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American Inventors Warn Congress of Potential Negative Impacts of Pending Patent Reform Legislation


Wednesday, April 02, 2014

Inventors from across the country caution that Senate bill could hurt innovation, economic growth and job creation; call on Congress to avoid unintended consequences of pending proposals

As a key U.S. Senate committee considers whether to take up patent legislation later this month, American inventors from across the country traveled to Capitol Hill today to warn members of Congress of the potential negative impacts of the pending legislation on American innovation, economic growth and job creation.

In a briefing for Capitol Hill staff today, a diverse group of inventors — including medical device and technology inventors, the creator of “Onion Goggles,” and a former contestant on the PBS series “Everyday Edisons” — called for the interests and concerns of small inventors and start-ups to be taken into account as the debate over patent reform continues in the Senate.

“For American innovation to continue to thrive, we must have a strong patent system that encourages innovation, attracts investors, grows our economy and creates good jobs. That very innovation economy is in jeopardy thanks to this legislation, which would discourage invention and seriously undermine the ability of start-ups to raise capital to fund their companies and new inventions. We’re here to make sure the voices of America’s innovators are heard in this debate, before it is too late and too much damage is done,” said Louis Foreman, Chief Executive of Edison Nation, which led the inventors’ fly-in along with the Alliance of U.S. Startups and Inventors for Jobs (USIJ) and Entrepreneurs for Growth.

Patent reform legislation has already passed in the House of Representatives (HR 3309). The Senate Judiciary Committee is considering a mark-up of its own legislation this month.

Eb Bright of USIJ noted, “The legislation currently before the Senate, which supporters claim to be ‘anti-troll,’ is actually anti-inventor, anti-start-up and anti-jobs and will damage the development of the next wave of innovations from U.S. start-ups. The provisions that have already been introduced either miss the abusive practices altogether or cast a broader net than intended. In order to avoid unintended consequences that could seriously harm American innovation, Congress should slow down and reconsider how to thoughtfully address this important issue.”

USIJ represents more than 40 life science and tech companies, inventors and research institutions that have come together to protect the nation’s innovation ecosystem. In order to ensure that the voice of inventors is fully integrated into the debate, the inventors have called on Congress to hold a second Judiciary Committee hearing on S. 1720 (Judiciary Chairman Patrick Leahy’s Patent Transparency and Improvements Act of 2013) that includes inventor testimony and to work with stakeholders, small inventors, start-ups, universities and other members that make up our American innovation economy on improvements to the bill.

As the America Invents Act was fully implemented less than a year ago, the inventors argue that its effect on our patent system has yet to be fully understood or appreciated, and that any attempts to alter the current system should be done with care to avoid unintended consequences that would harm inventors and entrepreneurs.

“Our strong patent system helped create our economy,” continued Foreman. “Therefore, Congress should be cautious and have a robust debate before making additional changes to our patent laws that might hamper economic growth or the job creation our country relies on.”

Inventors’ concerns with pending patent proposals include:

  • Fee-shifting provisions, which will actively discourage small entities from pursuing litigation to enforce their constitutionally bestowed rights by making the financial risk prohibitive, even when bringing suit in good faith.
  • Customer stay provisions will allow infringers to manipulate their supply chain structure to impede or prevent meritorious cases and increase the cost of litigation for the patent holder.
  • PGR estoppel removal will allow profitable, incumbent companies to harass and create financial hardship for our country’s inventors, start-ups and universities even if they do not intend to enforce their patents. Maintaining strong estoppel is crucial for inventors and start-ups that require strong patent protection to justify the risks they take with their investors to develop their products and technologies.
  • Heightened pleading standards provisions, which would deter legitimate inventors from asserting valid patents in meritorious cases by requiring that plaintiffs provide at the inception of a lawsuit overly detailed claim charts as well as technical information that is accessible only to the accused infringer. These provisions would also allow accused defenders to obtain early dismissal of meritorious cases simply by refusing or not being required to provide the information needed to plead the case. The focus should not be on the initial pleading and it should not only focus on claims, counterclaims and cross-claims of patent infringement.
  • Forced Joinder of investors will drive up the cost and complexity for individuals, start-ups and universities. Threat of joining investors will discourage seed and early stage investment. This provision will have a very chilling effect on investments in inventions and start-ups that require patent protection to succeed.
  • Congress should allow the covered business methods provisions from the American Invents Act (AIA) to continue as planned in the AIA and thereafter expire. Recently proposed versions of the covered business methods provisions have been designed by a handful of giant technology companies that would like to use the patented inventions of others without paying a fair price. Not only will these proposed versions prevent inventors and start-ups from producing our big breakthroughs to grow our economy and create jobs in the future, it will also put many small companies that rely on patents out of business today.
  • Demand letter provisions should target language specifically toward ‘fraudulent or materially misleading’ demand letters. They should underline the authority of the FTC to enforce section 5 of the FTC Act and take appropriate action against unfair or deceptive acts or practices, including abusive behavior.

In addition to Louis Foreman, inventors participating in the Capitol Hill fly-in included: Dr. James Bower, computational neurobiologist & founder of Whyville.com; Richard Himmelstein, inventor, entrepreneur & founder of ReachPeople; Eric Huber, inventor; Christopher Hawker, PowerSquid inventor; Griff Neal, Chief Executive, Encap Technologies;John Morris, Director of R&D, Twelve; and Martin Mayse, MD, Chief Technology Officer, Holaira.



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