Read the Patent Bill

by Dana Rohrabacher
It’s not patent “reform” when it would increase costs and risks for inventors.

Get ready: Another ill-conceived piece of legislation is about to wallop the U.S. economy, this time — adding insult to infringement — with a conservative-Republican gloss on it.

In their Wednesday NRO piece, “Restore the Founders’ Patent System,” my esteemed colleagues Representative Bob Goodlatte and Senator Mike Lee spent their first four paragraphs dishing out the boilerplate about the high importance the Founders placed on protecting our most innovative citizens, while touting their constitutional responsibility to curb abuses of the patent system.

All true and necessary. But H.R. 3309, their supposed effort to live up to the Founders’ expectations, which hit the House floor today, was never given the full airing promised, nor time to hear the multitude of credible opponents — from academia, from the legal profession, from independent inventors themselves. It even resembles Obamacare in the manner in which its progress so far has abused the legislative process.

The bill moved out of Chairman Goodlatte’s Judiciary Committee the day before Thanksgiving, when members had deserted Washington, and has been brought before the full House before even a full legislative day had passed. Why the rush? Why not wait until at least after the holidays for a vote?

I implore my colleagues to find out what’s in the bill. They really can do that before passing it.

Any bill with “loser pays,” those golden words of the litigation-reform movement, can enjoy an unquestioned pass in today’s House of Representatives.

But the sad truth of the Goodlatte bill is that the losers are the little-guy, independent inventors. The winners? The multinational corporations, with no allegiance to America, who have been on a decades-long march to neuter our patent system in the face of global competition.

We are told this bill is aimed at the threat of “patent trolls.” And just who are these miscreants? They are patent-holders or firms that represent patent-holders. They are engaged in defending their rights against the infringement of their own patents.

H.R. 3309 targets the wrong villains. Ample evidence shows convincingly that the overwhelming number of infringement cases are genuine, and that the very term “patent troll” is a catchy marketing designation designed to demonize inventors independent of the corporate bigs.

These patents are just as valid as any other one granted by the patent office, but huge corporate infringers would have us believe these patents are questionable, invalid, unworthy. That is not the case.

The patents targeted by the multinational electronics firms, for instance, are legitimate. They are projects of small inventors without the means to defend their ownership rights. (Who said conservative Republicans were giving up crony capitalism?)

And just what makes these vilified patents different from the “good” patents owned by the larger corporations themselves? To my conservative brethren: We are experiencing calculated confusion.

If the small inventor doesn’t have the resources to enforce a patent, an individual or company can still buy the rights from him or create a partnership to assure he isn’t cheated out of rightful compensation. But they’re left with a pebble vs. a mighty swift sword.

Typically, Goliaths win. Well-funded corporations deploying entire legal departments rightly see the Goodlatte bill as a means to encode the independents’ disadvantage. I have spoken with independent inventors, conservative political groups, the American Bar Association, industry groups and universities, and all of them recognize the horrifying imbalance.

Allow me to tick off some of the provisions Representative Goodlatte and Senator Lee did not share with NRO readers:

The “Innovation Act” (really, the Anti-Innovation Act) will create more paperwork when an inventor files an infringement claim, increasing both the costs of defending his rights and the potential for dismissal of a case on a technicality.

H.R. 3309 will convert us to a “loser pays” system, so the potential downside for a patent holder increases dramatically for filing an infringement lawsuit, especially against a large corporation that will spend big.

Expanding the meaning of “loser pays,” it allows the court to bring others into the case involuntarily, as plaintiffs, if they have an “interest” in the patent, thus making those parties liable for significant costs, too.

The bill would create a new requirement that a patent-holder must, once filing a claim for infringement, provide information about all parties with an interest in the patent to the patent office, the court, and the accused infringer. This seriously violates the privacy of business dealings, exposing small inventors, their friends, their suppliers, and anyone else vaguely attached to the inventor’s enterprise. Imagine forcing a patent-holder to provide a list of potential bank accounts (now liable to be raided) to the accused infringers.

Wait, there’s more. Once that requirement has been invoked, the patent-holder must maintain a current record of the information on file at the patent office or forfeit his or her rights. In other words, inventors and investors have a new bureaucratic reporting requirement, dramatically increasing their costs and vulnerability.

Almost forgot: The patent-holder is slapped with a new bureaucratic fee. He’s forced to pay recordkeeping fees to maintain current records at the patent office.

The legislation enables large multinational corporations to create nested “shell companies,” with few assets, that can infringe on patents while the inventor is unable to sue the firms because they are technically “customers.” The firms are free to keep infringing while the original case moves through the system. This process could protect an infringing process for a decade or more while an inventor, if he has the resources, tries to stop it.

The bill limits discovery in a court case unless the judge determines it is necessary and appropriate to expand the process. Infringers, especially big ones like large, multinational corporations, may make an infringement paper trail so broad and diverse that the plaintiff will have to ask repeatedly to expand the scope of discovery. You can guess who will have to pay, proportionately, the higher out-of-pocket expense to obtain the information needed for defense.

Then there’s the Orwellian (think Obamacare) authorization for the patent-office director to create a “patent troll” database and a strategic program to teach small businesses how to defend themselves against those who otherwise would exploit them, those fearsome “patent trolls”! Enemies list, anyone?

Finally, the “Innovation Act” removes Section 145 of Title 35 of the Federal Register, thereby eliminating the independent judicial review of patent applications, which has been the law of the land since 1836. This will leave a patent applicant with no independent recourse outside the patent office.

This bill is not reform. It is an anti-patent, anti-inventor bill. Read it.

— Dana Rohrabacher represents California’s 48th congressional district. He is vice chairman of the House Science, Space, and Technology Committee.

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