David Kappos’ fact-based argument against legislative patent reform: music to my ears

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.

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