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The Next Wave | Vol. 19 | No. 3 | 2012

Patent protection may hinder innovation

Results of a study suggest that, contrary to popular belief, greater amounts of innovation, productivity, and social utility may occur when people are required to pay damages for illegally using an invention rather than when they are prohibited from using it at all. Researchers Bill Tomlinson, informatics professor at the University of California, Irvine, and Andrew Torrance, professor at the University of Kansas School of Law, conducted a study providing experimental evidence that the most innovation may result when inventors receive no protection from the legal system. Using the "Patent Game," an interactive computer-based model that attempts to simulate patent systems, Tomlinson and Torrance conducted controlled experiments to evaluate the merits of property rules (which expressly prohibit people from utilizing a patent owner's invention) and liability rules (which require infringers to pay damages but do not bar them from using an invention). "Conventional wisdom says people will invent less if property rights are not strongly enforced," Torrance said. "However, we found that the threat of prohibition actually dampened innovation." Their paper, "Property rules, liability rules, and patents: One experimental view of the cathedral," appears in the 2012 spring issue of the Yale Journal of Law & Technology.

Should patents and commercialization activities count toward faculty tenure and promotion?

Increasingly, universities are including faculty member patents and commercialization activities in deciding tenure and promotion. However, a small study conducted in 2011 revealed that 75 percent of North American universities surveyed do not include patent and commercialization considerations in their tenure and promotion criteria. The study's authors, Dr. Paul Sanberg, senior associate vice president for research and innovation at the University of South Florida and president of the National Academy of Inventors, Ginger Johnson of Technology and Innovation, and Dr. Ashley Stevens, former senior research associate at the Boston University School of Management and past president of the Association of University Technology Managers, found that the universities that take patenting and commercialization into account share additional features: They are public institutions, they consider US patents a priority, they have adopted the policy in the last six years, and they publish their tenure and promotion guidelines. The authors note that adding patent and commercialization activities to tenure and promotion criteria will encourage young professors to innovate early, which will in turn boost universities' research budgets. They point out that in 2009 universities earned about $1.8 billion in royalties from academic inventions, an increase over $1.6 billion in 2008 and $1.3 billion in 2007. The report, "The role of patents and commercialization in the tenure and promotion process," appears in Technology and Innovation, Proceedings of the National Academy of Inventors (Vol. 3, No. 3).

Background on the America Invents Act, from the US House of Representatives Committee on the Judiciary

On September 16, President Obama signed into law the Leahy-Smith America Invents Act (H.R. 1249), a bipartisan, bicameral bill that updates our patent system to encourage innovation, job creation, and economic growth. Both Houses of Congress overwhelmingly supported the proposal, which was sponsored by House Judiciary Committee Chairman Lamar Smith (R-Texas). The House of Representatives passed H.R. 1249 by a vote of 304-117 earlier this year. The Senate passed the bill by a vote of 89-9. Senator Patrick Leahy (D-Vermont) partnered with Chairman Smith on the legislation. Congressman Smith led the House efforts on patent reform for more than six years.

Much-needed reforms to our patent system are long overdue. The last major patent reform was nearly 60 years ago. Since then, US innovators have developed cell phones and launched the Internet. And yet the laws protecting the technologies of today are stuck in the past.

Our outdated patent system has been a barrier to innovation, unnecessarily delaying American inventors from marketing new products and creating jobs for American workers. It takes over three years to get a patent approved in the US. American innovators are forced to wait years before they can hire workers and market their inventions. Meanwhile, our competitors are busy developing new products that expand their businesses and grow their economies. This year, for the first time, China is expected to become the world's number one patent publisher, surpassing the US and Japan in the total and basic number of patents. We cannot expect America's innovators and job creators to keep pace with the global marketplace with the patent system of the past. We need a system that ensures patent certainty, approves good patents quickly, and weeds out bad patents effectively.

