Patent Expert Says House Bill Adopted Today Weakens U.S. Patent System and Hurts Entrepreneurs

Business Wire, Sept 7, 2007

NEW YORK -- General Patent Corporation Chairman Alexander Poltorak, a national expert on the U.S. patent system and author of two books on intellectual property, condemned the House of Representatives' passage this afternoon of the patent reform legislation.

"The passage of the Patent Reform Act of 2007 in the House of Representatives is a severe threat to our entire patent system," Poltorak said. "As a whole it means weaker protection for universities, small inventors and entrepreneurs across America."

"The bill undercuts domestic industry and hurts independent inventors - the very backbone of American ingenuity," said Poltorak, whose company has helped defend the patent rights of many American inventors over the past 20 years. "The House bill renders patents nearly worthless, which will consequently weaken the incentive to innovate. It will stifle innovation and entrepreneurship."

Congress should instead consider a two-tiered patent system that creates different levels of patentability standards with different rights for each type, said Poltorak who formed an alliance, American Innovators for Patent Reform, to promote his proposal. A two-tiered system, which has proven successful in much of Europe and other parts of the world, would improve patent quality, reduce the backlog of pending patent applications and also minimize patent litigation, Poltorak said.

Poltorak, a former Russian dissident who fled the Soviet Union with his family in 1982, founded General Patent Corporation in 1987 after using his background as a physicist to form a high tech company that develop and patent technology for computers and laptops. He has successfully defended patents against business giants such as I.B.M., Motorola and TDK. He is the co-author of Essentials of Licensing Intellectual Property (2004) and Essentials of Intellectual Property (2002), both part of a series.

A complete version of Poltorak's statements follows.

Poltorak is available to comment on today's House vote. Please contact Dave Closs at Zlokower Company at 212-447-9292 extension 12 or dave@zlokower.com.

Statements by Alexander Poltorak on the Patent Reform bill

Alexander Poltorak is the chairman and CEO of General Patent Corporation Chairman, a 20-year-old intellectual property management and patent licensing company that advises inventors and entrepreneurs on licensing and patent enforcement. Dr. Poltorak is a national expert on the U.S. patent system and author of two books on intellectual property.

"The Patent Reform Act, if passed, will undermine the ability of small companies to compete against large corporations. The bill undercuts domestic industry and hurts independent inventors - the very backbone of American ingenuity.

"The proposed bill renders patents nearly worthless, which will consequently weaken the incentive to innovate. This bill, if passed, will stifle innovation and entrepreneurship.

"The statute defines a patent as the right to exclude others from using, making, selling, offering for sale or importing a patented invention. However, with the Supreme Court decision on eBay striking down the Federal Circuit rule of automatic injunction, there are, in effect, no teeth left in the right to exclude.

"The apportionment of damages provision of the Bill not only chips away at the economic value of patents but cuts to the heart of what the patent is - the right to exclude from making, using and selling. If one sells an infringing product one has to pay damages. If damages are nominal, why not infringe? An attempt to dramatically diminish patent damages devalues all issued and future patents.

"The patent system is already slanted against the small inventor. A patent is a bargain between the inventor and the State. To induce an inventor to disclose his or her invention to public, the State promises in exchange a grant of limited monopoly. But with the average cost of patent enforcement at $4 million, this right remains academic for most inventors. This bill will make it even more difficult to enforce a patent.

"A self-proclaimed goal of this patent reform is to decrease patent litigation. Lawmakers apparently forgot that a patent, by definition, is little more than a license to sue ("right to exclude") and decreasing patent litigation by making it more difficult and expensive makes patents largely unenforceable and, therefore, worthless.

"Supposedly, high-tech industry supports this reform. But it is just a handful of giants like Microsoft, Intel, Cisco and Dell, that support it. They don't need a patent monopoly to help them compete as they already enjoy a market monopoly. Small high-tech companies, the true innovators in this industry, overwhelmingly reject this proposal.

"This patent reform will damage universities, research laboratories and small R&D companies, which derive significant revenues from licensing their patents.

"Universities emasculated from their technology transfer revenues will be forced to lay off scientists involved in fundamental research.

"Science and high education will suffer. The Patent Reform Act, if passed, will make a significant dent in the US economy at large and will ultimately have devastating consequences for American competitiveness in the global economy.