George Ward: Patent reform could stifle innovation, high-tech startups

May 27, 2014 

George Ward is executive director of the University of Kentucky Coldstream Research Campus.

The U.S. patent system has been under intense scrutiny lately by federal and state lawmakers, as proposed reforms threaten to weaken our patent system, a system upon which countless innovators have relied for more than 200 years.

It is important that any action taken by lawmakers does not unintentionally stifle commercialization and innovation.

Proponents to changes in patent law are companies that have been victimized by the so-called "patent trolls." They are patent owners that do not design or manufacture products or processes, sometimes referred to as "nonpracticing entities."

Patent trolls instead threaten legal action against companies using routine business technologies such as providing free Wi-Fi in a store or placing the "shopping cart" feature on a website.

I am concerned that some provisions in these legislative proposals are drafted in an overly broad manner and go far beyond what is necessary in targeting bad actors within the industry. While abusive patent litigation is unwanted behavior, small high-tech companies could be harmed by new legislation that weakens their ability to defend patents on new technologies they develop.

As recognized in a recent article written by Brian W. Hannon and Margaret M. Welsh, of Sughrue Mion PLLC, not all nonpracticing entities are alike; they "may include universities, startups, technology transfer offices and research institutions."

As executive director for the University of Kentucky's Coldstream Research Campus, I see firsthand how difficult and time-consuming the process is for bringing inventions to the market — a process that sometimes stalls for a period due to unexpected gaps in funding.

UK provides support to more than 25 very early-stage companies still in their research and development stage. Many of these companies are further developing innovations first made in the labs at UK. These companies are the innovative product and well-paying job creators of the future. Any acts by lawmakers that impede small technology companies from prosecuting and protecting the patent rights they hold could not only reduce the number of new discoveries and new products that will make our lives better in the future, but harm the future jobs and the economy of our commonwealth.

Every era of invention has seen an increase in attention surrounding patents, mainly because of the surge of lawsuits that historically accompany the really big discoveries.

Patent wars have in fact been a hallmark of the system, dating all the way back to the discovery of the sewing machine in the 1850s and for other discoveries including light bulbs, telephones and automobiles.

In each case, litigation eventually subsided, technology evolved and our lives were made richer.

Adam Mossoff, in his article, "The Sewing Machine Patent Wars," stated:

"The patent litigation rate between 2000 and 2010 was a constant 1.5 percent. As reported by award-winning economist Zorina Khan, the average patent litigation rate between 1790 and 1860 was 1.65 percent ... Also, it bears noting that the measurable increase in patent litigation in 2012 was entirely the result of legal changes to the patent system instituted by the America Invents Act of 2011, as recognized by Congress' GAO Report on Patent Litigation (August 2013)."

It is critical that the Senate Judiciary Committee listen to all sides of this debate before rushing to action. I firmly believe a reasonable compromise that protects the rights of innovators while combating harmful patent prac tices is attainable if a robust debate examines the pros and cons of each proposed change.

To overcompensate for the trolls without seeing a bigger picture that supports innovation could undercut our ability to improve lives, grow jobs and compete on a global scale.

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