Europeans have long believed America is overly litigious. America, after all, is home to multi-million-dollar lawsuits over a lost pair of pants at a dry cleaners and a cup of McDonald’s coffee that was too hot.
In spite of this perception, however, Europe is second to none when it comes to driving away innovation, creativity and high-tech jobs through endless patent litigation. Sadly, America is ready to follow Europe’s lead as Congress prepares to pass the Patent Reform Act of 2007.
Congressional support for this bill is confounding. From labor unions to business lobbyists and from nanotechnology firms to agricultural interests, nearly every sector of the U.S. economy is opposed to the Patent Reform Act. Even Pepsi and Coca-Cola are working together to defeat the bill!
That is because all these groups know the Patent Reform Act, which has already been passed by the House of Representatives and is currently under consideration in the Senate, adopts European patent rules that threaten American jobs and undermine America’s standing as the world’s leader in research and innovation.
For example, the bill replaces America’s “first-to-invent” rule with Europe’s “first-to-file” rule. The first-to-invent rule has been in place since George Washington signed America’s first patent, granted to Samuel Hopkins in 1790, and is based on the novel idea that the inventor should receive the patent.
The first-to-file rule, however, gives the patent to whichever party’s lawyers reach the patent office first. In Europe the rule has placed small inventors at a great disadvantage against large manufacturers who have the money to hire teams of lawyers to maneuver through complex patent laws. My home country, Italy, is home to more than 500,000 small and medium-size businesses full of hard-working and creative individuals. These businesses are at a disadvantage in the European patent system.
Perhaps most damaging, the Patent Reform Act provides a post-grant review process that allows any patent to be challenged ad infinitum. This would increase costs for inventors and jeopardize the value of patents. Significantly, the standard for revoking a patent in this process would be lowered from the current “clear convincing evidence” standard to a “preponderance of the evidence.”
The Congressional Budget Office predicts this provision will lead to hundreds of new challenges each year. But that figure could grow higher. In Europe, thousands of post-grant reviews are filed each year, and each lasts an average of 31 months.
Foreign businesses are already preparing to take advantage of post-grant reviews. “Seeking invalidation of patents is likely to be a part of the patent strategy that Indian generics companies may follow in the U.S.,” predicted the secretary general of the Indian Pharmaceutical Alliance DG Shah in the Economic Times.
Post-grant reviews, coupled with the current practice of governments such as Brazil’s and Thailand’s authorizing the theft of patents through compulsory licensing, would damage the American manufacturing industry by helping foreign manufacturers cheaply sell generics. American firms that undertake the costly research required to develop new technology would never be able to match the low prices of these competitors.
Proponents of the Patent Reform Act argue that it will harmonize U.S. patent law with the rest of the world. However, adopting the worst aspects of international patent systems in the name of harmonization is neither laudable nor responsible.
Why is an Italian parliamentarian like me interested in this issue?
Not only Americans but also inventors across the globe rely on America’s patent protections, which the International Property Rights Index has ranked as the strongest in the world. Last year more than 94,000 foreign inventors, including 1,899 Italians and 102,000 Americans, sought and received patents in the U.S. because they know American patents will protect their intellectual property. By contrast, Europe, with double the population of the United States, sees 50 percent less activity at its patent offices.
Supporters of the Patent Reform Act should refocus their efforts on encouraging other nations to adopt the best aspects of the U.S. patent system rather than eliminating the rules that have made America a global magnet for innovation and creativity. In a world where foreign governments issue compulsory licenses to confiscate American patents and corporations around the globe are ready to pirate American inventions, weakening patent rights would be a terrible mistake.
America, and especially American dry cleaners, would undoubtedly benefit from taking Europe’s advice on tort reform. However, when it comes to intellectual property rights, Europe should be emulating America, not the other way around.
” Benedetto Della Vedova is a member of the Italian Chamber of Deputies.