The Start (and not the End) of the Patent Reform Effort

by Reihan Salam

Tim Lee of The Switch explains the ins and outs of the Innovation Act, which recently passed the House by a wide (325 to 91) margin. He argues that though the Innovation Act will limit the most egregious aspects of the patent troll problem, it won’t solve it:

The legislation will rein in the most egregious trolling tactics. Fly-by-night companies that send demand letters out to thousands of targets hoping to extract nuisance settlements are likely to find the Innovation Act a significant barrier. The ability of manufacturers to defend their customers against frivolous patent lawsuits could be particularly powerful, and the loser-pays provision will make frivolous patent lawsuits more expensive in general.

But legal scholar Brian Love argues that these “bottom feeder” tactics are only half of the patent troll problem. The other half is that there are a huge number of low-quality patents in existence, and right now there isn’t a quick and cost-effective way to invalidate them. Larger and more sophisticated trolls acquire broad patents and use them to seek large checks from deep-pocketed technology companies.

An earlier version of the Innovation Act expanded an awkwardly named program called the “Transitional Program for Covered Business Method Patents.” In plain English, the CBM program provided a fast-track process for knocking out low-quality patents. But opposition from software companies with large patent portfolios, including Microsoft and IBM, led to that language being removed from the bill.

Though the Innovation Act will do some good, Congress ought to consider abolishing software patents — or perhaps the Supreme Court should do just that, as Tim suggests it can by taking the position that software can’t be patented “unless it’s tied to a specific machine or physical process,” a position that the Court took until relatively recently.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.