David Kappos recently made a no-holds-barred speech at the LeadershIP conference in Washington DC. His clear and well-supported rationale is a breath of fresh air and a valuable compilation of facts that should serve as a wake up call for Congress and the Senate. If you haven’t had a chance to read the full speech, here are a couple of the most salient points.
The patent system is not, in fact, in a rapid decline
The narrative that’s playing in DC right now is that, as a result of patent troll games and frivolous litigation, the nation’s patent system is in crisis. Quite the opposite is true, according to Kappos. He cites studies of 2014 patent litigation trends which show that, from 2013 to 2014, there was an 18% decline in the total number of patent suits nationwide. In fact, when adjusting for recent procedural changes brought about by the America Invents Act (AIA), patent litigation in 2014 was in line with 2009-2010 levels.
In Kappos’ view, the American patent system is the “greatest innovation engine the world has known” and it is in need of “perpetual upkeep and habitual calibration” through smart reform, not broad-stroke changes:
Addressing today’s issues—which are real but not dire—through a massive overhaul of the system is like addressing a hangnail with an amputation the immediate problem will be obviated, but a slew of graver, irreversible problems will arise in the solution’s wake.
Blanket fee-shifting legislation isn’t necessary
Fee shifting is what hung up patent reform at the last go-around. Yet there’s still a hard push for legislation that awards attorney fees (loser pays) in “nuisance” patent litigation. Kappos argues that federal courts have always had the discretion to award attorney feeds to the prevailing party in exceptional cases. And two recent decisions, Octane Fitness v. Icon and Highmark v. Allcare have made it a requirement for courts to consider attorney fees more readily. It is early days, but the numbers seem to show that this case-by-case approach is working well, and that further legislation is unnecessary.
This is just a brief summary that highlights a couple of Mr. Kappos’ excellent points. I applaud Mr. Kappos for his direct and honest commentary and encourage everyone in our industry to read the full speech. Let’s have this conversation; one that’s based on facts, not rhetoric.
David Kappos is the former Director of USPTO. He is currently a Partner at Cravath, Swaine & Moore LLP and is considered a leader in the filed of Intellectual Property.
IAM Magazine hosted a successful NPE 2015 conference in New York last week, with over 200 industry delegates taking part. This conference, the industry’s first to focus specifically on the NPE community and our important role in the business of patent licensing, was an inspiring forum where we discussed the most pressing issues and explored how we can work toward a more positive view of our industry. Here is what I saw as the conference headlines:
Collaborative engagement in patent reform is essential for our industry
NPE 2015 attendees including senior leaders at NPEs, inventors, investors, lobbyists, analysts and lawyers agree: our collaborative participation is foundational to ensuring that proposed patent reforms are structured to stimulate, not stifle, ongoing innovation. We’re in this together.
“Licensing is under attack and industry needs to be more visible and voluble.” – Russ Merbeth, IV
Educating legislators on patent reform issues is well worth the effort
I took part in the opening panel, which focused on the current operating and policy climate. We had a frank discussion about how patent law is simply not a priority for most on The Hill. It takes a lot of time and effort to s how up and educate our legislators about both sides of the story; we’ve not got as deep pockets as our opponents, but we need to keep trying.
“What we have come to understand is that most people in DC are well-intentioned and work extremely hard, but they just do not have the time to research issues deeply. What they hear is what people tell them, so if you don’t go to make your case they will never hear it.” , Conversant
A sneak peak of Kappos’ critique of the Goodlatte Innovation Act
David Kappos, former USPTO director and a senior advisor to the Partnership for American Innovation, spoke out frankly on the Innovation Act. He made striking remarks which we now know were a warm–up for his no-holds-barred speech in Washington DCat the LeadershIP conference. He argued that current proposed legislation has the potential to devalue the patent system and cause decrease in investment in innovation.
“The Innovation Act is such a damaging piece of legislation. It will cause the mass devaluation of the patent system, which in turn means the mass devaluation of innovation. And when that happens you will get much less investment in innovation – that’s how the free market system works.” – David Kappos
Creative opportunities: NPE business models and markets
There was a recognition that NPEs who are in the business for the long game have to be creative about long-term growth strategies, building quality portfolios, and entering global markets. Germany was highlighted as a jurisdiction that is particularly promising to patent licensing entities. Numerous panelists commented that Germany was tops on their list of venues. Countries mentioned as strong opportunities alongside Western Europe, Japan and the US, were Indonesia, India, Turkey, Brazil and China.
“One result of this push across the Atlantic is that while US patent prices may be falling, in Europe they are starting to edge up.” – industry source to IAM’s Joff Wild
Conversant will be at IPBC China in Beijing this April. Watch this space for our highlights from this key event, themed ‘Maximising IP value’ in the Chinese marketplace.