For Release:
October 28, 2003
FTC Issues Report
on How to Promote Innovation Through Balancing Competition
with Patent Law and Policy
The Federal Trade Commission today issued its report on how
to promote innovation by finding the proper balance of competition
and patent law and policy. Although both competition in markets
and patents for inventors can work together to foster innovation,
the report states that each policy requires a proper balance
with the other to do so. “Consumers and innovators win
when patents and competition policy are aligned in the proper
balance. Although questionable patents can harm competition
and innovation, valid patents work well with competition to
promote innovation. This Report analyzes and makes recommendations
for the patent system to maintain the proper balance with
competition,” said Timothy J. Muris, FTC Chairman.
Today’s report – which makes
recommendations for the patent system – is the first
of two reports about how to maintain that balance. A forthcoming
second report by the FTC and the Antitrust Division of the
Department of Justice (DOJ) will make similar recommendations
for antitrust law.
Among the ten recommendations of today’s
report, the FTC proposes legislative and regulatory changes
to improve patent quality. Patents of questionable validity
can slow further innovation and raise costs to consumers.
Specifically, the report recommends:
- Creating a new administrative procedure that will make
it easier for firms to challenge a patent’s validity
at the U.S. Patent and Trademark Office (PTO), without having
to raise an expensive and time-consuming federal court challenge;
and
- Allowing courts to find patents invalid based on the preponderance
of the evidence, without having to find that clear and convincing
evidence compels that result. The current standard of “clear
and convincing evidence” undermines courts’
ability to weed
out questionable patents. This is especially troubling,
since certain PTO procedures and rules tend to favor the
issuance of patents.
The report also recommends that Congress
limit the award of treble damages for willful patent infringement.
Some hearings participants explained that they do not read
their competitors’ patents because of concern that learning
about others’ innovations will expose them to treble
damages infringement liability. Failure to read competitors’
patents, however, can harm innovation and competition. The
FTC’s recommended legislative change would allow firms
to
read patents to learn about new innovations and to survey
the patent landscape to assess potential infringement issues,
yet would retain a viable willfulness doctrine that protects
both wronged patentees and competition.
The FTC also outlines in the report several
steps it will take to increase communication between the antitrust
enforcement agencies such as the FTC and the PTO. In particular,
the FTC will:
- Continue to file amicus briefs in important patent cases
that affect competition;
- Ask the PTO Director in appropriate circumstances to reexamine
questionable patents that raise competitive concerns; and
- Urge the creation of a Liaison Panel between the FTC,
the DOJ, and the PTO to permit the exchange of policy views
on important issues as they arise.
Today’s report stems from hearings
that the FTC and the DOJ convened in February 2002. The hearings
took place over 24 days and involved more than 300 panelists.
The antitrust agencies heard perspectives from business representatives
from large and small firms, the independent inventor community,
leading patent and antitrust organizations and practitioners,
and scholars in economics and patent and antitrust law. Business
representatives were mostly from high-tech industries: pharmaceuticals,
biotechnology, computer hardware and software, and the Internet.
In addition, the FTC received about 100 written submissions.
The Commission vote to approve the report
was 5-0.
MEDIA CONTACT:
Office of Public Affairs
202-326-2180
STAFF CONTACT:
Susan S. DeSanti
Office of the General Counsel
202-326-2167
(http://www.ftc.gov/opa/2003/10/cpreport.htm)
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Related
Documents:
To Promote Innovation: The Proper
Balance of Competition and Patent Law and Policy
A Report by the Federal Trade Commission, October 2003
2002
Hearings Homepage
Consumer Information:
Spotting
Sweet-Sounding Promises of Fraudulent Invention Promotion
Firms
Invention
Promotion Firms
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