INTELLECTUAL PROPERTY; EXPERTS SHARE THOUGHTS ON PENDING PATENT PLANS
ASPEN, Colo. -- With Congress expected to debate patent legislation next month, people who live and study patent issues gathered here Monday at the Progress and Freedom Foundation's annual summit to debate what type of patent reform favors innovation.
Michael Meurer, a law professor at Boston University, showed charts of patent costs versus benefits for companies, which illustrated sharp increases in litigation costs since the mid 1990s. "The cost of defending a lawsuit is a tax on innovation," Meurer said. "We think the current patent system is burdening innovators with unnecessary regulation."
He also tried to calculate the value of a patent for a business, saying the average value across various industries is $78,000. For the chemical industry the average patent is worth $333,000, and the average software patent is worth $55,000.
What he found odd, though, was that 65 percent of firms surveyed said they did not conduct patent searches before initiating product development. While he likened it to building a skyscraper without verifying who owns the land, he said it is sometimes a challenge for technology companies to do searches because patent holders often are from other industries.
Bronwyn Hall, a University of California at Berkeley economics professor, sees the patent system "as something designed to encourage innovation by granting temporary monopolies." She also said companies across an industry sector probably could benefit financially from agreeing not to patent in some cases.
F. Scott Kieff, a law professor at Washington University, said he is concerned about proposed reforms before Congress aimed at allowing more flexibility in determining the value of patent claims. He said he inherently worries when there is so much bipartisan agreement on anything. "To me, there is a good chance they're right and a good chance you should check your wallet [when] the big guys agree," Kieff said. He said the proposed reforms would allow judges, bureaucrats or patent officers to consider what was happening in the industry when patents were issued. "The problem with flexibility is there's a big Achilles heal because with lobbying and political pressure, that's where the big guys win," Kieff said.
Mark Chandler, the general counsel for Cisco Systems, joked that he does not have the academic credentials to discuss patent reform -- he just lives patent problems on a daily basis. He said Cisco will spend $45 million on patent litigation this year and $10 million for cases that go to trial.
Chandler said companies often face an incredibly broad range of damages -- sometimes anywhere from $5 million to hundreds of millions. "The spread of damages is so huge and the risk of willfulness and treble damages high so, we have no choice but to settle [most cases]," he said. He hopes Congress makes three changes to the patent system -- better mechanisms to review patent quality, a ban on shopping for favorable courts, and reduced leverage on damages.
- By Heather Greenfield