NCPA - National Center for Policy Analysis


July 12, 2007

The U.S. patent system is beginning to show its age; outpaced by the swift evolution of technology and commerce, it increasingly favors speculators over innovators, impeding innovation and economic growth, says Bruce Sewell, general counsel for Intel Corp.

The need for reform is clear, says Sewell:

  • Nationwide, the number of patent lawsuits nearly tripled between 1991 and 2004, and the number of cases between 2001 and 2005 grew nearly 20 percent.
  • Until 1990, only one patent damages award exceeded $100 million; more than 10 judgments and settlements were entered in the last five years, and at least four topped $500 million -- one recent decision topped $1.5 billion.

The number of questionable, loosely defined patents, moreover, is rising:

  • One company holds patents that it claims broadly cover current technologies that allow people to make phone calls over the Internet.
  • Another has staked a claim on streaming video over the Internet generally and has pursued colleges for royalties on their distance-learning programs.
  • In 2002, a five-year-old boy patented a method of swinging on a swing.

Fortunately, the bipartisan "Patent Reform Act of 2007," introduced in both the House and Senate, responds to the need for comprehensive patent reform that protects the rights of inventors while eliminating the incentives that encourage speculators to game the system, says Sewell.  Meanwhile, no good-faith patent holder with a substantial claim of infringement would be denied his day in court, or appropriate remedies for infringement. The bill would benefit inventors, consumers and businesses, while maintaining faith in the "crown jewel" of America's intellectual property system.

Source: Bruce Sewell, "Patent Nonsense," Wall Street Journal, July 12, 2007.

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