Patent Reform on the Way?

Small businesses are urging Congress to reform some of the current patent laws after warning that the U.S. patent system is broken. In speaking to the House Small Business Committee, Mitchell Gross, chairman and CEO of Mobius Management Systems, Inc. cautioned that the current system leaves small businesses in a position where they are afraid to innovate.

At the center of this reasoning are the high damage awards from infringement cases that could leave businesses financially crippled. Small businesses claim that large corporations are at an advantage because of their deep pockets to absorb damage awards against them and their large resources to litigate. Gross called on the House Committee to cap infringement damages to only the value of the patented piece of a larger product, and not on the value of the entire product.

To counter, large corporations are urging Congress to establish legislation that controls the actions of so-called patent "trolls," companies that own often broad and obvious patents and attack large corporations claiming infringement or invalidity. Large corporations are often unwilling to litigate and will instead agree to settle, costing them millions. A proposed post-grant opposition program allows companies and people to challenge patents after they have been granted without the high cost of litigation.

Is there a happy medium? Maybe. Both sides seem to agree that patents need to be reviewed more closely so that they are less likely to be later deemed invalid. This solution would, at least, limit costly litigation for both sides.