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January 15, 2008
Easing patent fears - litigation insurance
Believe it or not, patent reform has raised a great deal of passion. Both side argue that if their position is not adopted, innovation and the US economy will come crashing to a halt. Or, more correctly, they argue that if the other side’s position is adopted, the system be destroyed. (A tame version of this is John Markoff's recent New York Times column Two Views of Innovation, Colliding in Washington.)
One of the major concerns is that of the small inventor/small company. They fear that the patent system is already stacked against them and that the patent reform proposals will just make matters worse. That fear seems to stem from the fact that big companies can outspend them and outlast them in court cases. Without the weapons of triple damages and automatic injunctive relief, they fear that they can not stand up to the big boys and protect their patents. The post-grant review process is seen as just another way for the big boys to string out the process and force the little guy out of the game by raising the costs.
Whether or not you believe these fears are justified and that the proposed changes will make matters worse is almost irrelevant to the political debate. These fears exist and should be addressed.
One way of doing so is by raising the possibility of patent litigation insurance. Such insurance covers the cost of bringing an infringement case. This is different from patent liability insurance. A workable insurance system—covering both the cost of bring litigation and the cost of potential liability—might be able to serve as a replacement for the defensive patent syndrome.
Here we can take a lesson from Europe. The Danish Patent and Trademark Office has long encouraged the creation of a patent litigation insurance system for small business. As a first step, the Danish insurance company Dahlberg joined with and SAMIAN Underwriting Agencies to offer an enforcement policy beginning in December of 2007: PatentEnforcer (TM). This is first-party coverage to offset the cost to small and medium size enterprises (SMEs) of bringing a patent infringement case.
Let me suggest the following: as part of the patent reform legislation, Congress should require the USPTO and the SBA to conduct a review of the patent insurance system. That review should specifically study on the feasibility of offering patent litigation insurance (possibly through SBA).
I don't know if this will actual lower the temperature of the rhetoric on patent reform. But regardless, a review of patent insurance would be a useful step in strengthening our innovation system.
Posted by Ken Jarboe at January 15, 2008 8:26 AM
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Comments
(from Keith Dick - via email due to problems with the blog software)
Litigation insurance? That's a bad idea.
Look at what's been going on. Patents are just a tool for large companies to bash each other and stomp out small companies. If they ever served the original purpose of promoting progress, that has long since ceased to be true. They now are inhibitors of progress.
Large companies have enough other ways to bash other large companies and stomp out small ones. The patent tool should be removed from their hands. Either abolish patents outright or severely restrict their issuance and use. Abolishment is probably the better choice.
Posted by: Ken Jarboe ![[TypeKey Profile Page]](http://www.athenaalliance.org/weblog/nav-commenters.gif)
at January 17, 2008 8:08 AM