We've known for months now that John McCain doesn't know how to use a computer, so it should come as no surprise that he talks about innovation policy as if it's an entirely new concept. We want a more efficient hybrid car battery, so let's pull a number out of the air -- $1 per U.S. citizen sounds good -- and award it as a prize to the person who invents one:
“I further propose we inspire the ingenuity and resolve of the American people,” Mr. McCain said, “by offering a $300 million prize for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”
He said the winner should deliver power at 30 percent of current costs. “That’s one dollar, one dollar, for every man, woman and child in the U.S. — a small price to pay for helping to break the back of our oil dependency,” he said.
And shame on Sen. Barbara Boxer for calling this a "gimmick." It's not like the federal government provides any form of ex post incentive for technological innovation already, does it?
The National Review loves the idea, of course. Conservatives just love it when government gets into the business of picking winners and losers in the competition for innovation. (Then again, maybe not.)
Memory chip manufacturer Rambus Inc. has spent the past several years as a defendant facing multiple antitrust claims. Rambus allegedly promoted the adoption of its designs by an industry standards organization, while failing to inform the organization that it had pending, secret patent applications covering those designs. Rival company Infineon Technologies AG, accused of infringing Rambus's patents, won a jury verdict on an antitrust counterclaim, but had that verdict overturned by the Federal Circuit in 2003. The Federal Trade Commission conducted its own investigation beginning in 2002, however, and last August unanimously held Rambus liable for unfair competition in violation of section 5 of the FTC Act. The administrative litigation is still pending, and appeals will likely follow.
There are many serious public policy objections to the patenting of DNA molecules. But the Patent Office has found it fairly easy to dismiss these objections with the response that until Congress and/or the courts change the patent laws, public policy considerations will be entitled to no weight in the patentability analysis:
"Whoever invents or discovers any new and useful ... composition of matter ... may obtain a patent therefor." 35 U.S.C. 101. Congress creates the law and the Federal judiciary interprets the law. The USPTO must administer the laws as Congress has enacted them and as the Federal courts have interpreted them. Current law provides that when the statutory patentability requirements are met, there is no basis to deny patent applications claiming DNA compositions, or to limit a patent’s scope in order to allow free access to the use of the invention during the patent term. (66 Fed. Reg. at 1095)
That's what makes this such an exciting proposal:
After the Senate bipartisan Patent Reform bill was introduced in August 2006 (see my earlier post), patent reform appeared to have taken a back seat in the new Congress in light of other pressing concerns such as the budget and the war in Iraq, but not for very long.
Members of the House Internet and Intellectual Property Subcommittee in the 110th Congress told Technology Daily that updating the patent laws will be their chief priority. California Democrat Howard Berman, the panel's chairman noted that too much time was being taken to get patents issued and "things being patented that shouldn't have been patented."
Less than two weeks ago, the U.S. Supreme Court held that a licensee could "pay and sue," i.e., continue to pay royalties, and nevertheless, challenge the validity, infringement or enforceability of the licensed patent in a declaratory judgment (DJ) action.
The ability to pursue this option changes the licensing calculus in our patent system which is dominated by transaction costs associated with both patent prosecution and patent litigation. See, for example, my article on "Why 'Bad' Patents Survive in the Market and How Should We Change?--The Private and Social Costs of Patents," 55 Emory L.J. 61 (2006).
I have been reading a new book, Making Innovation Pay: People Who Turn IP into Shareholder Value, edited by Bruce Berman (John Wiley & Sons 2006), that is both informative and insightful. This edited compendium contains eleven chapters featuring easy-to-read contributions by Bruce Berman, Marshall Phelps, Daniel McCurdy, Peter Detkin, James Malackowski, Ray Niro, Bruce Lehman and Ron Schutz among others. The book is laid out well, and it is a breezy read. Although the target audience is senior executives and managers in the world of business, the book is a very good collection for anyone interested in intellectual property.
The contributors are carefully chosen to provide a wide variety of perspectives topics such as IP management, protecting IP assets, capitalizing on one's patent portfolio, effective corporate patent strategies, the fiduciary obligations of management related to IP, the costs and risks associated with patent enforcement, the uneven playing field for small companies and individual inventors, the quality and uncertainty in patent examination including the lack of international harmonization of patent prosecution rules and examination, and the associated need for reform. Worth the time, money and effort.
We are down to the last few days of summer, and patent reform appears to be gaining some initial momentum in the Senate. Earlier this month, there was a bipartisan bill introduced in the Senate by Sens. Orrin Hatch and Patrick Leahy. Patent law has never been divided or amenable to classification along traditional political lines. But the debates and compromises among the stakeholders (PhRMA, BSA, IPO, PIA, AIPLA and the like) will be interesting to watch.
As a general matter patent settlements are good. Once both sides have a reasonable estimate of expected outcomes, there is a strong desire to reduce litigation costs and simply work it out.
Pharmaceutical patent infringement settlements between pioneer drug companies and generic ones raise issues that are somewhat unique and pose new questions over which the courts seem unsettled. In late June 2006, the U.S. Supreme Court denied certiorari in FTC v. Schering-Plough and let a 11th Circuit ruling stand that the settlement agreements between Schering-Plough and two generic companies (Upsher-Smith and ESI Lederle) did not unreasonably restrain competition beyong the scope of the patent grant.
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An examination of the legal and technological structures that keep almost all of us voiceless, by Prof. Andrew Chin (who?) at the University of North Carolina School of Law and Prof. Jay Kesan at the University of Illinois College of Law
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