Patent Reform a Must for America

Posted October 21, 2007 at 11:00pm

In his book “The Age of Turbulence,” Alan Greenspan states that “the most important economic decision U.S. lawmakers and courts will confront in the next quarter century will be to clarify rules involving intellectual property.” This is hardly an overstatement. Patents and copyrights contribute trillions of dollars to the U.S. economy. By some accounts, intellectual property assets comprise one-third of the capitalized value of American companies. The U.S. is a world leader in technology, communications and entertainment partly because of its robust and balanced protection of intellectual property. Yet there are challenges ahead.

As chairman of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, I have the pleasure of working in a bipartisan and bicameral manner to shape our IP agenda to improve protections and incentives for American creators and innovators. IP protections must be balanced against the legitimate interests of consumers and other users to best promote economic and social productivity. First on the subcommittee’s plate is patent reform, followed closely by strengthening our copyright system.

We enter the 21st century with a 19th- century patent system. While important reforms have been made along the way (the last major one being 55 years ago), the accelerating pace of new technologies and global trade have made comprehensive reform long overdue. The growing complexity of patent law has generated much uncertainty within the technology and business communities. This also is evident in the high number of patent cases decided by the Supreme Court in the past few terms, more than ever before. Finally, recent studies by the Federal Trade Commission and the National Academies strongly urged modernization of our patent system to maintain America’s innovation leadership.

The Patent Reform Act is the product of more than 20 Congressional hearings, consultations, studies and compromise. Because of bipartisan and industry commitment to needed reform, the PRA has succeeded where earlier efforts failed. Its principal features include: switching from a “first-to-invent” system to “first-inventor-to-file” (similar to every other industrialized country); enhancing agency review of previously issued patents (as an alternative to costly litigation); encouraging third parties to submit information to aid the examiner in deciding whether the invention is novel and non-obvious (to improve patent quality); damages reform (excessive damage awards can stifle innovation); venue reform (to discourage forum shopping); reforming the inequitable conduct defense (which infringers frequently assert as a means to invalidate a patent); and augmenting the Patent Office’s regulatory authority (to give it greater control over the patent examination process).

Innovation is the key to America’s economic future. We cannot afford to get it wrong. The patent system must provide appropriate incentives, predictability and balance for new technologies — everything from genetic research to nanotechnology to innovative business methods. The best thing about American ingenuity is that it’s not the exclusive domain of large, established companies. Universities, startup entrepreneurs and garage inventors are often the greatest contributors to our collective knowledge base and the rollout of new products. Some of the most important provisions in the PRA are the protections for universities and small inventors. I am confident that every constituency, large or small, traditional or advanced technology, will benefit from the PRA.

Several copyright initiatives also are in the works. The advent of new media has presented both opportunity and challenge for intellectual creations. Distribution systems such as digital radio, mobile video, Internet video and mesh networks present unique problems. Copyright law must keep pace as we complete the transition to a digital world. The ease and quality of duplication often invite infringement of digital works. This not only compromises the author’s rights but also drives up the cost of media for the rest of us (lawful purchasers wind up subsidizing thieves, both of tangible and intangible property). Accordingly, the enforcement of IP rights is high on the agenda.

In addition, as global markets replace national ones we must be more sensitive to the problems of international enforcement. Congress will maintain oversight of the administration as it moves forward with bilateral trade talks with Russia and World Trade Organization complaints against China.

Also on tap is legislation to provide greater protection to performers and copyright owners as well as enable consumers to receive content any time, any place and in any format. As music becomes more widely used in new and exciting ways, it is only fair that artists are adequately compensated and motivated to continue creating new works. Performers in the U.S. lack rights their counterparts enjoy in other countries. While the “author” of a song earns royalties every time it is played over the radio, the same is not true for the artist. It is equally unfair that only webcasters and satellite providers pay royalties and not other media. We hope to correct these imbalances.

The wealth of expressive works available on the Internet promotes further creativity. But it can be hard to identify the owner of a copyrighted work. The subcommittee will be considering “orphan works” legislation later this session to address that phenomenon. Similarly, in an effort to ensure that the copyright system works for the 21st century, we need to streamline licensing mechanisms to help users clear rights and promote legitimate distribution models (instead of illegal file-sharing).

While these efforts may not fully transform our “Age of Turbulence” into one of tranquility, they will bring needed clarity to our system of intellectual property rights.

Rep. Howard Berman (D-Calif.) is chairman of the Judiciary Subcommittee on Courts, the Internet and Intellectual Property.