Posts Tagged ‘Patent Law’

Free the Market! – An Intriguing Look at Antitrust Law

June 7, 2009

Gary l. Reback, has written an excellent book on contemporary antitrust litigation, Free the Market!.  Reback is an antitrust litigator who has worked on several high profile antitrust cases involving Silicon Valley technology giants, including Microsoft, Apple, and Oracle.  Free the Market! is not limited to IT, however, as it surveys industries as diverse as retail toys sales, women’s handbags,  and telecommunications.  Reback criticizes the “Chicago School” of antitrust analysis, which counsels against active antitrust enforcement by the federal government in favor of allowing the market to determine the appropriate levels of concentration in a given industry absent exceptional circumstances. According to Reback, the Chicago school’s approach has held sway at the Antitrust Division of the Justice Department and the federal judiciary, to the detriment of consumers and technological innovation.

Reback’s critique extends to the patent system, making the familiar argument that the U.S. patent system has impeded innovation by creating patent thickets for innovative technology companies.  He relates teh strey of Nathan Myrvold, the former Microsoft CTO who attained notoriety by saying that Microsoft wanted to charge a royalty on every internet transaction that needed to use Microsoft technology.  Myrhvold later formed Intellectual Ventures, a patent licensing company pursuing  similar royalty generating business model.  Reback notes the patent thicket problem and declares that the patent reform system needs to be reformed, but does not drill down into the types of reforms that would preserve patentees’ rights to protect valid intellectual property without creating the thickets that hurt small businesses.

Nonetheless, Reback’s book is a compelling narrative of antitrust cases that raises important issues in both antitrust and intellectual property law.

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Patent Reform Legislation Introduced In Congress

March 6, 2009

Patent Law blogs are buzzing about the patent reform legislation introduced this week in Congress.  PatentlyO has a good summary here, including a link to the proposed legislation.  Probably the most contoversial provision, indeed the provision that derailed patent reform in 2008, is the proposed amendment to the current patent damages regime.  The proposed amendment directs the Court to determine which of three methods a jury should use to calculate damages:

(A) Entire Market Value – if the Court finds that the claimed invention’s specific contribution over the prior art is the decisive generator of revenues, damages can be based on the entire market value;

(B) Established Royalty Based on Marketplace licensing – damages will be based on the value of an established rate of the patent, or of a non-infringing substitute.

(C) Valuation Calculation – Damages based on an the portion of the product that can be attributed to the patent (apportionment).

The intended effect is to significantly curtail the application of the Georgia Pacific factors, which require consideration of these among several other factors, but do not mandate that damages be limited to a minimal license rate or an apportioned value of the patent.

Patent reform opponents lost no time in beginning to fight the measure.  EE Times reports:

“Within hours after the new bill was introduced, two industry groups and two members of the House of Representatives came out against the new measure. The issue of damages quickly emerged as the central issue.”

Indeed, the two HR members, Don Manzullo (R-Ill.) and Mike Michaud (D-Maine, put out a joint statement saying:

“By diminishing the damage awards in patent infringement cases, this bill would encourage intellectual property theft by foreign competitors, putting 298,000 American manufacturing jobs at risk and curtailing U.S. research and development spending by $66 billion, according to a recent economic study”.

The congressmen are likely getting their numbers from a study put out by the anti patent reform group Innovation Alliance, by Case Western economist Scott Shane.  Shane argues that the reform would cause a reduction in the value of U.S. patents, which in turn would cause a reduction in the public value of U.S. Companies, causing a drop in R&D investment of $66 billion and a loss of anywhere from 51,000 – 298,000 manufacturing jobs.  Julian Sanchez’s excellent analysis of the patent reform bill dismantles Shane’s study, noting the fallacies in (1) assuming that any increase in patent damages automatically increases the value of U.S. companies, without accounting for the savings in reduced awards paid by accused infringers, and (2) assuming that a reduction in patent damages will cause a dollar for dollar reduction in the value of U.S. patents (in fact anticipated damages are only one factor in the complex formulas used to value intellectual property).

Patent Reform Organizations Gearing Up for Legislative Battle

February 22, 2009

The various organizations created to advance particular interests in patent reform have started to prepare for the coming legislative battles.  Not surprisingly, they have styled their messages around the recent economic storms, arguing that their policies will improve American economic health and competitive ness.

The National Journal reports that the Coalition on Patent Fairness has revamped its website and focused its message on the economic benefits of patent  reform.  The Coalition’s website includes a new blog where they announce the changes.  The National Journal notes that the Coalition joins other organizations gearing up both sides of the aisle, including the Manufacturers Alliance on Patent Policy, the Innovation Alliance, and the Coalition for 21st Century Patent Reform.

Indeed, the Manufacturers Alliance on Patent Policy recently coordinated a letter by over 130 manufacturers to President Obama asking that the administration approach patent reform at a much slower pace (or perhaps even exchewing the idea entirely).  The Manufactuers’ Alliance essentially argues that the changes wrought by the Supreme Court and Federal Circuit in patent litigation relieve the need for patent reform.  Their letter is reported by IP Watchdog here and PHOSITA here.