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The Patent Reform Act will harm the U.S. technology industry

Both sides have their own business interests at heart, but make no mistake - if the bill passes, it will harm the U.S. technology industry.

Steve Tobak
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Steve Tobak is a consultant and former high-tech senior executive. He's managing partner of Invisor Consulting, a management consulting and business strategy firm. Contact Steve or follow him on Facebook, Twitter or LinkedIn.
Steve Tobak
2 min read

The proposed Patent Reform Act of 2007 will be coming up for a vote in the Senate in a few months. A similar version of the bill has already passed in the House.

The bill has certain relatively benign provisions, but let's ignore them since they just cloud the argument and are of little interest to either side in the debate.

United States Senate

Let's instead just cut to the chase. In lay terms, the bill makes it easier to challenge issued patents and harder for patent holders to obtain compensation through the U.S. legal system.

Regardless of how that sounds to you, make no mistake - this debate is between two opposing sides with their own interests at heart.

In one corner are big technology companies such as Apple, Cisco, Dell, Google, HP, Intel, Microsoft, Oracle and SAP. These folks make a living selling products and services. They say that patent abuses in the current system are stifling innovation.

In the other corner are technology licensing companies such as 3M, Qualcomm, Rambus, Tessera, and biotech and pharmaceutical companies. They say the act will limit patent holder's rights and stifle innovation.

While each side claims the other limits innovation, the truth is that neither side cares about innovation; they are only concerned with their business model. That's not necessarily a bad thing, since a company's duty is primarily to its shareholders, but it does bear mentioning here.

US Patent and Trademark Office

Here's how I see it: Over time, U.S. technology companies actually manufacture fewer and fewer products. We are now under intense and growing competitive pressure from companies in China, India, Taiwan, etc. Our technology lead is being challenged like never before. Nobody seems to debate that.

That said, we continue to be the world's technology leader because we invent. And the U.S. courts are the first line of defense for U.S. technology companies and inventors alike against all offenders, domestic or international. That's right. When a U.S. company believes its patents are being violated, its first and best line of defense is to seek an injunction barring products that incorporate the technology in question from entering the U.S.

The proposed Patent Reform Act will therefore weaken the rights of U.S. patent holders, whoever they are, and wherever the offending company is, period. Moreover, it will have a ripple effect in international patent offices and courts, thus further weakening the patent rights of U.S. companies overseas.

So, forget all the special interests for a moment and look at the obvious. While some patent reforms might make sense, The Patent Reform Act in its present form will ultimately harm the competitiveness of the U.S. technology industry at a time when we can least afford it. And it only gets worse from here.