Professor Mark Lemley writes an article in the San Jose Mercury News about current Congressional patent reform hearings. He states: “The system that has fostered American growth and entrepreneurship is under attack by those who would game the system and stifle innovation for an easy buck.” Citing loopholes in the patent system that favor plaintiffs, difficulties that arise in patents for the information technology industry and the increase in enormous patent awards, Professor Lemley reiterates his recommendations for patent reform, which he previously stated in Congressional testimony:

1. Abusive plaintiffs are exploiting jurisdictions that strongly favor plaintiffs even though they have nothing to do with the location of the companies. While seven patent cases were filed in Marshall, Texas, in 2003, 220 infringement actions have been filed since then naming 856 defendants. We should reform the laws governing where suits can be filed, allowing litigation where the plaintiffs or the defendants reside but curtailing `forum shopping' for plaintiff-friendly jurisdictions.

2. Patent owners who win their suits should be entitled to the proportionate share of the value of the product that is attributable to their inventive contribution, and not to capture the full value of the entire product. The current system encourages patent owners in component industries such as information technology to seek and obtain damages or settlements that far exceed the actual contribution of the patent. The patent holder for a windshield wiper should receive damages for the contribution of the windshield wiper, not for the value of an entire car.

3. Finally, the standards governing awards of enhanced damages for willfulness are a mess. 'Willfulness' in patent law means something different than it does in the rest of the world. More than 90 percent of all patent plaintiffs claim willful infringement, even though most of the defendants in those cases did not copy the invention, but developed their products independently and indeed may never even have heard of the plaintiff or its patent. Under current rules, it costs nothing for plaintiffs to allege defendants were willfully infringing on a patent, and they have a strong incentive to make such a charge because a finding of 'willfulness' triples the award they can collect.

4. By merely sending a carefully crafted letter telling companies about a patent, plaintiffs can force those companies into an expensive Catch-22. Either they must conduct internal audits and be willing to give up their attorney-client privilege or they risk being declared willful infringers for continuing to sell products they designed in good faith and without knowledge of the patent. Changing the law so that defendants who copy a technology from a patentee have to pay punitive damages, but others do not, would help restore fairness to the patent system.

posted by Noel Le @ 10:55 AM | Patents

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