Last summer, Lamar Smith put forth a bill to reform the patent system that included a variety of ideas that were mostly bad and would likely make the system even worse than it already is. The Senate has now followed up with its own plan and it's also a mixed bag. Just like Smith's bill, it changes the patent policy from "first to invent" to "first to file." As we've pointed out repeatedly, this is dangerous because it simply puts the incentives in place for companies to file more patents faster -- and when you're facing a system that doesn't scale, the overall impact can be extremely dangerous. The system gets even more overwhelmed, to the point of breaking down completely. The Senate plan does try to make it easier to contest patents, which is good. However, there are some problems with the way it's been set up. First, the appeals process goes before judges from within the patent office -- who have an obvious bias to see patents remain in place, rather than be overturned. Second, the system requires people to protest a patent within the first year it's been granted. Considering how many patents are suddenly brought up years after they've been granted (only when someone else does something innovative in the market), this seems very dangerous as well. All it means is that many firms may wait an extra 12 months before suing for patent infringement. The bill tries to stop the forum shopping that has made Marshall, Texas so popular among patent litigation lawyers -- but, of course, the last time the government tried to stop forum shopping it created additional problems as well (such as a centralized court that was staffed mainly by strong patent supporters). A final point in the bill is a good idea however -- saying that damages on patent infringement claims should only be limited to the value of the patented part, not the overall product. This is actually a big step forward, as too many patent infringement suits these days are about a minor feature in a larger innovation -- but the patent holder claims that they deserve royalties based on the price of the overall product. It's unlikely this bill will go anywhere, but it's yet another iteration in the patent reform effort. Unfortunately, there's way too much "bad" to go with the few "good" points in the bill.
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