patent Fairness is a broad range of small, medium, and large companies and trade associations in the financial services, technology, energy, chemical, manufacturing and media industries that have come together to reform the current patent system to support innovation and job creation. The major tenets of patent law have always applied the same standards to all types of inventions whether the discovery covers beds, shoes, airplanes, biotechnology, software or flatware. With patent reform, that will continue.

The Patent Reform Act of 2009 (PRA) preserves the two century old tradition of the patent law. It contains no special rules that apply to some inventions and not to others. The PRA would update the law to ensure quality is maintained in the granting of patents and that rights are fairly enforced. These changes are sensible and balanced. They follow the trend established by half a dozen Supreme Court cases, each of which has been decided in ways that cure imbalances in the law. The PRA is the proper expression of Congress’s role as the entity charged with ensuring our laws are modern and up to date.

Fact of the day: The patent law has not been substantially revised since 1952, before the invention of the microprocessor, cell phones, transistor radios, biotechnologies and personal computers.

Patent Reform and the Economy

Today the Senate Judiciary Committee begins the legislative markup of the Patent Reform Act of 2009.

President Obama has made patent reform a central part of his innovation "Agenda" to spur innovation that will lead to job creation. New Commerce Secretary Gary Locke during his confirmation hearing told Senators that he would weigh heavily the economic impact of patent legislation.

A recent report by Dr. Everett Ehrlich projected that the Patent Reform Act, as introduced, could create as many as 100,000 new high tech sector jobs over the next five years. Dr. Ehrlich predicted that 150,000 high tech jobs would be lost if Congress failed to enact meaningful reforms to the patent system.

Number of the day: 100,000: new jobs created by the Patent Reform Act.

The Truth About Tessera’s Patent Forum: There Will Be No Truth

Tessera is hosting a Patent Reform forum today (3/25) at the Four Seasons Hotel in Paolo Alto, CA. Below are some things to think about if you are a member of the media covering this event.

The Forum Lacks Balance

The event is titled "The Patent Reform Act and How it Threatens Your Business and Ability to Protect Innovation." The title exhibits a clear bias in favor of the campaign of misinformation conducted by opponents of the legislation.

The program includes only critics of the Patent Reform Act. There is no balance of views.

What You Won’t Hear From Tessera’s Panel of Biased "Experts"...

A recent economic study by Dr. Everett Ehrlich projected that the Patent Reform Act, as written and including the reforms to damages calculations that ensure inventors are fully compensated for the value of their invention in legitimate infringement cases, would result in the creation of 100,000 new high tech sector jobs. Dr. Ehrlich projected a future job loss of 150,000 high tech sector jobs if Congress fails to pass reforms to the patent system.

What You Will Hear But Should Question...

Opponents of the bill will claim that America’s leading high tech companies and their partners in the Coalition for Patent Fairness are "anti-patent" and "pro-infringement."

In reality, CPF companies hold more than 75,000 patents, utilize the patent system to protect their intellectual property and products, and are leading innovators in the modern economy.

What does the Coalition for Patent Fairness say about the Tessera Forum:

"With its slanted agenda and biased panel of experts, this forum is a dishonest attempt to pollute what should be an honest debate about the role of the Patent and Trademark Office in stimulating innovation and job creation in the modern American economy."

28 CEOs Send Letter to President Obama in Support of Patent Reform

WASHINGTON, DC – March 25, 2009: Today, 28 CEOs from leading American companies wrote a letter to President Obama in support of patent reform. The letter urges the President to support the Patent Reform Act of 2009, which is in line with the Administration’s technology policy objectives as set out on www.whitehouse.gov. An excerpt from the letter is below:

"We share your sense of urgency on revitalizing the U.S. economy and believe that patent reform is an important part of that effort. According to a study by the Information Technology Industry Foundation, information technology has driven nearly all of the economic growth in the United States over the last decade, adding $2 trillion annually to the economy. Modernizing the U.S. patent system and stopping the abuses we see now will greatly enhance our efforts to innovate by creating U.S.-based jobs to help better lead our nation’s economic recovery."

