Thursday, December 09, 2004

IEEE Spectrum Says the U.S. Patent System is Sick

From IEEE Spectrum, the monthly magazine serving the nations electrical engineers:

A small grocery and catering company in Gaylord, Mich., received an unusual letter in 2001 from the law firm representing jelly giant J.M. Smucker Co. The letter accused Albie's—which sells pastries and sandwiches in northern Michigan—of violating Smucker's intellectual property by selling crustless peanut butter and jelly sandwiches.

For those of you who were born fucking yesterday, crustless PB&J sandwiches are preexisting art. As such, they should never have been considered for a patent -- nor should Smucker's have applied for one.

The U.S. Congress set us on this road in 1982, when it created a centralized appellate court for patent cases called the U.S. Court of Appeals for the Federal Circuit. A decade later, Congress ordered that the U.S. Patent and Trademark Office (PTO), which up until then had been funded by tax revenues, instead fund itself through application and maintenance fees. Both changes were described as administrative and procedural rather than substantive.

But now, after still another decade, it is apparent that together these changes have resulted in the most profound transformation in U.S. patent policy and practice since the Patent Act of 1836. They make it easier to obtain patents, to enforce patents against others, and to extract large financial awards from such enforcement but harder for those accused of infringing patents to challenge the patents' validity.

What's more, the changes increase the risks associated with innovation
Of the 169 028 U.S. patents issued in 2003, nearly half were issued to foreign entities.

Flawed as it is at times, the free enterprise system has demonstrated a unique ability to generate new technology. Industrialized capitalist economies have increased their productivity more in the last two centuries than in all the millennia of previous human history. The basis for this advance is the pursuit of profits, which forces companies to innovate. This incentive depends fundamentally on the smooth functioning of the institutions that determine and administer ownership of the fruits of research and development—the patents, trade secrets, and copyrighted material.

Instead, our PB&J-friendly patent system costs companies and individuals billions of dollars and millions of man-hours annually to obtain patents and fight frivolous lawsuits. More often than not, patent holders win in court, despite problematic claims stated in their patents. In recent years, as many as two-thirds of patent holders have succeeded in litigation at the federal district court level, compared with an average success rate of 32 percent in the decades before the congressional reforms took hold [in 1982].

The solution they suggest:

Create incentives and opportunities for parties to challenge the novelty and nonobviousness of an invention before the PTO grants a patent


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