Monday, October 8, 2007;

NOTHING Congress deals with is more eye-glazing than patent law, a hypertechnical thicket of such concepts as "prior art" and "non-infringing alternatives." Yet it is crucial to the economic interests of ordinary Americans. Income and jobs depend on innovation. But people will not innovate unless they know they can enjoy the rightful fruits of their inventions. That is why the Constitution gave Congress authority over intellectual property law -- and for more than 200 years, the patent system has served the country well.

Though strong patent protection is a good thing, lately the problem has been too much of it. The technological revolution of the past quarter-century has swamped the U.S. Patent and Trademark Office with hundreds of thousands of patent applications, each claiming to be original and each more arcane than the last. The result has been a proliferation of "low-quality" patents and expensive lawsuits over who invented what. Some inventors use dubious patents to extract large payments from high-tech companies, which usually find it cheaper to buy off purported inventors than to battle them in court. This is not a pro-innovation patent system; it's an anti-competitive one.

The Supreme Court has helped clarify the law somewhat, most recently in an April 30 decision that made it harder to claim infringement of an "obvious" invention. The battle has shifted to Congress, where the House approved a patent reform bill Sept. 7; a similar measure is awaiting Senate floor action. Patent reform has become one of the most heavily lobbied bills in years, with dozens of players ranging from small inventors to Silicon Valley giants. But the central struggle is between companies such as Cisco Systems, Microsoft and Apple Computer on one side, and the pharmaceutical industry on the other. Technology firms depend on cheap, reliable access to new software and components; drugmakers tend to invest heavily in medicines that often take years to go from the laboratory to the market. The pharmaceutical companies protest that any weakening of intellectual property rights is a mortal threat to their lifesaving business, a fair point that they have overstated a bit.

A key feature of the pending legislation is "post-grant review": the right of third parties to challenge an already-granted patent without going to court. This would provide a needed opportunity to weed out low-quality patents. Both the House and Senate bills would wisely open a one-year window for post-grant reviews. Far more contentious is the issue of how much an inventor should get when patent infringement has been proved. Current law provides for a "reasonable royalty," but that has been pretty much up to courts and juries to define. Technology companies have insisted that Congress restrict damages to the value directly attributable to the patented part: a disk drive, say, rather than a whole computer. After much resistance to that idea from the drug companies, the Senate version of the bill now merely ensures that courts properly instruct juries to adopt a more limited damages formula in cases where it clearly applies. This would be a modest but eminently justifiable change.