Patent reform

In today’s innovation marketplace, everywhere you step, you land on somebody’s patent. You can’t innovate. Somebody is always suing your company for violating their patent, forcing it to divert resources from innovating to litigation. Companies patent their work, not to protect their inventions, but to protect themselves from “patent trolls” who leverage patents on obvious, non-novel techniques to extract undeserved riches from your hard-working company. Reform is badly needed. These seem to be the talking points in support of patent system reform, as stated by companies like Google, Microsoft, and HP.

Apparently, things haven’t changed much since the 1860s. That’s when Elias Howe got rich through royalties extracted from hard-working companies which were trying to sell sewing machines to hard-working Americans. These companies ‘perceived this non-practicing entity — the inimitable “patent troll” — to be flourishing through his use of lawsuits, injunctions and licensing, as they watched their own attempts at manufacturing actual sewing machines flounder in both the market and in court.‘ That is from Adam Mossoff, guest-blogging this week at the Volokh Conspiracy.
Adam Mossoff is chronicling the patent “thicket” which sprang up around the sewing machine over 150 years ago.

Legislation is working its way through Congress in the area of patent reform, and many people have many opinions. Software giants tend to be in favor of reform, which mainly centers on capping or limiting damages for which patent infringers could be found liable.

Venture capitalists and their friends are speaking out against the idea. The argument goes like this: If damages are limited to x, it basically means that big companies, for whom x may not be big deal, won’t care too much about violating patents. This of course would essentially destroy the value of IP owned by small, VC-backed companies, and allow the big guys to run rough-shod over them.

From what I can tell, the venture capitalists have a point.

Furthermore, if it is mainly big IT firms which are being hurt by superfluous patent cases, why do we need a structural across-the-board reform? Couldn’t the USPTO just raise the standards on what they consider “obvious” in the field of IT, and leave the IP system for other industries relatively unperturbed?

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