One of the most brilliant parts of the Constitution is found in Article One, Section Eight, Clause Eight. To save everyone the trouble of looking it up, that is the section of the Constitution that directs Congress to secure patents and copyrights for authors and inventors.
Patents are crucially important to the American economy. Invention and innovation not only takes time, it takes money. Patents allow companies to recoup the investment necessary for the cost of developing a great new product. But in addition to the costs of research, development and production, companies have to allow additional money for protection of their patent against patent trolls.
Patent trolls demand royalty payments from holders of patents, claiming part or all of their invention was actually discovered by the patent troll. If the patent holder doesn’t agree to this extortion, the troll threatens and sometimes follows through with expensive patent litigation.
Over the last year, patent holders have been protected against frivolous patent claims by trolls. In Texas, real estate agents fought off a demand from patent trolls claiming a patent on website features that showed prospective homebuyers where nearby schools and stores were located. It isn’t just patent holders who are protected. Consumers are protected as well. In September of last year, in an Inter Parties Review (IPR) proceeding, Teva Pharmaceuticals tried to extend an expired patent and block generic manufacturers from being able to produce and sell the blockbuster multiple sclerosis drug Copaxone. They failed.
There is a great way to protect legitimate patent holders and stop patent trolls. It is called the Inter Parties Review or IPR. The IPR is a streamlined process for dealing with patent challenges. It costs on average $250,000 whereas the average cost for a patent defense in a traditional court setting is approximately $1.7 million. The IPR is a speedy process that is definitive, binding on the parties and binding on future litigation.
There are a number of groups that do not like the IPR. Primarily patent trolls and their lawyers. When a legitimate patent holder is faced with a demand, they have a choice to make. Pay or fight. Many patent trolls and their lawyers understand the calculation business owners make. It is a very simply decision.
How much justice can they afford?
When the cost of patent defense is one seventh the normal cost, more legitimate patent holders can afford to fight off these patent trolls and their lawyers.
A system that is cheaper, faster and efficient should make everyone happy.
But no, that is not so.
Senator Chris Coons from Delaware has introduced a bill he calls the STRONGER Patent Act. A thinking person can simply, reflexively oppose anything Chris Coons supports and have a 98.7% chance of being right. The so-called “STRONGER Patent Act” eliminates the IPR.
Who benefits from the elimination of the IPR? Not innovators. Not manufacturers. And certainly not consumers.
The people who benefit from this are the patent trolls and their lawyers. Elimination of the IPR means a more expensive and more complicated process for patent holders to defend their patents. It means more patent holders will decide paying off patent trolls is cheaper than fighting them before the United States Patent Court.
It is a rare thing for a law to work and provide a streamlined and efficient way for someone to protect their rights. Congress should not even consider the STRONGER Patents Act. Instead, they should protect the IPR process.
It is something that works and that is pretty rare in government.