To view the full letter with the list of signatories please go to: http://www.patentfairness.org/learn/factsheets/

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation and competitiveness in the global market by modernizing and strengthening our nation’s patent system. Legislative reform is critical to enable the patent system to promote, rather than inhibit innovation and economic recovery.

Contact: David DiMartino 202-661-6368
For more information, visit http://www.patentfairness.org.

Secretary Locke Sworn in as the Secretary of Commerce

Yesterday evening the Senate approved Gary Locke as the new secretary of commerce and he was sworn into office shortly thereafter. We are encouraged by Secretary Locke’s Congressional testimony that he will look at all the facts and economic data while considering patent reform proposals. The Coalition for Patent Fairness looks forward to working with Secretary Locke as he works to implement President Obama's innovation agenda to spur research and development, innovation and job creation including the President's call for meaningful patent system reforms.

Locke: Innovation and Job Creation "Critical" in Assessing Patent Reform

Coalition for Patent Fairness Lauds Commerce Secretary Nominee’s Pledge to Use Economic Data When Considering Reform Measures

WASHINGTON, DC – March 20, 2009: Innovation and job creation are important factors in determining patent reform policies, according to President Obama’s Commerce Secretary Designee Gary Locke.

In written testimony provided to the Senate Commerce Committee, Locke said, "[I]nnovation is critical to creating jobs and bringing us out of the current economic downturn." His comments echo the Obama Administration’s position that patent reform will spur innovation and job creation and will be part of the Administration’s overall economic policy.

Locke also addressed the economic need for patent reform when he testified before the Committee. In his testimony Locke told Members of the Committee, "We must look over the horizon and prepare for the new economy that will emerge when this recession passes. Simply put, we must re-build, re-tool and re-invent our national strategies for sustained economic success."

"We agree with Governor Locke’s statement that ‘innovation and job creation is essential to reversing the current economic downturn.’ A recent independent study by economist Dr. Everett Ehrlich projected that the Patent Reform Act of 2009, as written, would create 100,000 new jobs over the next five years. On that assessment alone, the Patent Reform Act is a job creation engine and Congress should pass it quickly," the Coalition for Patent Fairness said.

The Ehrlich study projected the potential economic impact of S. 515, the Patent Reform Act of 2009. Dr. Ehrlich found that as written, including the reforms for instituting fairness in the damages process by establishing guidelines that allow inventors to recoup the true value of their invention in legitimate infringement cases, the Patent Reform Act would create 100,000 new high-tech sector jobs over the next five years. Dr. Ehrlich also warned in the report that if Congress failed to do anything and maintained the status quo, 150,000 more jobs could be lost over the same timeframe.

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

Contact: David DiMartino 202-661-6368
For more information, visit http://www.patentfairness.org.

Senate Judiciary Committee Chairman, Patrick Leahy, calls for Patent Reform

At an executive business meeting, Senate Judiciary Committee Chairman Patrick Leahy made an opening statement encouraging progress on patent reform and urging support for the Patent Reform Act of 2009.

"The hearing last week demonstrated there is wide consensus among participants in the patent system, academics, and Senators on this Committee that Patent Reform is necessary," Leahy stated. "It should also be apparent, at least in my view, that the time for posturing has ended, and the time for reaching agreement has arrived."

He further stated, "I hope that the time has come for Congress to act."

The Patent Reform Act of 2009 was scheduled to be considered by the Judiciary Committee this week, but has been delayed for one week in agreement with the Committee’s rules. Markup and debate will take place on Thursday, March 26.

Commerce Nominee Calls for Patent Reform as Part of Foundation for Economic Growth

During his confirmation hearing before the Senate Commerce Committee today, Former Washington Governor Gary Locke indicated that as part of his effort to institute policies that support long term economic growth, reforms to the patent office are important, including resolving the backlog of patent applications.

"We must look over the horizon and prepare for the new economy that will emerge when this recession passes," he told senators. "Simply put, we must re-build, re-tool and re-invent our national strategies for sustained economic success."

Locke’s comments reiterate the support for Patent Reform expressed by the Obama Administration on whitehouse.gov in its "innovation agenda" for creating jobs and economic growth. A recent economic report indicated that the bipartisan Patent Reform Act would create 100,000 new jobs if enacted.

