FTC Gets Tough on Patents

Gretchen Gallen
WASHINGTON, D.C. – With all the industry banter lately over the validity of Acacia's DMT patents, in a likeminded move this week, the Federal Trade Commission (FTC) put forth a proposal that could make patents harder to obtain and easier to challenge.

In an annual address to the American Intellectual Property Law Association, FTC Chairman Timothy J. Muris discussed the proper balance between marketplace competition and patent policy required to promote innovation.

In what might sound like music to many members of the adult community who are currently in litigation with Acacia, or have just received their first letters regarding copyright infringement, the FTC is calling on the U.S. Patent and Trademark Office to apply tougher standards before issuing patents, and on Congress to enact legislation that would make it easier for companies to challenge those patents in federal court.

Under current FTC procedure, the courts require a business to prove a patent's invalidity by presenting "clear and convincing" evidence.

"This standard appears unjustified," Muris stated. "The FTC believes this requirement undermines the courts' ability to weed out questionable patents, and instead recommends that courts determine validity based on a preponderance of the evidence."

Muris also expressed concern over the quality of patent claims and stated that many of the patents currently out there, should not have been issued in the first place.

"The Patent and Trademark Office must protect the public against the issuance of invalid patents that add unnecessary costs and may confer market power, just as it should issue valid patents to encourage invention, disclosure, and commercial development," Muris stated.

As it stands, the U.S. Patent Office sifts through an average of 300,000 applications on a yearly basis and is currently backlogged by two years and badly in need of additional funding to cope with its overload. Nearly 1,000 patent applications flood into the U.S. Patent Office on a daily basis.

Patent officials are given between eight and 25 hours to read and understand each application, evaluate patent-ability, and write up conclusions.

"Competition and consumers are not served if patents are inappropriately granted or if their scope is undeservedly broad," Muris stated.

He also added that questionable patents may slow innovation and raise costs to businesses and consumers by discouraging firms from conducting research and development and inducing unnecessary licensing.

The FTC's recommendations for amending current patent law are based on a 315-page report that was drafted during a meeting with the Department of Justice in February of this year.

According to the FTC, the hearings took place over a 24-day period and involved more than 300 panelists from large and small firms, the independent inventor community, patent and antitrust organizations, and scholars in economics, patent, and antitrust law.