Opinion: Patent law proposal would destroy incentive to innovate

By Dan Leckrone

Special to the Mercury News

Posted: 03/09/2009 08:21:00 PM PDT

This week, Congress is considering legislation to make radical changes to U.S. patent law. This version of the bill is no different from the previous efforts of the 109th and 110th Congresses, except that a couple of contested features from the last time have been dropped.

The real goal of this legislation, which claims to be patent reform, is and always has been simple: It seeks to reduce the price that a handful of big technology corporations have to pay for the use of patented technology owned by others. By cutting the value of patents, this proposed law will reduce incentives for inventors to invent, and for venture capitalists to invest.

How can this be in keeping with American values when all it would do is leave America with fewer and worse jobs? It is hardly the best course of action in a global economic crisis when the bottom is still not visible.

To understand what's driving this legislation year after year, let's look at the math. During the period 1996 to 2006, the seven corporations leading this lobbying effort in Washington, D.C., were defendants in 247 antitrust lawsuits and 285 patent infringement cases. When faced with patent infringement settlement awards that totaled $1.9 billion for the period, they decried the court decisions, claiming the existence of some sort of crisis which demands "reforming" the U.S. Patent system. Put into context, these scofflaws paid about half of all U.S. patent infringement awards during

that period. And even then, their payment for their unauthorized use of technology owned by others was a tiny fraction of what they had to pay in antitrust fines and penalties.

Let's be clear: The only crisis here is a crisis of arrogance and greed. What these corporations are attempting to do is get Congress to change the law in a way that would force the federal courts to calculate patent infringement awards favoring infringers over patent owners.

While these corporations would benefit, all other patent owners — ranging from small-time entrepreneurs to university researchers to solo scientists in all industries — would suffer because their patents would inherently be worthless.

What these corporations really are seeking is a legislated bailout for their illegal actions. Again, the arithmetic is telling. Over the past eight years, an average of 93 patent infringement cases a year have gone to trial. Thus, the Congress is being asked to set up special rules that affect roughly 93 court decisions annually and reduce the costs of infringement for a handful of corporations.

Equally significant, this bald and selfish lobbying for the past five years has diverted congressional attention from long-needed reforms, such as providing the Patent Office with the money it needs to hire enough examiners to cut patent processing time from the current 32 months to the 18 months and less that was the norm two decades ago.

The new bill is nothing more than a "get out of jail" card for a handful of large corporations that the courts repeatedly find guilty of breaking the antitrust laws and stealing the work and patents of others. This is one corporate bailout that Congress should reject.

Dan Leckrone is chairman and chief executive of The TPL Group. He wrote this article for the Mercury News.