“Danger!” — The Need for Active Watch of Patent Reform

4/13/09

“Danger, Will Robinson!” These immortal words uttered by the Robot in the 1960s television series “Lost in Space” are now part of our pop culture lexicon when warning of an impending, and sometimes unseen, threat. It’s too bad the Robot is just a fictional character, because as we’ve seen with recent economic and legislative happenings, there are times we could all use someone or something to give us an early warning.

Given the recent turbulence in the markets, imagine how prescient it would have been to have someone yell “Danger, Danger” last spring as you moved all your investment dollars, including the kids’ college money, from the relative safety of that conservative bond fund to the aggressive stock fund when it seemed like the right thing to do. After all, you were only following the advice of CNBC, the leaders in financial news. Oil stocks looked particularly good, and when the experts said stocks can only go up, who were you to second guess them. As you clicked to make that online trade, your warning Robot would have yelled “Danger, Danger! Stock Market Crash ahead!”

Similar warnings might also have been appreciated by many organizations as the Obama administration and a new Congress amends and creates new legislation and regulations. This “Danger” warning certainly would have been appreciated by those major biotechnology companies with local operations when the Patent Reform Act of 2009 was introduced in the Senate in March. The proposed bill provided a statutory methodology to be used in the calculation of damages in patent infringement suits. The methodology would limit damages valuation to the amount of value added by the invention’s improvements over the prior art. The invention’s entire market value would only be considered where the improvements alone constitute the “predominant basis” for market demand. This change, favored by large IT firms who rely on market dominance and not on patents, would severely diminish the value of patent protection. Limiting damages takes the teeth our of patent protection and, while it benefits a few select industries, industries that rely on strong patents to encourage innovation and investment, like the life sciences, would be severely impacted.

Two weeks ago the Senate Judiciary Committee’s approved a modified version of the reform bill that added a “gatekeeper” provision, giving judges more … Next Page »

David Resnick is a partner and the co-team leader of the Biotechnology/Chemistry team at Nixon Peabody. David assists clients in obtaining and defending intellectual property protection in the life sciences, including stem cells, RNAi and personalized medicine. The views expressed in this column represent only those of the author and not of Nixon Peabody or its clients. Follow @

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