It has come to this: A claim that patent reform threatens the environment

Much of America's ability to once again play a contributing factor in the restoration of balance in Earth's natural environment depends on the continuing creation of new technologies, both for replacing other technologies that damage our planet and for simply curing the problem at hand. Some of these technologies are being created at the grass roots level, by entrepreneurs and experimenters, often with the intention of licensing or selling that technology once it receives its US patent -- its assurance of originality and viability.

But the value of that patent in the modern market is determined by its defensibility -- literally, how much it can rake in, in infringement cases. Without that market value, much of the incentive for trying to build new technologies in the first place, may be lost.

That's the implication of a letter sent by a newly assembled coalition of manufacturers, most notably including Monsanto, along with the American Council on Renewable Energy (ACORE), to Senators Patrick Leahy (D - Vt.) and Arlen Specter (R - Penn.), and to Reps. John Conyers (D - Mich.) and Lamar Smith (R - Tex.), the chairmen and ranking members of committees that will be deliberating the latest round of patent reform legislation to be deliberated on Capitol Hill, probably throughout this year.

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"We are concerned with recent legislative proposals to make fundamental changes to the US patent system that we believe would weaken, rather than strengthen, patent protection, putting this innovation pipeline and subsequent American manufacturing capacity at risk," writes the group, which has yet to adopt a collective title. "The patent reform legislation that has been introduced would reduce penalties for patent infringement by changing the law of damages. This change would elevate the importance of one of the factors now considered in calculating patent damages."

The factor the group refers to is apportionment of damages, and specifically how the Patent Reform Act would replace the current system of evaluating damages with one that mandates that a judge or jury consider an economic estimate of the market value not of the infringed patent, but instead upon the product culminating from the patent. And if that product doesn't exist yet, then the judge or jury is instructed to calculate how much market value the product would have if it did exist.

"Upon a showing to the satisfaction of the court that the claimed invention's specific contribution over the prior art is the predominant basis for market demand for an infringing product or process," reads the current text of S. 515, the Patent Reform Act of 2009, "damages may be based upon the entire market value of that infringing product or process...Upon a showing to the satisfaction of the court that the claimed invention has been the subject of a nonexclusive license for the use made of the invention by the infringer, to a number of persons sufficient to indicate a general marketplace recognition of the reasonableness of the licensing terms, if the license was secured prior to the filing of the case before the court, and the court determines that the infringer's use is of substantially the same scope, volume, and benefit of the rights granted under such license, damages may be determined on the basis of such license."

There are even more definitive circumstances that go on from there, the point being that judges will suddenly find themselves thrust into the role of economists.

Two years ago, when essentially the same language was introduced before Congress by exactly the same legislators, Federal Appeals Court Judge Paul Michel wrote Sens. Leahy and Orrin Hatch (R - Utah) to register his disapproval.
"The provision on apportioning damages would require courts to adjudicate the economic value of the entire prior art, the asserted patent claims, and also all other features of the accused product or process whether or not patented," Judge Michel wrote (PDF available here, with thanks to our friend Dennis Crouch at Patently-O). "This is a massive undertaking for which courts are ill-equipped. For one thing, generalist judges tack experience and expertise in making such extensive, complex economic valuations, as do lay jurors. For another, courts would be inundated with massive amounts of data, requiring extra weeks of trial in nearly every case. Resolving the meaning of this novel language could take years, as could the mandating of proper methods.

"The provision also invites an unseemly battle of 'hired-gun' experts opining on the basis of indigestible quantities of economic data," Judge Michel continued. "Such an exercise might be successfully executed by an economic institution with massive resources and unlimited time, but hardly seems within the capability of already overburdened district courts. Appellate issue would also proliferate increasing complexity and delays on appeal, not to mention the risk of unsound decisions."

So there's a considerably logical case against the use of economic tests of existing or perhaps non-existing markets, to determine the true value an infringed-upon inventor receives in awards...assuming after all this change takes place, the inventor even cares to bother bringing a case to trial anyway. But the factor that the new environmental group focuses on instead is the notion that any such economic evaluation of the markets, regardless of how long it takes or how much it clogs up the judicial system, would result in far lower values than the current speculative system enables.

"By giving this one factor -- apportionment -- a preeminent position in damage calculations, proponents of the legislation would have achieved the goal of reducing damage awards," reads the ACORE group's letter. "This type of reduction in the value of intellectual property rights could adversely affect the future of our industries in the United States."

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