Are Patent Problems Stifling U.S. Innovation?
Professor Mark A. Lemley is quoted in BusinessWeek in an article relating to a forthcoming book that he co-authored with Dan L. Burk '94 The Patent Crisis and How the Courts Can Solve It. BusinessWeek writes:
Chief executives from 28 large corporations, including Google (GOOG), Cisco (CSCO), Research in Motion (RIMM), and Intel (INTC), sent President Barack Obama a letter on Mar. 25, urging him to support the Patent Reform Act of 2009. The problem, they say: Litigation costs and patent infringement damages are stifling innovation.
Mark A. Lemley, a professor at Stanford Law School and specialist in intellectual property, has been sounding the alarm on these issues for years. He's co-author, with Dan L. Burk, of an upcoming book, The Patent Crisis and How the Courts Can Solve It, with Dan L. Burk. An edited version of a conversation with Business Week's Damian Joseph follows:
What's wrong with the U.S. patent system?
I think there are a couple of problems. The Patent Office gets 450,000 applications a year, and there's a backlog of 1 million applications—700,000 of them are just sitting in a stack. The examiners don't have time to review them. It's sort of turned patenting to a mass-production business, and I think there are concerns that quality has declined. A lot of patents shouldn't have been issued.
Also it is impossible to finally ever reject a patent. Someone can go back unlimited times and get a do-over. If the patent office denies your application, you can keep coming back and back until they approve. Examiners turn over pretty quickly so if a new examiner reviews the resubmitted application, or he's not paying attention, it can slip through.
Why should businesses care if there are issues with the patent system?
They spend a lot of money just paying lawyers and dealing with copyright infringement claims. To take a patent case to trial can cost $5 million to $10 million. Even worse is the time and distraction. Some number of employees are dealing with lawsuits, depositions, and collecting materials. Then at the end of the day, there's the risk that even a weak case could still go to jury and you never know what the jury will do. The jury could award huge damages. Companies end up settling cases and paying out money to avoid that.
Is there an effect on the overall economy?
I think it has an affect on the overall economy, but concentrated in different industries. The problems are most severe in information technology. Money being diverted from research and design is most problematic.
What can be done to solve the problem?
I think there are a couple of basic approaches—by fixing forum-shopping and fixing the way we calculate infringement damages. We are, though, beginning to see an approach in courts and Congress to deal with litigation abuse problems. We recently fixed the problem of getting injunctions, where cases involving small components of an item can shut down the production of the larger product.