Senate Judiciary Committee Schedules a markup of the bipartisan Patent Reform Act of 2009

The U.S. Senate Judiciary Committee has scheduled an executive business meeting to consider S. 515, the Patent Reform Act of 2009. The business meeting has been scheduled for Thursday, March 19. The business meeting will be webcast live online. Results of the mark up will be posted on the Judiciary Committee’s website at the conclusion of the meeting.

Please note that, under Committee rules, any item appearing on the Committee’s agenda for the first time – legislation, resolution, or nomination – can be subject to a one-week hold by any Senator on the Committee. It is likely that the Patent Reform Act will be held over for one week.

We will keep you posted on the developments.

From Inside the Judiciary Committee Hearing This Morning:

Steve Appleton was the first witness to testify today on behalf of Micron Technology, Inc. and the Coalition for Patent Fairness. In his opening remarks he called for immediate action to pass S. 515, the Patent Reform Act of 2009.

Here is his testimony, by the numbers:

100,000: high tech jobs that would be created by patent reform bill according to a new study.

150,000: high tech jobs that will be lost if Congress does nothing, according to same report.

18,000: number of patents held by Micron.

1950's: last time congress reformed patents.

30: $30 million spent by Micron defending patent lawsuits last year.

450: number of jobs Micron could have created with $30 million.

From his written testimony:

88: percentage of patent suits filed against tech companies by patent trolls or Non-Practicing Entities.

70: percentage increase in patent lawsuits against tech companies over past five years.

650: percentage increase of licensing fee requests to high tech companies - usually a precursor to litigation - since 2004.

Watch the Senate Judiciary Committee hearing

The Senate Judiciary Committee will hold a hearing on the bipartisan Patent reform Act of 2009 on Tuesday at 10am ET. Watch a webcast here. Testifying before the Committee will be Steve Appleton, CEO of Micron Technologies, Inc. a CPF member company. Check this website Tuesday for a CPF statement, copies of testimony provided to the committee, and a new economic report that makes the case for patent reform.

Bipartisan Patent Reform Bill Introduced

Today in Washington, Senator Pat Leahy and Senator Orrin Hatch were joined by Representative John Conyers and Lamar Smith to introduce the bipartisan Patent Reform Act of 2009.

This is the first day of this debate – over the next weeks and months there will be discussion about the need for patent reform, the positive impact of patent reform on maximizing innovation and spurring job creation, and the economic benefits of modernizing our patent system to protect inventors and innovators and end abuse of the system.

The CPF issues a press release in support of the bill, here is an excerpt:

"Especially during difficult economic times like these, U.S. companies need a legal environment that maximizes innovation and job creation. The Patent Reform Act of 2009 will promote innovation; bring new products to market; improve our competitiveness and create U.S. jobs, while modernizing a patent system that is overburdened and in need of reform."

Original Cosponsors in the Senate include: Senators Chuck Schumer (D-N.Y.), Mike Crapo (R-Idaho), Sheldon Whitehouse (D-R.I.), James Risch (R-Idaho), and Kirsten Gillibrand (D-N.Y.).

You can read the text of the bill here.

What are others saying? Hear from Google, Symantec, HP, SIAA, Palm and Micron.

Related Blog Posts:

PatentlyO writes "Patent Reform Act of 2009"
Peter Zura writes "Say Hello To 2009 Patent Reform - Dual Bills Introduced In House, Senate" at The 271 Patent Blog.

ATTN: MEDIA AND TECH BLOGGERS:

Today at 3:30 PM ET business leaders and policy analysts from the Coalition for Patent Fairness (CPF) will conduct a media teleconference call to discuss the need for legislation to modernize and reform the U.S. patent system. Patent system reform will help American businesses foster innovation and job creation, stimulate U.S. global competitiveness and protect consumers.

