The Innovation Act is Anti-Innovation

Google remains the third largest corporate lobbyist in the country, spending a reported $4.62 million in the second quarter in Washington, with Amazon, Facebook, and Apple spending a combined $6.07 million in the same period.  Naturally, each company has its own interests—Facebook would like more skilled immigrants in the U.S. and Amazon wants to deliver goods by drone—but all of these tech giants, according to this story in Wired, have urged lawmakers to support a patent reform bill called the Innovation Act (HR 9).  Of course, the names of bills can be terribly misleading sometimes. Because, as far as I can tell, the Innovation Act is fundamentally anti-innovation.

At its core, HR 9 is meant to rid the patent system of the dreaded Patent Troll, who—like its cousin the Copyright Troll—will enforce a somewhat flimsy claim in some constituent patent it has no interest in developing, but pursues the case solely for the purpose of extracting money from an entity that is developing something new.  Even strong patent proponents will admit that bad actors exist—bad actors exist in every system—but that trolls are the exception not the rule, and more importantly, that the Innovation Act is based on a definition of “troll” so broad as to potentially disenfranchise many legitimate inventors.  In essence, the passage of HR 9 would be a rather sad comment on the fundamentally American rationale that established the intellectual property clause in the first place — the assumption that a great idea might come from anywhere.

The central problem with the way Silicon Valley interests are portraying the need for reform, according to Professor Adam Mossoff at the Center for the Protection of Intellectual Property at George Mason University School of Law, is that so many of the arguments are predicated on what he calls “junk science.”  Mossoff criticizes inaccurate studies of patent litigation, which have led to defining the term “patent troll” so broadly as to threaten a hugely inventive sector of the American market.  In legal lingo, the colloquial troll is generally referred to as a Non-Practicing Entity (NPE), but much of the data used to support reform proposals will define NPEs as “any entity that derives the majority of its revenue from patent licensing activities.”  As Mossoff—and former patent judge Paul Michel—will point out, this would include universities, start-ups, biotech firms—literally any entity that has the capacity and resources to invent but not the resources, structure, or expertise to develop, manufacture, distribute, and market. To quote Mossoff, “…the definition [of the NPE being applied] is so broad that it renders the results of its study completely uninteresting, unremarkable, and predictable – it’s like saying that 90% of people who sue over an auto accident own cars.”

If a doctor has a concept for a new medical device, both she and the public are going to benefit faster in most cases if the device is sold or licensed to a company that already has the resources to bring the instrument to the market.  Perhaps this same doctor will create a business entity that goes on to invent or improve several other medical devices, but which only ever sells the licenses for those products because it doesn’t make sense to become manufacturers.  Why should this innovative company’s patent interests be weakened by the fact that it would be defined as a Non-Practicing Entity?

In fact, where proposals like HR9 appear to lead is to further exacerbate the central hazard in the U.S. market, which continues to favor the massive corporation over the entrepreneurial endeavors.  It puts giant corporations at an unfair advantage—as if they didn’t already have an advantage—when it comes to licensing or exploiting the intellectual property created by individuals, start-up entities, or R&D-based institutions like universities.  Not only does this seem as though it would accelerate the disastrous trend of wealth consolidation, but it also appears to undermine the central, democratic principle that genius may come from the humblest corners of society and should be rewarded when it does.

On this note, I also have to point out that the arguments for this proposed reform to patent law sound a little too app-centric for our own good.  In large part, the aims of the “reformers” appear to be predicated on software and other innovations that tend to have short lifespans in the market–transformations measured in months in contrast to patents that last years.  And while I understand how distracted we can be with all the shiny objects that dance around on our little screens—giving us new ways to spy on ourselves for data mining companies; to hook up for casual encounters; to order a car service; or to play games on the crosstown bus—we should remember that there’s a lot of lower-tech invention and development that needs doing around here, even in the computing world.  We still need a greener energy paradigm, still have aging infrastructure, healthcare needs, security issues, outdated transportation systems, and growing concerns over resource management.  The inventions inherent in addressing any of these and other long-term challenges may well be in the minds of people whom HR 9 would define as future “patent trolls.”  That doesn’t sound like progress to me.

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