Reformers must alter one-size-fits-all patents

Signs that it does so erratically should concern members of Congress as they prepare for to vote on the Patent Reform Act of 2007.

The nation's founders could not have imagined the complex, controversial patent system that we have today. The patent appeals court has expanded the patent system to embrace logic, business models, athletic movements, and much of basic science--in short, anything. Yet, the system remains resolutely simple, embracing this new diversity on its own terms: one size fits all.

Does it make sense to treat a method of teaching the same as a $10 billion drug? Does it make sense to view the high cost of clinical trials through the same lens as debugging a computer program? What really happens when one size fits all?

The result is laid bare in today's crisis in information technology and services: easy-to-get, low-quality patents create opportunities to abuse the system and ambush companies that have spent millions to get their products and services to market. And in the politics of reform: drug companies, independent inventors and universities are simply not vulnerable to these types of attacks and do not want reforms that might limit the value of their patents.

So why not tailor the patent system to suit different needs, granting one sort of patent for software, for instance, and another for drugs?

Some claim that a World Trade Organization agreement--designed to ensure that less-developed nations grant patents on drugs--precludes discrimination against different technologies. But as scholars Rochelle Dreyfuss and Graeme Dinwoodie have already shown, discrimination is not the same as differentiation. In fact, a one-size-fits-all legal straightjacket inevitably leads to discriminatory results. And a patent regime that works well in one sector and poorly in another amounts to a discriminatory industrial policy that redirects investment to the one at the expense of the other.

This has not gone unnoticed. Last year, a Senate resolution co-sponsored by 30 senators supported reform that "reduces barriers to innovation in specific industries with specialized patent needs." The private-sector Committee for Economic Development subsequently urged Congress to "reexamine the premise that today's unitary system continues to serve all industrial sectors well, especially given the proliferation of problems regarding software patents."

Although a recent study from the Federal Trade Commission vividly shows differences in how patents are working among critical sectors, no agency is actually monitoring or evaluating those differences. Are patents resulting in genuine technology transfer between willing buyers and sellers, or merely the production of legal disputes? And what about payments exacted from parties that invented the same technology independently? How often do companies acquire and use technologies unaware of hidden patents? If the patent system is promoting speculation, litigation and extortion, we need to know.

The passion and rhetoric of the patent reform debate yield plenty of evidence that the system has lost its moorings.

The system has traded the science-based culture of experimentation and innovation for a straightjacket designed by and for lawyers. It has led to an endless quest for "legal certainty" that has perversely generated enormous legal costs and increased liabilities for market-oriented investments. It has led to a patent office that thinks its mission is "to help customers get patents." It has yielded a centralized patent appeals court that has consistently expanded the volume, scope and power of patents.

Whatever happens to patent reform this year, the intensity of the debate makes clear that it is time to take patents seriously, very seriously.