New Congress needs to revisit patent reform

Along with the poisonous hangover of partisan politics that the 105th Congress left for
the 106th are pieces of decidedly nonpartisan high-technology policy. One leftover is of
particular importance to anyone who buys or uses technology, or anyone who invents and
markets it.


I’m referring to the last-minute demise of patent reform. The House bill, HR 400,
had flown through in 1997, pushed by Judiciary Committee chairman Rep. Henry Hyde (R-Ill.)
and Rep. Howard Coble (R-N.C.)—both now familiar faces thanks to televised
impeachment hearings. The Senate bill, S 507, bogged down despite the efforts of Senate
Judiciary Committee chairman Sen. Orrin Hatch (R-Utah), Sen. Patrick Leahy (D-Vt.) and
other powerful members.


The companion bills would have made the Patent and Trademark Office an independent and
more flexible government corporation, more like the Postal Service. Passage would have
given PTO greater latitude in hiring and paying staff, and created two management advisory
boards of outside experts in patents and trademarks. PTO would have become a more
user-oriented—that is, inventor-oriented—operation.


An ongoing problem is that although PTO’s work is funded by user fees, Congress
has, for many years and in spite of an increasing number of patent applications, siphoned
off about $100 million of these funds annually for other purposes. If it were an
independent agency, perhaps PTO would not be so cavalierly treated by Congress as a cash
machine.


In addition to the change in PTO’s status, portions of the bill also included
major revisions in patent law.


One proposed change would require that patent applications be published 18 months after
they are filed. No doubt this would have resulted in a major online technology investment
by PTO, which has long struggled with building an electronic storage and retrieval system
for patent data.


A second major change would extend new patents’ terms so that all diligent
inventors would receive at least 17 years of coverage.


These changes aim to eliminate the abuse of so-called submarine patents, in which a
patent applicant tries to hide or delay his patent as long as possible while unsuspecting
operations inadvertently infringe and then get sued for royalty payments.


Foreign countries require publication of American patent applications in their systems
within 18 months of filing. But foreign inventors filing in the United States can now keep
their U.S. patent applications secret until the patent is issued. Proponents of reform
believe that current U.S. policy gives foreign companies rapid access to emerging U.S.
technologies while denying U.S. companies equal access to foreign innovations.


So with this global competition, and in spite of the need to get our technology rapidly
into the market, what happened to the bill to modernize the patent system? Here’s
what:


Phyllis Schlafly, a conservative activist, opposed the bill, both personally and
through her group, the Eagle Forum. Why this social conservative is concerned about patent
reform is not clear to some proponents in the Senate. Other members of the Senate opposed
the bill by placing anonymous revolving holds on it to prevent debate, despite its
bipartisan support.


Other opponents tarred the bill as being sought by large U.S. companies. Indeed, some
partners in a large coalition supporting passage included giants such as Boeing Co.,
Eastman Kodak Co., Ford Motor Co., IBM Corp., Intel Corp., Lucent Technologies Inc.,
Microsoft Corp., Motorola Inc., Sun Microsystems Inc. and many others that are not exactly
the Little Sisters of the Poor. But small business groups such as Technology Chairs of the
White House Conference on Small Business and the American Electronics Association, whose
membership is 75 percent small-business owners, also backed the bill.


Patent reform is an appropriate policy debate. Will an intellectual property bill
reward the entrepreneurship of businesses of any size? Will a modern patent system that
will get our technology rapidly into the marketplace, creating jobs and reducing
litigation? It is a debate that needs to be concluded by the new Congress.


Stephen M. Ryan is a partner in the Washington law firm of Brand, Lowell &
Ryan. He has long experience in federal information technology issues. E-mail him at smr@blrlaw.com.

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