Patent reform legislation

                               Patent reform legislation
Objective: 
1. Stimulating economic growth.
2. Creating high paying jobs

Technological innovation is linked to growth of the economy. Two innovation factors are linked to growth
1. Capital investment
2. Increased efficiency

Innovation produces high paying jobs

Delay in granting patent rights has substantial costs.

Goal: 40%reduction in patent pendency.
             Enhanced post grant review will reduce the need  for inefficient court challenges.

                     Virtuous cycle of growth
Innovation 
                       Growth
                                       Additional innovation


1.  Innovation fuels growth.
   Technological change is the primary driver of growth.
Without technological change, wealth cannot be sustained and growth rate tends to zero.

Patent in
1. New products
2. New processes.

TOTAL- 3.4% growth rate
2.5%= 1.1% capital investment and 1.4% increased efficiency
0.9%= labor force expansion.

Capital investment leads to 
1. decrease in the price of products
2.improves quality

Innovation enables
1. Investment in new products
2. Enhances desirability of investing in capital goods. Telecom products*******
3. promotes efficiency

 

2. Innovation produces high paying jobs.
Average rate of compensation increased by 20% in private sector from 1990-2007.



3. Timely, high quality patents
       1. Venture capitalist backed up start ups rely heavily on patents to attract funding.
       2. Ability to secure timely patents.

Patents are among the most important means for securing competitive advantage.


4. Delay, uncertainty,poor quality and inefficient legal processes.
  Negative effects of delay
Reasons for delay
750,000 patent applications backlog.
Costs associated with filing. Expensive for start ups.
Uncertainty with patent delay imposes significant costs.

5. Effects of poor quality patents and inefficient legal processes.
Low quality patents- obvious, overly broad,unclear in invention
Litigation costs for low quality patents exceed the innovation benifits offered by high quality patents.
Cost of court challenge.

Patent reform litigation goals
1. Delay - 34 months to 20 months.
2. Additional fees by USPO: currently only covers front end cost(review and filing).does not cover backend costs.( patent issuance and maintainence fees).
USPO can charge flexible fee structure. Have a fee setting authority in place.
3. Enhanced post grant review
 For smaller firms, to challenge patents is expensive. It drives them out of business especially when they fight with larger firms. Enhanced post grant review will offer a timely and much less expensive mechanism to fight patents.
Timely resolution and patent validity by implementing PGR.
Grant patent------------------- patent resolution validity
                         Time taken = 8 years,result is uncertainty of investors,underinvestmentor 
Mistaken investment.
Goal is to shrink it to 1 year.

Conclusion
Patent reform litigation is a deficit neutral. Adding $0 to federal deficit.