Stop reckless rush to overhaul patent system

July 18, 2007|By Kevin L. Kearns

Reform of the nation's patent system, the 218-year-old wellspring of American innovation and material progress, has become a rush project in Congress. Leading the way is the Senate Judiciary Committee, with a bill that could cripple American innovation. Chairman Patrick J. Leahy, a Vermont Democrat, is trying to hustle his bill through committee, apparently to please several powerful information technology firms - even though testimony at the bill's one hearing revealed serious flaws in the legislation.

For years, foreign firms have been trying to slow America's innovation engine under the guise of "harmonization" with foreign law. They would be happy to see this bill sail through Congress. A key question, though, is why the best patent system in the world needs to be "harmonized" down to the levels of the parochial, unfair European and Japanese systems, or a Chinese system that specializes in intellectual property theft.

At the recent Senate hearing, not a single manufacturing firm was invited to testify - even though technological innovation and industrial advancement are closely intertwined. Indeed, U.S. manufacturers undertake 60 percent to 70 percent of the nation's research and development and hold 60 percent of its patents.

Lawyers, bankers and leading high-tech firms such as Microsoft and Intel dominated the hearing on patent reform. However, smaller enterprises are the true drivers of innovation. About one-third of all patent applications are made by independent inventors, small manufacturers, universities and nonprofit research groups. Their efforts are crucial for leading-edge scientific advances, and their views should be heard.

Many large IT companies fear having their market positions disrupted by new ideas. They want current law rewritten to make challenges to patents easier, and they want to curb "abusive litigation" by patent holders protecting their rights. If Congress creates a new, open-ended post-patent review procedure to challenge the validity of a patent throughout its life, the benefits to patent-holders become very uncertain. Incentives to seek patents would be weakened, venture capitalists would face higher risks when backing new ideas, and business models that depend on patents would be discarded.

The new bill also grants unprecedented rule-making authority to an overburdened Patent Office working to reduce a massive application backlog. What is needed instead is full funding of the Patent Office so that it can employ and retain talented staff to do its main job of granting patents expeditiously.

The Senate bill's assault on intellectual property rights has inspired a wide-ranging alliance of opposition from high-tech firms, independent inventors, university research centers, venture capitalists and manufacturers. Opponents include the high-tech Innovation Alliance, the Big Ten university presidents, the National Venture Capital Association and the Coalition for 21st Century Patent Reform.

This broad opposition indicates the need for a fuller debate. Mr. Leahy's desire to rush the bill through the Senate does a grave disservice to our patent system. The future of American innovation hangs in the balance.

Kevin L. Kearns is president of the U.S. Business and Industry Council. His e-mail is kearns@usbusiness.org.

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