Recommendations for US Patent Reform*
by the Federal Trade Commission (FTC) and the National Academies of Science (NAS)
III. Infringement and Other Issues
The effectiveness of patents depends heavily on the nature of litigation for infringement.
Willful Infringement
If a firm knowingly infringes a patent, that firm is subject to the possibility of harsh penalties (up to three times the damages). During the hearings, some commentators stated that they avoid reading patents in order to avoid these penalties. This may lead to unnecessary duplication of R&D and it means that patent publication does not serve to disseminate new technical knowledge, one of the policy objectives of the patent system.
The FTC recommends that a patent holder claiming willful infringement can only seek treble damages if he/she provides written notice (sufficient to allow an infringer to challenge the validity of the patent) or when the infringer deliberately copies the invention, knowing it to be patented.
The NAS recommends that this rule should be significantly modified or eliminated.
Good Faith by Patent Applicants
The patent system depends on patent applicants to provide essential information. To deter bad faith behavior, if a court finds that a patent applicant withheld important information, the court can deem the patent unenforceable or invalid. This occurs, for instance, if an applicant intentionally fails to disclose prior art that might invalidate the patent (“inequitable conduct”) or if the patent application fails to inform the public of the best way to implement the invention (“best mode”).
The NAS report argues that these rules add to the expense of patent trials because they often require a difficult determination of the patent applicant’s state of mind at the time of the application. The report recommends that these rules should be significantly modified (it makes some specific suggestions) or eliminated.
The FTC made no recommendations regarding these rules.
Experimental Use
Based on common law precedent going back to the early nineteenth century, universities long believed that researchers using a patented invention for experimental purposes were exempt from patent infringement. A recent CAFC decision (Duke v. Madey) effectively removes this exemption. This has raised concerns about the effect patents may have on university research.
The NAS recommends “appropriate targeted legislation” to provide “limited protection for some research uses of patented inventions.” Also, the report recommends that the Federal government assume liability for patent infringement by federally-funded researchers.
The FTC did not make specific recommendations on this issue (the decision occurred late in the hearings) although the FTC report notes the potential chilling effect on research and suggests that this issue warrants continued attention.
Other issues
The FTC also recommends that economic policy considerations should be integrated into patent law decisions.
The NAS also recommends that the US, Europe and Japan harmonize their patent procedures and standards over such issues as the rules for determining priority. Recommended changes in US patent rules include changing from a first-to-invent priority rule to first-to-file and mandatory publication of all patent applications after 18 months.
I., II., III.
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*The analysis provided here (in black) does not necessarily represent the analysis provided by the FTC or NAS. The recommendations (in red) are brief summaries of recommendations in the reports.
