If claims that an economic problem can be fixed by a new law sound too good to be true, they probably are. Such is the case in Congress’ latest push for patent reform.
It sounds good on the surface. Targeting so-called “patent trolls” and combating supposed out of control litigation – companies that file patents for the purpose of launching frivolous litigation against anyone that even remotely appears to be violating them – would seem like an opportunity to better protect legitimate businesses and our economy’s innovators. President Obama has called patent reform one of the “biggest problems” that his administration is trying to tackle (by their leadership on other issues, that unfortunately, seems accurate), and both the House and Senate have introduced legislation aimed at curbing the practice.
A recent letter to Congress from a group of 40 top economists and academics, however, calls all of those assumptions into question. It shows how “unreliable studies” about how much abusive patent lawsuits cost businesses have drawn undue attention by making “highly exaggerated” claims. Contrary to what proponents of reform have claimed, it is simply false that that there is a patent litigation crisis that calls for a revamp of the whole system. The latest and most accurate studies show that the problem has been on the decline over the past year.
“We are very concerned that reliance on flawed data will lead to legislation that goes well beyond what is needed to curb abusive litigation practices, causing unintended negative consequences for inventors, small businesses, and emerging entrepreneurs,” the letter states in its conclusion.
These experts aren’t the only ones wizening up. Intellectual Asset Management Magazine ran an article that found a clear trend that the rate of patent litigation is declining, and a number of conservative critics spoke out against the House bill over concerns that it will weaken intellectual property protections.
If the case for implementing patent reform of this magnitude is flawed, then where does the impetus for these bills come from? Not from the little guy. Just the opposite, it comes from the emergence of a well-funded, tech-focused lobbying coalition that includes Facebook, Adobe, and – most importantly — Google.
The growing influence of special interests in Washington, inside and outside government is particularly apparent in the emergence of Google as a powerful player. This is evident in recent coverage about Google executives meeting with White House officials almost once a week. We’ve seen this most recently in the last-minute, backroom deal Google leveraged with the FCC on net neutrality. Republicans on Capitol Hill called repeatedly for Chairman Wheeler to release the details of the proposed net neutrality plan to the public for review prior to the allowing a vote, to no avail. Yet, Google was able to grab his ear and convince him to make some last minute changes.
The exact details of the conversation are unclear but the message is not: special interests’ influence in government decision making is unmistakable and powerful.
This was a blatant crony carve-out designed to benefit the Obama administration’s corporate allies. Reclassifying the Internet as a public utility greatly expands the power of the federal government over the Internet, and this power can certainly be used to reward friends or punish foes.
Google’s cheerleading of overreaching patent reform shows how cronyism and the benefits of handing out favors is too great a temptation to resist. It is impossible to predict who all the winners would be from the proposed patent reform bills in Congress, but should they become law we can be pretty certain of two things: Google will be one of the winners, and the American public will be among the losers.
One of government’s most storied errors is over correcting problems to such an extent that we end up in an even worse place than before. If innovators in our economy get a scrape, they only need a Band-Aid, not a cast. Cracking down on actual cases of patent abuse is something Congress can and should do, but comprehensive legislation like the Innovation Act go much too far. More targeted legislation to specifically address the issue of patent trolls, on the other hand, has been attacked by Google and its allies, demonstrating that the goal is not addressing a “troll” problem, but on revising our whole patent system and driving down cost for them.