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Inventors cry foul over patent law reform
[November 26, 2007]

Inventors cry foul over patent law reform

(New Scientist Via Thomson Dialog NewsEdge) WHEN Lawnie Taylor set out to develop a bleach that is kind to cotton, he had no inkling that the detergent industry had written off the idea as impossible. An inventor and former US Department of Energy physicist, he pressed ahead with experiments in the laundry room of his home in Germantown, Maryland.

Eventually he arrived at a recipe that whitens cotton without destroying it. He was granted a US patent in 2005, and this month the James Austin Company is due to start selling the product under licence.

It sounds like just the sort of enterprise that patent systems are designed to nurture, but for Taylor it's not working out that way. In 2006, Clorox of Oakland, California, the biggest manufacturer of bleach in the US, began selling a product that Taylor alleges is identical to his patented formula. With the support of his trade association, the Professional Inventors Alliance (PIA) of Washington DC, Taylor has filed a lawsuit against Clorox claiming damages for infringement. He now faces a lengthy, expensive court battle to prove his case. Clorox says his suit is "without merit".

The story illustrates why many inventors are unhappy with the way the patent laws work. But although the law may be about to change, it won't be in the way the inventors want. The Patent Reform Bill, which has been passed by the House of Representatives and faces a vote in the Senate early next year, is being backed by a collection of major technology companies, including Apple, Cisco, Dell, Google, Intel, Time-Warner, Hewlett-Packard and Microsoft, operating under the banner of the Coalition for Patent Fairness. The bill will make it easier for companies to challenge patents, and is likely to mean inventors spending more time in the courts, not less. "The legislation is loaded with poison pills for inventors," says Ron Riley, the PIA's president.

The backers of the bill say it is targeted at a bunch of parasitic patent holders sometimes known as "trolls". The trolls file broad patents without any intention of going to the expense of developing and manufacturing products based on them. Instead, they bide their time until a business, often unknowingly, uses one of the patented ideas. Then the troll pounces, suing for millions of dollars in damages.

The bill was prompted by a lawsuit brought in 2002 by NTP of Arlington, Virginia, against Research In Motion (RIM) of Waterloo, Ontario, which makes the hand-held BlackBerry emailer. Because NTP doesn't tend to turn its patented ideas into products, some critics describe it as a troll. But in 2005, a US District Court in Virginia ordered RIM to pay NTP $53 million in damages and shut down the BlackBerry network in the US. Instead RIM paid NTP $612 million, and the BlackBerry network was allowed to carry on.

The incident sent shock waves through the US government, whose employees had become dependent on the device. This eventually led to the reform bill. "When they started threatening to shut it all down, all of a sudden it became a big deal," says Mike Lazarides, RIM's chief executive officer. "Congress started asking: is our patent system really so bad that it's actually going to happen?"

One contentious provision of the bill gives judges the option to base damages on the contribution an invention makes to a product, rather than the product's total value . So if a firm sells a $100 product with a $5 microchip at its heart and loses an infringement lawsuit on the chip, damages could be based on just 5 per cent of the product's revenues. By curtailing the damages that trolls might hope for, the measure is intended to both reduce the incentive to file broad patents and make troll attacks less costly to unwitting victims.

Another key provision will allow companies to bring challenges to patents before a court more than once, using different grounds for the later challenges if the earlier ones fail. Earlier patents, journal articles or software that carries out a particular function can all be used as evidence of "prior art", but at present, a company may only challenge a patent in court once.

If the only effect of the bill were to get trollish patents revoked, few people would object. The problem, its critics say, is that these measures will also hurt genuine inventors like Taylor. "Well-paid lobbyists representing big corporations are working hard to label independent inventors as trolls in order to win changes that would further disadvantage independent inventors," says John Koza, a computer scientist at Stanford University in California.

Cutting down the damages awarded for patent infringement will load the dice further against small inventors, as it limits the potential financial risk to big companies who muscle in. Inventors worry that even if they win a court case, the damages they get might cost the infringing company less than a negotiated licence would have done. "They are trying to eviscerate the essence of the value of the invention," says Riley. "It's quite obvious that infringers will be emboldened to ignore patents," adds Louis Hoffman, a patent attorney in Scottsdale, Arizona.

The threat of repeated challenges to a patent also leaves inventors vulnerable to being tied up in court by well-resourced opponents. "Big companies use intimidation, saying they have deep pockets and will keep us in court forever," says Jim Fergason of Menlo Park, California, inventor of a type of LCD.

Patent history is littered with instances of inventors becoming embroiled in ruinous litigation. The engineer Bob Kearns, inventor of the intermittent windscreen wiper, spent 30 years in dispute with the motor industry after his idea was used without payment. Edwin Armstrong, inventor of FM radio, was left penniless after a 12-year patent battle over the invention with his former employer RCA, and in 1954 he committed suicide.

Claims that the new law will make such incidents more likely are disputed by Chuck Fish, a patent attorney for Time-Warner in New York City. He points out that the bill requires the US Patent and Trademark Office (USPTO) to set up policing systems to ensure that inventors are not unduly harassed. He also says the bill will still allow judges to base damages on the overall value of a product, if the patented invention within it is the predominant reason the product sells even if that invention accounts for only a fraction of its cost.

Nonetheless, 430 organisations, including biotech, nanotech, pharmaceuticals, transport, mobile telephony and chemicals firms, and universities, have joined Riley's independent inventors in an umbrella group called the Innovation Alliance. Their aim is to persuade Congress to scrap the bill.

What is needed instead, the alliance says, is massive investment in the USPTO so that it can properly assess previous inventions to ensure the patents it grants are genuinely novel, and prevent overly broad patents from being granted.

With patent applications growing at around 10 per cent per year , the USPTO's 5000 examiners can't cope, and quality suffers, Riley says. "They only get 20 working hours to examine each patent." He is calling for the number of examiners to be tripled.

Fergason says examiners should be making use of new tools for deep searching of prior art: "There has never been a time as good as this to search prior art. With search engines like Google, the searches you can do now are just awesome."

Meanwhile Gregory Aharonian a professional "patent buster" in San Francisco, California, who invalidates patents by digging up prior art, says that responsibility for the troll phenomenon lies with firms like RIM, who need to be more vigilant about spotting existing patents. "These people should grow up: they have a responsibility to pay attention to what others are patenting. Only children are scared by trolls."

Reform bill's key provisionsPaul Marks Damages for infringement to be based on the value of patented component only, not the product containing it.

WHAT THIS ACHIEVES Reduces incentive to file broad patents and cuts costs to companies that infringe them.

WHY INVENTORS ARE SCARED Reduces damages awarded to genuine inventors. Could encourage companies to infringe patents rather than negotiate a licence.

Patent's validity can be challenged repeatedly in court.

WHAT THIS ACHIEVES Companies can get overly broad patents revoked, avoiding vexatious lawsuits.

WHY INVENTORS ARE SCARED Companies could use multiple challenges to intimidate genuine inventors, by threatening to tie them up in lawsuits for the patent's entire lifetime.

Copyright 2007 Reed Business Information - UK. All Rights Reserved.

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