© The Author (2008). Published by Oxford University Press. All rights reserved
Editorial |
Strength or weakness?
Doing the electronic rounds, at the tail end of 2007, was a much-forwarded email circular concerning an article in the 7 November issue of China Intellectual Property News by Yongshun Cheng. The author, a former senior judge and deputy director of the Intellectual Property Division of the Beijing High People's Court, currently directs the Beijing Intellectual Property Institute.
According to this circular the article, translated into English, argues that the proposed US patent reform bill is ‘bad news for American companies and good news for their foreign counterparts’. He is reported as saying that the bill is ‘friendlier to the infringers than to the patentees in general as it will make the patent less reliable, easier to be challenged and cheaper to be infringed’. The circular continues that
It is not bad news for developing countries which have fewer patents. Many of the Chinese companies are not patent owners in the US market and their products are often excluded from the market because of patent infringement accusations. This bill will give the companies from developing countries more freedom and flexibility to challenge the relative US patent for doing business in US and make it less costly to infringe.
This is apparently bad news for American legislators, who are urged to reconsider the consequences of patent reform. But, having done so, should they block the proposed reforms or accelerate them?
An idealist will maintain that the best patent system is one which grants only good, valid patents and filters out all dubious ones. The system will operate swiftly and predictably. Its fixed costs (such as office fees) and variable costs (such as those incurred in claim drafting, patent writing, or litigation) will be reasonably affordable by all who use the system. Such a system will encourage investment in innovative products and processes while also cultivating an environment that is conducive to competition.
An ideal system such as that described above works as well for the weak as for the strong, and benefits the wrongdoer as well as the injured party. This is because the costs both of enforcement and of failure will be kept within manageable proportions and because the power of more strongly presumptively valid patents will enable non-patentees to make better business decisions. In that sense, to the extent to which the US system tends towards the ideal norm, it will benefit Chinese non-patent owners and even actual or would-be infringers.
The demands of Realpolitik however draw the patent system away from the ideal. What is most advantageous for American industry is a patent system that is skewed towards its own interests. Such a system might typically allow the grant of weak and dubious patents that are typically not available for the same alleged invention in other jurisdictions; it might also provide for a regime of monstrous damages that appear on any objective standard to match the notion of compensatory damages that underpins the patent systems of most other countries. There might also be the destabilizing notion that a patent is available only to the ‘first to invent’, who might emerge at any time and whose claims may be tactically devastating to the commercial operations of the patentee. Add the bewildering range of jurisdictional rules and options at the disposal of the patent owner and you have a system which, while beloved by many in the USA, is much disliked elsewhere.
The setting off of the alarm bells by the circulation of news of Yongshun Cheng's article was certainly intended to awaken consciousness among US legislators as to the consequences of their actions. But if the legislators take heed to the message, they should not attribute it solely to the messenger. It is not only the Chinese who will take advantage of American patent reform. Elsewhere in Asia, in Europe, and in South America, foreign traders will also find it easier to import goods into the USA, enriching both local consumer choice and international trade.
More importantly for the Americans, it is the third tier of innovators, after the mega-corporations and the government itself, who will benefit as they find their own domestic market more amenable. A better patent system will enable the small and medium-sized enterprises to hold their heads up high, more confident in the power of their own patents and less afraid of those of their larger competitors. They too will have greater flexibility to challenge the patents of others, and even to run the risks of infringement, when the same game is played with a better set of rules.
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