More balance needed on patent reform

In the weeks ahead, Congress has the opportunity to pass important legislation to strengthen and reform America’s patent system.  Patent rights are critical in promoting the development of new technologies that spur economic growth and create jobs.  Patents provide the legal foundation upon which innovators can make the costly and uncertain investments in research, development, and manufacturing that turn an invention into a business.  The most effective way to strengthen our economy and create new jobs is to continue America’s global leadership in innovation, so it’s essential that Congress gets this issue right.   

The Coalition for 21^st Century Patent Reform (21C) is a diverse group of more than 40 companies across 18 different industry sectors, including many of the nation’s leading research and manufacturing companies.  The 21C Steering Committee, which I chair, includes 3M, Bristol-Myers Squibb, Caterpillar, ExxonMobil, General Electric, Procter & Gamble, Johnson & Johnson, and Eli Lilly.  For more than 100 years, our Coalition’s member companies have played a critical role in fostering innovation in the United States, and our members invest billions of dollars annually in research and development that create jobs and improve lives.

{mosads}21C represents a middle ground viewpoint in what can often be a complex and contentious legislative debate about patent law and policy.  Our members own substantial patent portfolios and we rely on our patents to protect our enormous investments in R&D, technologies, and products against infringement by others.  On the other hand, our members have been on the receiving end of frivolous patent demand letters and litigation.  We believe that bad faith assertions of patent infringement, brought by any patent owner seeking to coerce settlements from alleged infringers to avoid the disruption and cost of litigation, have no place in a properly functioning patent system.

From this middle ground perspective, 21C’s goal is to ensure that any patent reform legislation affords balance and fairness to patent owners and those accused of patent infringement alike. 21C has participated in countless hours of meetings and negotiations with Republican and Democratic Senators, along with their dedicated staffs, to help put together the comprehensive package of patent reforms in S. 1137, the “Protecting American Talent and Entrepreneurship Act of 2015” (the PATENT Act), which was reported by the Senate Judiciary Committee with bipartisan support in early June. 

The Senate’s PATENT Act includes provisions to curb abusive litigation practices by some patent owners, while preserving the rights of the majority of patent owners to continue in good faith to license, assert, and litigate their patents when necessary to prevent infringement.  Equally important, the PATENT Act includes provisions designed to restore basic fairness to proceedings in the Patent and Trademark Office to review the validity of patents it has issued, while retaining the viability of these reviews as alternatives to litigation.  Although 21C will continue to work with the PATENT Act’s sponsors to improve the bill before it reaches the Senate floor, we support the legislation and believe it represents a thoughtful, constructive, and bipartisan approach to strengthening America’s patent system. 

The same cannot be said, however, for the bill advancing in the House of Representatives – H.R. 9, the Innovation Act.  For more than two years, 21C has worked with members of the House Judiciary Committee and their staffs in an effort to craft balanced patent reforms we could support.  Unfortunately, the bill that emerged from the House Judiciary Committee last month lacks such balance and 21C must oppose it.  Several of its provisions go well beyond what is necessary to curb abusive patent litigation and risk harm to all patent owners.  It appears to be drafted on the premise that every patent holder enforcing its legal rights is a “patent troll,” which weakens all patents, favors business models that do not rely on innovation and patent protection, and makes it more difficult, costly, and uncertain for all patent owners to protect their inventions against infringement, thereby chilling investments in R&D and innovation. 

We urge the House to hear the pleas of U.S. innovators and patent owners to craft a more balanced bill before it proceeds to the House floor.  We will know we have the right bill when it garners widespread stakeholder support across industries, not opposition from mainstream patent owners like the member companies of 21C, who believe that the House bill in its current form, even if inadvertently, picks winners and losers among different industries, business models, and types of patent owners, and risks unintended consequences that could seriously damage our patent system and American innovation.

Rhodes is vice president and chief intellectual property counsel of 3M Company, and chairs the Steering Committee of the Coalition for 21^st Century Patent Reform.