CPF Media Teleconference Call: Patent Reform Will Spur Innovation and Job Creation

DATE:                 Tuesday, March 3, 2009

TIME:                  3:30 PM EST

CALL IN INFO:     Please contact Erin Eagan to RSVP and receive the call in information.
                           Phone: 202.661.6375

CPF Company
Representatives:            

John Thompson, Chairman of the Board of Directors and Chief Executive Officer, Symantec Corporation
Robert Holleyman, President and Chief Executive Officer, Business Software Alliance
Mike Holston, General Counsel, Hewlett-Packard Company
Bruce Sewell, Senior Vice President and General Counsel, Intel Corporation
Andy Pincus, Partner, Mayer Brown

CPF Supports Former Governor Gary Locke for Commerce Secretary

WASHINGTON, DC – February 25, 2009: The Coalition for Patent Fairness (CPF) issued the following statement in response to the announced nomination  of former Washington State Governor Gary Locke as Commerce Secretary:

"We applaud President Obama's appointment of former Governor Gary Locke as the Commerce Secretary.  Governor Locke understands the need to encourage innovation in order to create jobs and grow the U.S. economy.  Locke’s commitment  to innovation as a governor shows that he understands the need for a strong patent system.  Our patent system is in dire need of modernization and we look forward to working with Governor Locke as he implements the Obama  administration's commitment to reform the current system. The U.S. Patent System must be updated to stop unjustified lawsuits that dampen innovation, encourage research and development and new innovation,  create jobs, and stimulate the economy."

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system.

Contact: David DiMartino 202-661-6368 ddimartino@bgrpr.com
For more information, visit http://www.patentfairness.org.

Coalition for Patent Fairness Renews Call for Patent Reform

WASHINGTON, DC – February 24, 2009: In the current economic climate it is more important than ever for Congress to enact meaningful reforms to the U.S. patent law, says the Coalition for Patent Fairness (CPF), a leading innovation, competitiveness and patent reform advocacy organization.

In a letter to Congress released today, a broad array of supporters of modernizing the patent law called for Congress to pass bipartisan patent reform legislation that will modernize the PTO, address patent fairness, and allow American companies to invest in innovation and job creation. The letter, signed by more than 100 small, medium and large companies and trade associations, was addressed to the Chairmen and Ranking Members of the House and Senate Judiciary Committees.

The letter states that patent reform is critical to fostering innovation and creating new jobs.

"...in light of the current economic situation, our country and our leading small, medium and large businesses must do everything we can to facilitate creation of the new products and services that will produce more jobs and economic growth.  Although the purpose of the patent system is to promote innovation, the numerous hearings held by your two committees over the past five years have demonstrated that some aspects of the system today are in urgent need of reform."

According to the Center for American Progress (CAP) there are more than one million pending US patent applications.  These delays are dampening innovation and job creation.  In a January report, CAP called on Congress to take action to reform the patent law.

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system. Legislative reform is critical to enable the patent system to promote, rather than inhibit innovation and economic recovery.

Contact: David DiMartino 202-661-6368 ddimartino@bgrpr.com
For more information, visit http://www.patentfairness.org.

Former Gov. Gary Locke for Commerce

Several media reports are confirming that President Barack Obama’s choice to lead the U.S. Department of Commerce is former Washington State Governor Gary Locke. Locke, a Democrat, is expected to be named in the next few days.

Locke is 59, served two terms as Washington’s Governor from 1997 to 2005. He was the nation’s first Chinese-American Governor.

Read about him in the Washington Post , New York Times, the Seattle Times and Tech Daily Dose.

Coalition For Patent Fairness Launches New Website, Blog

WASHINGTON, DC - February 18, 2009: The Coalition for Patent Fairness has unveiled its new website, www.patentfairness.org. The site has an updated interface, content and a new blog - the Better Mouse Trap Blog - that will follow developments in the patent reform arena.

The Coalition for Patent Fairness issued this statement: "Deficiencies in our patent system are holding our economy back by dampening innovation and job creation. Congress needs to pass a bipartisan and comprehensive patent reform bill to modernize and reduce uncertainty in the current system by addressing the backlog of patent applications in the patent office, ensuring only proper patents are being granted, and creating an environment where small, medium and large companies can innovate and create jobs. Our revised website will communicate that message and serve as a source of information for policy makers, business leaders, consumers and journalists interested in patent reform."

