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2/17/2006
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The U.S. Patent System In Crisis

The U.S. patent system is in disarray. Change requires not just a better system, but better patents, too.

Injunctive Power
Few people outside the Patent Office think true reform will come from administrative rule changes alone. Legislative reforms are more likely to improve patent quality and reduce litigation, but getting a bill pushed through Congress is no sure thing, given the variety of interests lobbying for and against parts of Smith's legislation. And even if it did happen, those changes would have little impact on patents already in force. Tens of thousands of existing patents of questionable quality would remain valid for as long as 20 years.

That's why debate over patent reform often returns to the power of injunction. Injunctions have been the default remedy in patent cases for nearly a century, requiring the court to bar an infringer from continuing to use the technology at issue. Major IT vendors would like to limit their use to cases where irreversible damage has been done to a company. Even with dramatic improvements in patent quality, injunctions shouldn't be automatic, says Matt Tanielian, Cisco Systems' senior technology policy counsel. "It's inherently an imperfect science. It's never going to eliminate all bad patents," he says. "The entrepreneur and the opportunist in the system will find a bad patent, or find the patent they can exploit, and use it."

But opponents, including small tech companies, independent inventors, and companies with patents as their principal assets, argue that without the threat of an injunction, large infringing companies would have no motive to settle with patent holders. "You can wave a magic wand right now and get all these high-quality patents to be issued, and I'm telling you, the infringement problem won't go away," MercExchange's Woolston says. The big tech companies arrogantly disregard other companies' intellectual property rights, assuming that no one can stop them, he says. The more aggressive they are, the more Wall Street rewards them, "and they get paid handsomely," he adds. "They don't think the system is quick enough to stop them."

The threat of an injunction can force warring parties to negotiate. "A good reason to have an injunction remedy is because the courts won't do a very good job of determining what patent damages should be, or because we think the process of going through that is too expensive," says George Washington University Law School professor Mark Abramowicz.

In most areas of law, judges can weigh the pros and cons of various remedies that serve the public interest. Patent law, however, all but mandates automatic injunctions for an infringing patent. But "this is what judges are good at ... weighing what the appropriate remedy would be," says Electronic Frontier Foundation's Schultz. "If you have a good case ... a judge will grant you an injunction in a minute. It's just giving the judge discretion to actually decide whether or not it's a good idea, as opposed to some automatic thing where even if you have a lousy case, and there'll be extreme public harm, you get it anyway."

But injunctions are only a symptom of the bigger problem: Bad patents lead to confusion, litigation, and a bad system. Strong patents would mean fewer challenges, fewer resources spent on interminable reviews and court battles, and more confidence in a system that underpins entrepreneurialism in America. It may take 20 years to get rid of all the weak patents, but the overall effect on the patent system would be well worth the wait.

Continue to the sidebars:
The Jpeg Enforcer
and Tech-Talk Troubles

Read more about patent reform
and listen to our podcast on patent enforcement as a business model.

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