Earlier this month I posted a letter to Congress from a group of 51 law professors and economists suggesting that the empirical evidence shows that patents are actually serving as a deterrent to innovation because potential innovators are afraid of getting sued for patent infringement and that the rewards of patent reform “could be great.” Now comes the response signed by 40 law professors and economists expressing “deep concern” that the aforementioned studies are “flawed, unreliable, [and] incomplete.” I have copied the letter below. Those of you following will note substantial similarity to the counter-post from Ted Sichelman who was instrumental in drafting and circulating this letter -Dennis
[To Members of the United States Congress:]
As economists and law professors who conduct research in patent law and policy, we write to express our deep concerns with the many flawed, unreliable, or incomplete studies about the American patent system that have been provided to members of Congress. Unfortunately, much of the information surrounding the patent policy discussion, and in particular the discussion of so-called “patent trolls,” is either inaccurate or does not support the conclusions for which it is cited.
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 claim that patent trolls bring the majority of patent lawsuits is profoundly incorrect. Recent studies further indicate that new patent infringement filings were down in 2014, with a significant decline in non-practicing entity (NPE) case filings. Unfortunately, these facts have gone largely unnoticed. Instead, 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.
Indeed, the bulk of the studies relied upon by advocates of broad patent legislation 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. Studies cited for the proposition that NPE litigation is harmful to startup firms, that it reduces R&D, and that it reduces venture capital investment are likewise deeply flawed. In the Appendix, we point to a body of research that calls into question many of these claims and provides some explanation as to the limitations of other studies.
Those bent on attacking “trolls” have engendered an alarmist reaction that threatens to gut the patent system as it existed in the Twentieth Century, a period of tremendous innovation and economic growth. Indeed, award-winning economists have linked the two trends tightly together, and others have noted that it is exactly during periods of massive innovation that litigation rates have risen. We are not opposed to sensible, targeted reforms that consider the costs created by both plaintiffs and defendants in patent litigation. 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. Many of the wide-ranging changes to the patent system currently under consideration by Congress raise serious concerns in this regard.
That these proposed changes to the patent system have not been supported by rigorous studies is an understatement. 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. 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.
As David Kappos, the Director of the Patent Office from 2009 to 2013, stated in 2013 testimony before the House Judiciary Committee, “we are not tinkering with just any system here; we are reworking the greatest innovation engine the world has ever known, almost instantly after it has just been significantly overhauled” by the America Invents Act in 2011. “If there were ever a case where caution is called for, this is it.” As Congress addresses this important issue, we hope you will demand empirically sound data on the state of the American patent system.
Michael Abramowicz (GWU); Martin J. Adelman (GWU); Andrew Beckerman-Rodau (Suffolk); David C. Berry (Cooley); Ralph D. Clifford (UMass); Christopher A. Cotropia (Richmond); Gregory Dolin (Baltimore); John Duffy (UVA); Richard A. Epstein (NYU); Chris Frerking (UNH); Damien Geradin (George Mason); Richard S. Gruner (John Marshall); Stephen Haber (Stanford Poli-Sci); Timothy R. Holbrook (Emory); Chris Holman (UMKC); Ryan Holte (SIU); Gus Hurwitz (Nebraska); Jay P. Kesan (Illinois); Zorina Khan (Bowdoin Econ); Anne Layne-Farrar (Northwestern); Stephen M. Maurer (Berkeley Public Policy); Damon C. Matteo (Tsinghua); Michael Mazzeo (Northwestern Management); Adam Mossoff (George Mason); Sean O’Connor (UW); Kristen Osenga (Richmond); Jorge Padilla (Lexecon); Lee Petherbridge (Loyola); Michael Risch (Villanova); Mark Schultz (SIU); David L. Schwartz (Chicago Kent); Ted Sichelman (USD); Brenda M. Simon (Thomas Jefferson); Matthew Laurence Spitzer (Northwestern); Daniel F. Spulber (Northwestern Management); David J. Teece (Berkeley Business); Shine Tu (WVU); Polk Wagner (Penn); Brian Wright (Berkeley Ag-Econ); Christopher S. Yoo (Penn).