This is not to say that patents are a bad thing. In fact, the opposite is true. Patents create exclusivity, and exclusivity is valuable. Investment money follows when a company’s technology can be valued and protected with a measure of certainty, and when potential infringement risks from other patents can be ascertained.
Patents become overvalued, however, when the legal issues surrounding their enforcement become unwieldy. This incentivizes companies to acquire them en masse—not for the underlying technology, but to secure a place in the market. The loser in this scenario is the same one that resulted from the failure of mortgage-backed securities: the small- or medium-cap investor. When start-ups can’t compete because they have no way to combat an arsenal of uncertain patent rights, it will choke off competition and cause prices for patents to rise. In sum, Americans should expect to eventually pay for the current rush for overvalued patents.
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Senior Innovation Advisor for the Commonwealth of Massachusetts, Eric Nakajima spoke with The Washington Post's Emi Kolawole about the complex role immigration plays when it comes to high-tech innovation in the United States.
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First Book President and CEO Kyle Zimmer speaks with the Washington Post's Emi Kolawole about innovation and her advice on how to overcome failure.
Given this, why not return to the original patent laws of 1836? Back then, aspiring inventors were required to submit a physical patent model to clearly demonstrate what they had made. A patent examiner’s discretion was limited because there was no obviousness requirement, and courts couldn’t expand the scope of a patent’s claims using the doctrine of equivalents. Reverting to our original laws would drastically cut the time and cost to obtain patents and slash litigation costs, bringing the total cost of patents down to a rational market value.
Although this overhaul may sound radical, it could easily be implemented in the same fashion as the new AIA. This would allow all granted patents and pending patent applications to be grandfathered under the old rules. Thus, for roughly a decade, you would have two sets of patent laws until all the old patents expired. That would be fair to the existing patent holders, but still enable all new inventions to proceed under the new rules.
In addition to improving the cost and speed of patent litigation, this overhaul would also better define the scope of patents and the specifics of the technologies they cover. This clarity of purpose and language would stimulate more inventors to invent, and more of the investment community to fund the development of the resulting ideas. Only then can we expect to see the results that are currently being promised us via the AIA: increased entrepreneurship, decreased unemployment and worthwhile protection for America’s next generation of innovators.
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