Knocking Some Common Sense Into Patent Lawsuits
from
January/February 2006
by Stephen B. Maebius
Strong patent protection has produced a rich heritage of
innovation in the U.S. that continues to this day. Patents provide the
protection needed to secure investments in risky new technologies such
as stem-cell treatments and nanotechnology. New drugs are brought to
market on the strength of patents that enable pharmaceutical companies
to recoup the incredibly high costs of research, clinical testing,
regulatory approval, and marketing.
But recent years
have seen a big increase in the number of high-stakes
patent-infringement cases against major companies such as eBay,
Research in Motion (the maker of BlackBerry wireless devices), and
Microsoft. All have faced the prospect of paying staggering sums for
patent-infringement awards and litigation costs. Plaintiffs claiming
they were there first in all kinds of other inventions and discoveries
are flocking to the courts that are perceived to be most favorable to
them. These include the Eastern District of Texas, where large groups
of multinational companies are routinely joined together as defendants
in a single case when a broad patent covers a standard industry
component. This trend has fueled charges that patents in some instances
are actually stifling innovation and that the threat of patent
litigation creates too much leverage in the hands of those holding
patents of questionable validity.
Defending patent
cases is expensive—a median of about $500,000 in cases that ended in a
court verdict, according to a 2000 survey by the American Intellectual
Property Law Association. In patent suits where more than $25 million
was at stake, the median cost of litigation was $4 million for each
side.
Against this backdrop, Congress has proposed
legislation that would enable companies that think a potential
plaintiff’s patent is invalid to make their case in an administrative
proceeding at the U.S. Patent Office. Known as “opposition,” the
procedure would weed out invalid patents before they become the source
of unwarranted, costly, and protracted litigation. A conclusion could
be reached within a year and could save a lot of money. By late
November, NTP v. Research in Motion, in which NTP accused Research in
Motion of infringing its patents, had dragged on for three years and
cost the defendant $15 million.
The proposed
legislation also tries to strike a balance in which both innovation and
competition are encouraged. Without weakening the protection needed to
continue our tradition of innovation, the opposition procedure, which
virtually eliminates the costly discovery phase of litigation, would
set a one-year deadline for challenges to a new patent. Laws already on
the books provide a way out for those that miss the date. A company can
file a request for “reexamination” at any time during a patent’s
enforceable life, for example.
Congress’s proposed
opposition system would not weaken our patent laws but would provide a
speedy and inexpensive way to administratively revoke questionable
patents. Provided that industry cooperates with a reasonable amount of
competitive patent-monitoring, opposition will bring about a
much-needed alternative to costly litigation over patents of dubious
validity.
Stephen Maebius, an
intellectual-property partner in the Washington, D.C., law office of
Foley & Lardner, formerly served as a patent examiner in the U.S.
Patent and Trademark Office.
