Why conservatives should back patent reform

The more it appears likely that patent reform legislation may emerge from an otherwise embattled Congress, opponents are kicking up their campaign a notch, attacking from the right of all places.

As they stand now, the Senate’s Protecting American Talent and Entrepreneurship Act (PATENT) Act and its likely counterpart in the House, the Innovation Act, are not perfect. The PATENT Act emerged from its Senate Judiciary Committee mark-up last week with some questionable components intact. These same components, particularly those concerned with the inter parte review (IPR) process, are subject to amendment during the House Judiciary Committees mark-up of the Innovation Act Thursday. The hope is the amendments will carry over during any House/Senate conference that will put together a final draft of the bill. That’s why conservative voices will be important to the reform process. The best hope for a sound bill, one that preserves the property rights necessary for a functional market economy while addressing flaws in the system that bad actors have been exploiting, requires lawmakers who value the importance of property rights and market economics to remain engaged.

{mosads}The current patent troll problem is rooted in the overall transition from an industrial-manufacturing economy to information economy. The U.S. Patent Office for more than a century has been geared toward a smokestack age. Knowledge and expertise here have been incentivized and rewarded over the decades. Government being what it is, even on its best days it’s difficult to facilitate change. The appointment of former Google executive Michelle Lee to head the Patent Office is an important step. She will be instrumental in the agency’s ability to function in the 21^st century economy.

But the PATENT Act and Innovation Act are needed, too. They will build on previous bills, such as the America Invents Act, by requiring patent plaintiffs to be much more specific when citing infringement, stop “pay-or-else” letters that demand immediate payment of a license fee to avoid legal action, and pay attorneys’ fees if they lose their case.

Indeed, there are some legitimate IPR concerns about both bills. Critics feel 2011’s America Invents Act made the IPR process, which allows a defendant to ask the USPTO to review and potentially invalidate a contested patent, too easy. The so-called “Manager’s Amendment,” proposed by Rep. Bob Goodlatte (R-Va.), restores some balance to the IPR problem as well as addressing other concerns conservatives have raised about the Innovation Act.

At the same time, we must be wary of material that oversimplifies the matter and sets up straw-man arguments. For example, the American Conservative Union, a group whose positions I align with more often than not, has become an outspoken opponent of the PATENT and Innovation acts, to the extent it is arguing in a video that patent trolling is not a crisis.  

While patent litigation might be plateauing due to some reform steps already put in place, but it is foolish to say the abuse is all ginned up by special interests. The same Lex Machina that ACU cites showing a decline in patent suits in the last half of 2014 has also found that decrease to be short-lived. It recently reported that 604 patent cases were filed in April 2015, almost double the 335 filed in September 2014, the month the ACU video uses as a benchmark.

Neither is patent reform akin to Obamacare or Dodd-Frank financial regulation. It’s not a government takeover of the patent system. The government already runs the patent system and, if anything, the USPTO is already broken. True, there are some radicals out there who want to end the patent system completely, but that’s not what PATENT or Innovation Act bills will do.

The push for patent reform is truly bipartisan, and, as R Street Institute’s Zach Graves pointed out this week, was initially driven by Republicans with support from conservative Democrats. Recall it was ultra-liberal Harry Reid who killed patent reform last session.

Lastly, the opposition from the Right wants to characterize this as the weight of crony capitalism coming down on the romantic notion of the solitary inventor in a garage. The true situation isn’t as sexy: patent trolling is primarily a business-to-business problem that nonetheless is adding costs that are consuming start-up capital and/or leading to increased costs for consumers down the line. Prosaic to be sure, but free market advocates are certainly capable of grasping how frivolous litigation can affect macro issues.

Opponents are getting nervous because it looks like we are on track for patent reform. If principled conservatives are alarmed by parts of the bills that come off as too heavy handed against property rights, then its best to keep supporting the work and ideas of reform-minded lawmakers who also are sympathetic to them. Abandoning the debate, and those best positioned to argue on the behalf of market-based solutions, only raises the likelihood of a bad law resulting.

Titch is an independent policy analyst and policy adviser to The Heartland Institute. He is the author of the whitepaper “Why Patent Reforms Are Needed: Intellectual Property Abuses Threaten Innovation and Cost Consumers Billions.” Follow him on Twitter at @stevetitch.