The Leahy-Smith America Invents Act is one of the most significant job creation bills enacted by Congress this year. The Act implements a first-inventor-to-file standard for patent approval, creates a postgrant review system to weed out bad patents, and helps the Patent and Trademark Office address the backlog of patent applications. The enactment of H.R. 1249 is a victory for America's innovators and job creators who rely on our patent system to develop new products and grow their businesses. The America Invents Act brings our patent system into the 21st century, reducing frivolous litigation while creating a more efficient process for the approval of patents. These reforms will help the innovators and job creators of today launch the products and businesses of tomorrow.

Software companies ignore patent infringement

In an article to be published in New York University Annual Survey of American Law, Christina Mulligan and Timothy Lee assert that patent litigation is rampant throughout the software industry because the cost for a company to figure out if they are infringing upon a patent (i.e., discovery costs) is prohibitively high. They point out that discovery costs are high because of the sheer number of software patents and their disorganization. Software products contain thousands of lines of code, any of which may be patentable. Raising a popup window to update software, the slide-to-unlock feature on an iPhone, and the one-click purchasing feature on a retailer's website—they are all patented. Mulligan and Lee argue that information collected about software patents is not standardized and, thus, not indexable. Their article, "Scaling the patent system," claims that thoroughly clearing a single software product from patent infringement would require more patent attorneys than exist in the US and would cost more than the entire value of the software industry. As a result, many software companies do not try to avoid patent infringement. To remedy this problem, Mulligan and Lee suggest patent policy reform, such as excluding industries with high discovery costs from patent protection, establishing an independent invention defense, or eliminating injunctions.

Printing intellectual property in 3-D

In January 2012, The Pirate Bay, a controversial file-sharing website, launched a new category of downloads termed, "physibles"—digital design files that can be printed as physical objects from a 3-D printer. 3-D printers work by building up an object one layer at a time. Currently, they are used in industrial settings to create objects such as artificial jaws and airplane components, but personal 3-D printers are on the horizon. 3-D printers will allow the general public to legally create objects for use and/or sale that they may have otherwise purchased because, unlike text, music, and video, which are protected by copyright immediately upon creation, the majority of physical objects are not protected by an intellectual property right. Intellectual property rights for physical objects and designs come in the form of patents and trademarks, and they are harder and more expensive to obtain than a copyright. Additionally, file-sharing websites like The Pirate Bay may open the way for people to use 3-D printers to illegally reproduce patented physical objects. Just as the entertainment industry responded to illegal file-sharing with digital rights management techniques that prevented a file from playing on an unauthorized device, manufacturers of physical objects may respond to 3-D printers by developing techniques to protect digital design files. (Photo depicts a necklace, created by Dutch jewelry designer and conceptual artist Ted Noten, made of glass fiber-filled nylon printed from a 3-D printer.)

Assessing intellectual property awareness

The US Department of Commerce's Patent and Trademark Office (USPTO) and National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership (MEP) unveiled the web-based Intellectual Property Awareness Assessment Tool on March 30, 2012. The tool is designed to help manufacturers, small businesses, entrepreneurs, and independent inventors easily assess their knowledge of intellectual property (IP).

"Understanding and protecting IP is an important part of the process of bringing innovations to the marketplace," said Under Secretary of Commerce for Standards and Technology and NIST Director Patrick Gallagher. "We hope this new tool will be useful for companies and individuals helping them to create value and be more globally competitive."

Intellectual property is a key concern of small businesses owners, who can secure significant competitive advantages by exercising the rights they hold to their innovations. However, many individuals are often unaware of their rights and miss the opportunities they can provide. USPTO and NIST MEP developed the IP Awareness Assessment Tool as a way to help educate innovators about these rights.

The tool enables users to measure and increase their awareness of IP issues, relevant to their creative projects and business goals. Users answer a comprehensive set of questions regarding IP, after which the tool provides a set of training resources tailored to specifically identified needs. The tool is available on USPTO's website at

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Date Posted: Jan 15, 2009 | Last Modified: May 9, 2012 | Last Reviewed: May 9, 2012