The new Patentfairness.org will feature a blog that will track innovation and patent reform issues and public policy. The Better Mouse Trap Blog, named as a nod to America’s tradition of innovation, will be updated regularly and track legislative and regulatory developments, highlight member company activity, and deliver filter-free pro-patent reform messages to interested audiences.

The site also provides resources to interested parties seeking to learn about patent reform and will ask visitors to volunteer to take action to support a bipartisan patent reform bill that will spur innovation and job creation. Patent reform is part of President Obama’s technology and innovation agenda.

The Coalition for Patent Fairness is a diverse group of companies and industry associations dedicated to enhancing U.S. innovation, job creation, and competitiveness in the global market by modernizing and strengthening our nation’s patent system. Legislative reform is critical to enable the patent system to promote, rather than inhibit innovation and economic recovery.

Contact: David DiMartino 202-661-6368 ddimartino@bgrpr.com
For more information, visit http://www.patentfairness.org.

Microsoft Gets 10,000th Patent

CNET News reports that Microsoft, a CPF member, received its 10,000th patent earlier this month and has risen to the "top 5 among patent recipients."

"Logging the 10,000th patent really is a testament to all of the innovation that has been taking place," Microsoft chief patent counsel Bart Eppenauer told Cnet News.

Of course, with the increase in securing patents comes a substantial increase in patent infringement lawsuits. Here is what Cnet News reported on that business issue:

"That increase has come almost entirely from entities that do not produce products," Eppenauer said. Most of the suits have come not from other technology companies, he said, but rather from the firms whose primary business is acquiring and enforcing patents. In those cases, having a large patent arsenal of one's own is of little use, since there are no products that could be used to countersue over.

"Patents really are the currency of innovation in our industry," Eppenauer said.

Commerce Secretary nomination or Groundhog Day??

It's back to the drawing board for the President as his second nominee for Commerce Secretary withdrew last week. New Hampshire Senator Judd Gregg withdrew his nomination on Feb. 12, about a week after it was announced.

President Obama told the Springfield Journal-Register: "It comes as something of a surprise, because the truth, you know, Mr. Gregg approached us with interest and seemed enthusiastic." Gregg says he withdrew over what he called "Irresolvable conflicts."

New Mexico Governor Bill Richardson was the first nominee for Commerce Secretary. He withdrew from consideration in January.

Right now it's anybody's guess who might be the commerce secretary.

Boston Globe on the need for Patent Reform

Rick Weiss of the Boston Globe has a column Monday on the need for patent reform by Congress. Some excerpts:

"So common is the phrase 'patent pending' on US goods that Americans can be forgiven if they interpret it as a proud proclamation of success. "Our product is so special, we're in line to win a patent!" In truth, however, all those patents pending are a sign of failure - the failure of the US Patent and Trademark Office to keep up with the torrent of innovation upon which our economy depends."

That's one of the arguments we've been making, that the reform bill is needed to ensure the PTO can meet the demand for patent applications and thoroughly review and award valid patents. According to Weiss, "1 million US Patent applications are gathering dust."

Why is this a problem? Weiss says that while patents are pending, other inventors avoid the field for fear of future infringement lawsuits, driving down innovation.

It is clear that driving down or slowing innovation hurts our economy. CPF has argued that and that slowed innovation stems job creation as well.

Weiss goes on to outline the other problems with the patent office:

"Prolonged patent pendency is one of many problems in the US patent system that the Obama administration and Congress should aggressively address in 2009. Patent examination rules, including the time allotted per application, have not changed since the 1970s, even though inventions today are far more complex. The information technology system that examiners use is antiquated. And the patent office has barely taken advantage of the option of sharing its workload with other patent offices around the world, which today redundantly examine identical applications filed in their respective countries."

"Due to these and other problems, patent examiners - highly trained engineers and technology specialists - get so frustrated that, on average, they quit after just three years, about the time it takes to become proficient. Patents that do issue are too often of poor quality, unclear in their descriptions or more expansive than justified. Weak patents trigger expensive court challenges, which infuse uncertainty into the tech landscape, stifle investment, and stall job creation."

