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FTC Recommends Improvements To US Patent System

by Glen Shapiro,, Washington

08 March 2011

A United States Federal Trade Commission (FTC) report has recommended improvements to two areas of patent law policies, affecting how well a patent gives notice to the public of what technology is protected and the remedies for patent infringement.

The report emphasizes that the patent system and competition policy share the goal of promoting innovation that benefits consumers. “When the patent system incorporates the principles of competition policy, the patent and antitrust laws work together to achieve their common goal. The recommended changes would benefit consumers by encouraging investments in innovation and promoting competition among patented technologies,” said FTC Commissioner Edith Ramirez.

It also highlights the role of courts and the US Patent and Trademark Office (USPTO) in notice and remedies issues. FTC Chairman Jon Leibowitz considered that “this new report provides valuable insights on how courts can reform the patent system to best serve consumers. … and, combined with the hard work by many leaders in Congress to improve a troubled system, will help ensure that patents continue to serve America’s innovators and consumers.”

Therefore, while recognizing that patents play a critical role in encouraging innovation, the report also observes that some strategies by patent holders risk distorting competition and deterring innovation. This is especially true, the report concludes, for activity driven by poor patent notice, and by remedies that do not align the compensation received by patent holders for infringement with the economic value of their patented inventions.

To address these issues, the report first recommends improving policies on patent notice through actions by the courts and the USPTO. It points out that “clear notice of what a patent covers promotes innovation by encouraging collaboration, technology transfer, and design-around. But poor notice undermines these benefits if potential licensees cannot find relevant patents, or if companies hesitate to invest in technology because the scope of others’ patents is unclear.”

It adds that poor patent notice also can distort competition by forcing firms to design products and make investments with an incomplete knowledge of the cost and availability of different technologies. The report suggests “mechanisms to improve the public’s ability to identify relevant patents, to understand the scope of patent claims, and to predict the breadth of claims that are likely to emerge from patent applications.”

The FTC’s recommendations include making patent claims more definite and improving the utility of descriptions in patents for delineating their boundaries; enhancing the patent examination record as a source for interpreting claim scope; and more fully incorporating consideration of third parties’ ability to predict the potential breadth of evolving claims into the administrative and judicial review of the written descriptions of patent applications.

The report also explains that patent remedies that align compensation of patent holders with the economic value of their patented inventions are important for both innovation and competition. “Patent damages that under-compensate patentees for infringement can deter innovation,” it says, “but overcompensation can lead to higher prices and encourage speculation in patent rights, which also deters innovation.”

TAGS: court | business | patents | law | intellectual property | patent search | United States | regulation

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