Strong, balanced patents are an American innovation
This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Our founding fathers - inventors of myriad devices as well as modern democracy - appreciated the value of creativity, which is why they designed the Constitution to foster innovation and, in turn, economic growth.

They did so by granting Congress the power to develop a patent system, which endowed inventors with exclusive rights to their inventions for a given period of time. If inventors could develop and market their inventions exclusively, they could hope to make money.

That simple incentive spurred innovation on a scale the world had never seen. Some 220 years later, we have the founders to thank for the cotton gin, the airplane and the personal computer, to name a few American inventions. The U.S. economy continues to shine like a beacon of innovation for the rest of the world, but some critical aspects of the patent system have fallen out of balance. Most notably, abusive patent litigation and low patent quality are stifling innovation.

While many patents have been granted recently for some very important new inventions, patents have also been granted for a crustless peanut butter sandwich and for a method of swinging sideways on a playground swing. More seriously, poor-quality patents have been granted in many critical sectors on which our economy depends, from financial services to technology to manufacturing.

In a report on the patent system, the Federal Trade Commission, the government agency charged with protecting consumers and ensuring competition, explained that "one firm's questionable patent may lead its competitor to forgo R&D in the areas that the patent improperly covers."

As a result, one questionable patent can restrict innovation and competition. Multiply this several thousand times and it becomes a serious economic threat. More important, the number of patent lawsuits, and the costs of defending a patent case and the average size of damage awards, have all skyrocketed.

This is due to the growing number of companies that are basing their business models on using patents to sue companies that make products. Not only does this force productive companies to funnel resources from research and development to their legal departments, but it also actively discourages innovation.

Why innovate or take the entrepreneurial risk of making products if it just increases the risk of costly litigation?

This is a serious issue for Utah. With nearly 4,000 technology and science companies providing about 63,000 high-paying jobs, Utah depends on innovation and, subsequently, a healthy patent system. Micron Technology and Intel alone are responsible for investing $3 billion in a new manufacturing facility for our joint venture, IM Flash Technologies, in Lehi, the single-largest private investment in Utah's history.

This kind of growth is only possible when companies take risks, and companies' ability to invest and take risks is diminished in the face of increasingly costly patent litigation.

Fortunately, Congress is taking action. Leaders in both the House and the Senate have introduced bipartisan, bicameral legislation that will strengthen and balance our patent system. Leading the charge is Utah Sen. Orrin Hatch, long a champion of American innovation, growth and competitiveness. He and Congressman Chris Cannon, among others, are sponsoring the bipartisan, bicameral Patent Reform Act of 2007.

Their legislation will give the U.S. Patent Office greater ability to consider patent applications carefully and allow for fairer and more efficient resolution of patent infringement cases in our courts. As a result, it will produce higher-quality patents and encourage companies to innovate and take risks without fear of litigation.

Consensus is building around the recognition that patent reform is needed now. A growing number of policymakers, academics, legal scholars, editorial writers and columnists, economists and even Supreme Court judges have expressed, in studies, statements and opinions, concerns about the state of our patent system and the need for reform.

The Federal Trade Commission, the National Academy of Sciences, the Council on Foreign Relations and academics from a host of top universities have all said in one form or another that the patent system is stifling innovation and something has to be done about it.

When the founders designed the patent system, they developed one that was balanced and whose objective was to foster innovation. Over time, Congress has had to modernize and strengthen patent laws to reflect changes in our economy.

Today, we are again upon one of those moments that warrant congressional action. Fortunately, Congress, led by Sen. Hatch, Rep. Cannon and others, is ahead of the curve.

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* ROD LEWIS is vice president of legal affairs and general counsel for Micron Technology, Inc., which, with its partner, Intel, employs 1,300 people in Utah.

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