Yesterday, over 130 US manufacturing companies sent a letter to President Obama detailing their serious concerns about the economic impact that enactment of patent reform legislation would have on the US economy.  Recognizing that the 111th Congress may be poised to revisit the patent law reforms that the 110th Congress previously abandoned in 2008, the manufacturers took this opportunity to tell the President their side of the patent reform story.  Among the manufacturers were the following four (4) Indiana companies:

Cummins Inc., Columbus, Indiana
DePuy Orthopedics, Warsaw, Indiana
Hill-Rom, Inc., Batesville, Indiana
Zimmer Inc., Warsaw, Indiana

The letter is a quick and interesting read (click image below for full text). The manufacturing companies emphasize that patent damages should not be reduced.  Rather, they stress that any legislation should be aimed at improving USPTO operations (currently, the patent application backlog is more than 700,000 and the average pendency is more than 32 months).  Taking a pretty obvious jab at the high-tech and financial services industries who aim to benefit from heavy patent reform, the manufacturers argue that “the prosperity of a few companies within two industries should not come at the expense of a larger group of stakeholders.”

I’ve listed below some of the main points that the manufacturing companies include to support their argument that drastic patent reform is unnecessary and perhaps dangerous to our economy:

• “A recent study focusing on the impact of apportionment legislation estimates that this change alone would put at risk up to 298,000 manufacturing jobs and reduce R&D investment by up to $66 billion.  This would be a negative outcome even when our economy is strong; at a time of economic crisis, it would be tragic.” (Source: The Likely Adverse Effects of An Apportionment-Centric System of Patent Damages, Case Western Study)
• “The legislation introduced in the 110th Congress dealt with patent issues on the back end rather than the front end, i.e., it attempted to deal with the symptoms of poor patent quality and growing pendency rather than addressing these issues directly. Many of the problems identified by legislative reform proponents as reasons for such reforms are best addressed instead by reforms of USPTO operations.”
• “[T]here is no explosion in patent litigation.  In 1993, lawsuits were 1.45% of patents granted.  In 2007, lawsuits were 1.48% of patents granted.  The number fluctuates from year to year, but it has never indicated a system out of control.” (Source:  USPTO Annual Reports, Federal Judicial Statistics)

• “Moreover, there is no explosion in patent damage awards.  Adjusting for inflation, the median annual patent damages award has actually dropped slightly over the last 13 years. In constant dollars, the median was $3.9 million from 1995 through 2000, and $3.8 million from 2001 through 2007.”  (Source: 2008 Patent Litigation Study, PriceWaterhouseCoopers)

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