WASHINGTON (Legal Newsline) – A group of 40 economists and law professors from around the country sent a letter to members of Congress Tuesday, expressing serious concerns with the many “flawed, unreliable or incomplete” patent litigation studies that have become the basis for another possible restructuring of the nation’s patent system.
The economists and professors sent their five-page letter to U.S. Sen. Chuck Grassley, R-Iowa and chairman of the Senate Judiciary Committee; Sen. Patrick Leahy, D-Vt., ranking member of the Senate Judiciary Committee; U.S. Rep. Bob Goodlatte, R-Va., and chairman of the House Judiciary Committee; and Rep. John Conyers, D-Mich., and ranking member of the House Judiciary Committee.
Goodlatte
The group is urging the federal lawmakers to proceed with caution to ensure balanced, targeted legislation.
“As Congress considers legislation to address abusive patent litigation, we believe it is imperative that your decisions be informed by reliable data that accurately reflect the real-world performance of the U.S. patent system,” the economists and professors wrote.
“Unreliable studies with highly exaggerated claims regarding patent trolls have stolen the spotlight after being heavily promoted by well-organized proponents of sweeping patent legislation.”
The group argues that the “bulk” of the studies relied upon by patent reform advocates are “infected” by fundamental mistakes.
“For example, the claim that patent trolls cost U.S. businesses $29 billion a year in direct costs has been roundly criticized,” they noted, referring to a Boston University study that found in 2011 90 percent of companies facing patent lawsuits were small businesses.
However, that study was based on less than 100 respondents.
“Studies cited for the proposition that (non-practicing entity) litigation is harmful to startup firms, that it reduces (research and development), and that it reduces venture capital investment are likewise deeply flawed,” the group continued.
The economists and professors — from George Washington University, University of Virginia, George Mason University, Stanford University, University of Pennsylvania and University of California Berkeley, among others — said they are not opposed to “sensible, targeted” reforms that consider the costs created by both plaintiffs and defendants.
“Yet, tinkering with the engine of innovation — the U.S. patent system — on the basis of flawed and incomplete evidence threatens to impede this country’s economic growth,” they wrote. “Many of the wide-ranging changes to the patent system currently under consideration by Congress raise serious concerns in this regard.”
The group argues that, at a minimum, the fact that patent lawsuit filings decreased in 2014 — including what they describe as a “substantial” decrease in lawsuits brought by patent licensing companies — calls into question much of the current rhetoric.
“We are very concerned that reliance on flawed data will lead to legislation that goes well beyond what is needed to curb abusive litigation practices, causing unintended negative consequences for inventors, small businesses and emerging entrepreneurs,” the economists and professors wrote. “It is important to remember that inventors and startups rely on the patent system to protect their most valuable assets. Legislation that substantially raises the costs of patent enforcement for small businesses risks emboldening large infringers and disrupting our startup-based innovation economy.
“If reducing patent litigation comes at the price of reducing inventors’ ability to protect their patents, the costs to American innovation may well outweigh the benefits.”
To read the complete letter, along with the studies and articles cited, click here.
From Legal Newsline: Reach Jessica Karmasek by email at [email protected].
