Let's not miss this opportunity for consensus-based patent reform

 

Our news is peppered these days with reports of “patent trolls” – dark, ugly creatures, shaking down innocent companies based on absurd claims of patent infringement.  Congress should quickly pass legislation to curtail this abusive behavior.  However, some are using the need to address the patent troll issue as cover to unnecessarily weaken our nation’s patent laws. 

If passed in its current form, the focus of legislative discussions -- H.R. 3309 -- would undermine U.S. innovation and job creation.   That would send the wrong signal internationally, where we are trying to get important new players such as Brazil, China and India to strengthen their patent and overall intellectual property laws. Unfortunately, H.R. 3309, scheduled to be voted in the House today, does not achieve a consensus that addresses litigation abuse while retaining a strong patent incentive. Several provisions must be narrowed and a strong fee diversion provision added. Regardless of what happens on the House floor today, there will be opportunities for significant improvements on the Senate side.

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A tailored “customer stay” provision that makes sure innocent retailers don’t get the shake down, while retaining flexibility for innovators to address infringers involved in the development and manufacturer of rogue products, is one vital and necessary improvement to H.R. 3309.   And adding a simple prohibition against fee diversion from the U.S. Patent and Trademark Office is a second key improvement.  These two items enjoy a broad consensus from Congressional lawmakers and stakeholder groups.  A host of measures that curtail Judicial discretion in the IP arena also need to be redrawn.  

Stopping the diversion of user fees from the USPTO is a particularly clear opportunity, for which there is a vehicle already available.  Recently Rep. John Conyers (Mich.) a liberal Democrat from Detroit, and Rep. Darryl Issa (Calif.), a conservative Republican from San Diego who is an inventor with multiple patents to his credit, introduced H.R. 3349, bi-partisan legislation that would require all fees paid by American innovators be retained by the USPTO to fund the processing of patent applications.  This straightforward bipartisan step would do more to foster the innovation ecosystem, job creation and economic growth than all patent reform proposals currently on the table.  It should be incorporated into a narrower patent bill.

Fully funding the USPTO is the surest way to improve patent quality, reduce the backlog of patents waiting to be processed and curb frivolous litigation. Fully funding the USPTO will also allow the implementation of the 2011 American Invents Act to play out and establish a track record. Other proposals could disrupt implementation of this major legislation -- the most comprehensive reform of the U.S. patent system since 1836 -- just as it gets up to speed. And fully funding the USPTO has the virtue of enjoying a consensus of support from the smallest independent inventor to the largest Silicon Valley Tech company. Pending patent reform proposals divide stakeholders and either help or harm them based on their business models. Especially at a time when both the Executive Branch and the Congress are scrutinizing the budget for revenue to address the nation’s long-term fiscal woes, an ironclad prohibition against fee diversion would be most welcome.

It may sound straightforward -- even trivial -- that user fees should be used by the government to conduct the work for which the fees are paid, but it has been routine to divert hundreds of millions of dollars from USPTO’s fee collections to unrelated government programs. The USPTO needs to have the funds to continue the progress it has made in reducing the backlog of patents that have not yet been examined. Unfortunately, hundreds of thousands of patents for cures to diseases, breakthroughs in robotics and nanoparticles, and bright new gadgets that can enrich our lives, still sit waiting in the USPTO.

The Conyers/Issa bill connects directly back to the issue that is the focus of the legislation currently rushing through Congress, and many related proposals occupying so much Congressional and business community attention these days -- the increase in frivolous patent suits adversely affecting our country. There is universal agreement that one of the surest fixes in the long run is to focus more resources on the quality of the patents themselves, which in turn means making more resources available to the USPTO to carefully screen patent applications. And that of course brings us back to funding. 

Let’s not miss this opportunity.  Let’s take this step to fix the funding problem as part of any new effort to further alter our patent laws. With access to the user fees it collects, the USPTO is positioned to hire, train, equip and retain a workforce with a focus on quality to ensure the patents it grants are not easily made the tools of abuse, but are clear and defensible. This positive step sends the right signal to our trading partners around the world that the U.S. is committed to maintaining the strength of the world’s oldest and best intellectual property system.

The Conyers/Issa bill is a model of simplicity. Just six pages long, it does precisely one thing -- fund the US Patent and Trademark Office using the fees collected by the Office to undertake the work for which the fees are paid in. Simple. Enacting this bill this year, along with the necessary refinements to H.R. 3309, can significantly address our national problem with abusive patent litigation, accelerate innovation into the marketplace and create jobs. And mark an opportunity ripe to be seized.

Kappos is an attorney with Cravath, Swaine and Moore LLP, which represents major technological, telecom and healthcare firms.  He was under secretary of Commerce for Intellectual Property and director of the United States Patent and Trademark Office from 2009 to Feb. 2013.