The U.S. technology industry has faced dozens of lawsuits by “patent speculators” in recent years, and it’s time for Congress to fix problems with the patent system, Intel’s general counsel said Monday.
In the last 21 months, U.S. technology vendors have contended with 193 patent infringement lawsuits, and 70 percent of them came from patent speculators — “people who buy up patents for the purpose of litigating them,” said Bruce Sewell, Intel’s executive vice president and general counsel, at a patent forum.
By contrast, companies in the pharmaceutical industry have been defendants in 28 patent infringement lawsuits during the same stretch, and 24 of those lawsuits have been between competitors, he said.
Patent lawsuit reform is needed to fix the problem with patent speculators — called patent trolls by some people — Sewell said, speaking at a patent reform forum in Washington, D.C. Patent reform legislation pending in the U.S. Senate doesn’t target legitimate inventors, he said.
“We’re not talking about individual inventors who sue for patent infringement,” Sewell said. “We’re talking about patent speculators who warehouse patents and use those patents to go after successful companies.”
But Hans Sauer, associated general counsel at the Biotechnology Industry Organization (BIO), called the Patent Reform Act, a version of which passed the House of Representatives in September, a “very patent-hostile bill.” In the Senate, the bill has stalled over objections from the biotech and pharmaceutical industries, as well as inventors and some labor unions.
The House version of Patent Reform Act, supported by several large tech vendors including Microsoft and IBM, would allow courts to change the way they assess damages in patent infringement cases. Currently, courts generally consider the value of the entire product when a small piece of the product infringes a patent; the bill would allow courts to base damages only on the value of the infringing piece.
“Not all patents are identical,” Sewell said. “Some patents are more important in a product, and some patents are less important.”
The bill would also allow a new way to challenge patents within one year after they’ve been granted.
Changes in the way patents are enforced could hurt innovation, Sauer said. The bill could diminish incentives for the health industry to innovate in the coming years, he said.
“Will I, 30 years from now, pay $10 less for an iPod and have a 10 percent less chance that Alzheimer’s medicine will be available?” he said.
It is difficult to predict the effects of the patent reform legislation, added Anat Hakim, a patent lawyer with Foley & Lardner LLP, the law firm that sponsored the patent forum.
Sewell complained that there’s a small “cottage industry” of patent speculators that have sprung up. “The concern is that we don’t end up encouraging another cottage industry,” Hakim said.
The U.S. Supreme Court has ruled on several patent questions in recent years, and the U.S. Patent and Trademark Office is instituting new rules later this year, Sauer noted. Adding a patent overhaul bill on top of those changes is “a lot to happen at once,” he said.
But Sewell said the changes are needed for the IT industry, if not biotech. “You have a group of companies that are happy with the status quo, and are saying, ‘Don’t change it; it’s not broken,’” he said. “That’s fine, but it’s broken for a lot of other people.”