Common Myths about Patent Reform

The patent bill in its present form picks winners and losers among American industries with different business models.

The patent law has always applied the same standards to all types of inventions of whether the discovery is on anything from flatware to software. Patent reform would preserve this two-century-old tradition of the patent law. Patent reform would not create new special rules that apply only to some inventions and not to others. As areas of invention change, the patent law must be amended to reflect new marketplace realities. Patent law was last revised in 1952, before the invention of the microprocessor, cell phones, transistor radios, biotechnologies and computers. Patent Reform would update the law to ensure continued quality in the granting of patents and rights are fairly protected and enforceable.

Patent Reform needs no Congressional action.

Because our economy and new job creation rely on innovation, a broad and growing group of institutions and experts on innovation and competitiveness - including the Center for American Progress, the National Academy of Sciences, the Federal Trade Commission, the Council on Foreign Relations and legal scholars from the nation's top universities - are calling for reform to our patent system to spur innovation and economic growth. The editorial boards of the nation's most prominent publications - including the New York Times, Wall Street Journal and the Los Angeles Times - have called for congressional action to modernize our patent system that hasn’t seen significant reform in over 50 years. A half a dozen Supreme Court cases, each of which has been decided in ways that cure imbalances in the patent law, have signaled the need for reforming our patent system. Congress has the authority and the responsibility to ensure that our patent system is meeting the needs of the 21st century economy and the current need for economic growth and job creation.

Patent reform will drive jobs overseas.

The patent system today discourages U.S. job growth. Productive companies are spending billions of dollars in money and resources to defend themselves against patent lawsuits. The cost of defending an average patent lawsuit is between $2 million and $4.5 million. Furthermore, prior to 1990 there had been only one patent damages award in history larger than $100 million, yet in the past five years, there have been at least ten judgments and settlements in that category, and at least four that topped $500 million. One topped $1.5 billion. This is money that could be otherwise re-invested in the companies, spurring innovation and creating high-paying jobs.

Patent reform will weaken America's global economic standing.

The opposite is true: patent reform will strengthen America's global competitiveness; doing nothing will weaken it. As the Council on Foreign Relations reported in 2006, "Failure to rein in the patent regime could have global repercussions. To hinder innovation is to hinder the dynamic competitiveness of U.S. companies -- [S]ignificant problems with patents put the U.S. system at a disadvantage vis-a-vis more balanced and less costly foreign [patent systems]."

Patent Reform will only help big technology companies.

Patents affect every industry and companies of every size. The Coalition for Patent Fairness is a broad range of small, medium, and large companies and trade associations in the financial services, technology, energy, chemical, manufacturing and media industries that have come together to reform the current patent system to support innovation and job creation. The patent law has always applied the same standards to all types of inventions. With patent reform, that will continue.

Reform will make inventors more vulnerable to infringers and weaken the enforceability of validly issued patents.

The nature of the patent system has fundamentally changed since Congress last addressed patents, more than 50 years ago. As Supreme Court Justice Anthony Kennedy explained in a concurring May 2006 eBay decision,"[i]n cases now arising... the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees." The current abuses of the system call for reform of the patent system to protect inventors and innovators against unjustified patent infringement lawsuits.

Patent reform will keep life-saving drugs off the market.

Reforming the patent system will not undermine the ability of pharmaceutical manufacturers or biotech companies to protect their intellectual property. In fact, the Federal Trade Commission has found that the patent system today inhibits the development of new drugs: "firms in the biotech industry reported that they avoid infringing questionable patents and therefore will refrain from entering or continuing with a particular field of research that such patents appear to cover. Such effects deter market entry and follow-on innovation by competitors and increase the potential for the holder of a questionable patent to suppress competition."