What should we do to address these problems and improve and modernize the patent system?

Patent reform legislation died last year and Congress should resuscitate that effort. The executive branch can have a big impact on its own, however. It starts with leadership, sorely lacking during the Bush administration. President Obama must appoint a highly skilled director with professional managerial experience, empowered with a clear mandate to apply best business practices to every aspect of the office. The office must revamp its wage and fee structures, introduce more flexible and realistic application-review policies, encourage more telecommuting and work sharing with other patent offices, and prioritize information technology improvements to attract and retain the best examination staff."

Weiss includes some interesting statistics in his close:

"A lot has changed since George Washington signed the first patent act in 1790, a year in which the nation's team of three patent examiners approved all three applications it received - for inventions that improved soap-making, candle production, and the milling of flour. Today, nearly 7,000 employees handle more than 460,000 US patent applications each year for inventions as diverse as better hand-held electronic devices, materials that more efficiently absorb the sun's energy, and gene-altered bacteria that can clean up toxins. Any number of these thousands of applications may carry the seeds of renewal for our struggling economy. We owe it to ourselves to assure they get a timely and professional review."

Obama Picks Gregg for Commerce

After weeks of swirling speculation and names being floated and then un-floated, President Obama has settled on his pick for Commerce Secretary: Senator Judd Gregg of New Hampshire.

The Gregg pick was a surprise in most quarters – He's a republican Senator from New Hampshire. Politics aside, our friend Andrew Noyes over at Tech Daily Dose had this to say about Senator Gregg and what the selection means for Patent Reform:

"While Gregg has not had to vote on controversial legislation that would overhaul the U.S. patent system, he has not indicated he would support the bill in the form that nearly reached the Senate floor last spring. Gregg has, however, been helpful from his position on the Appropriations Commerce-State-Justice Subcommittee to end fee diversion at the Patent and Trademark Office, sources said."

The Coalition for Patent Fairness issued a statement applauding the Gregg nomination and we are looking forward to working with him to modernize and reform the patent system so that it promotes innovation and job creation.

President Obama Supports Patent Reform

The White House website section on President Obama’s agenda and priorities includes a call for patent reform. Here is what it says:

Reform the Patent System: Ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration. Give the Patent and Trademark Office (PTO) the resources to improve patent quality and open up the patent process to citizen review to help foster an environment that encourages innovation. Reduce uncertainty and wasteful litigation that is currently a significant drag on innovation.

Clearly this is a huge step forward for supporters of patent reform. The inclusion of patent reform as an agenda item signals the White House’s understanding that at a time when job losses are on the front page every day, unemployment is at a record high, and the economic recession shows no sign of letting up, it is important to support innovation and job creation especially in industries that are showing growth and an ability to sustain it.

Coalition for Patent Fairness Launches Blog

Welcome to the Innovation and Job Creation Blog/Better Mouse Trap, a blog dedicated to following the debate over patent reform in the 111th Congress. Here you will find the latest news and information and the latest reports of activities of the Coalition for Patent Fairness – a group of small, medium and large businesses and trade associations dedicated to supporting innovation and job creation through the modernization and reform of the US patent system.

We are launching this blog to give our organization of high tech companies and companies from other industries a voice as the debate over reforming the patent system continues in Congress.

CPF companies are innovators and job creators. We build better mouse traps – better software, hardware, PDAs, search engines, networks and hundreds of other products. We create jobs – good paying jobs in one of the few sectors of the economy showing growth-the high tech sector.

We’d be able to do more, create more jobs, innovate and create more products if they weren’t saddled with unjustified patent infringement charges and costly litigation.

That’s where the Coalition for Patent Fairness comes in. Together, these small, medium and large companies are working to reform the patent system that hasn’t seen a significant reform in more than 50 years. CPF members are 21st century companies forced to comply with a 19th century system that stifles innovation and job creation for the modern economy.

Check back here for the latest on patent reform, on who will join the Obama Administration in key patent-related positions and the latest news from other blogs and MSM sources on patents, innovation and job creation in the high tech sector.