More defenders of NPEs warn Congress against hasty action

Jon Dudas and David Kline, writing in Forbes, have invoked the research Zorina Kahn of Bowdoin and reinforced by a Yale faculty white paper opining that Congress should tread lightly when trying to regulate a major, historical, well-planned and heretofore working part of the U.S. patent system.

The legislative history, such as it is, of the nation’s first patent law enacted in 1790 suggests the Founding Fathers debated and rejected the British system of high patent fees and the requirement that patent owners had to work their patents, a system that confined innovation to a small cadre of well-healed individuals who had the wherewithal to manufacture. There was no room for entrepreneurs and disruptive technologies.

Here’s what the early Congress decided upon:

  • They set patent fees at a level an ordinary citizen could afford;
  • They decided against imposing working requirements on patentees. Prof. Khan explains, “the Senate suggested requiring patentees to make products based on the patent or license others to do so, but the House rejected this as an infringement of patentee rights;”
  • They wrote the patent law so that they created tradable assets, patent rights, thus opening the door to patent licensing and greatly expanding patent value.
Currently there are no less than six attempts to legislate against Non-Practicing Entitles (NPEs) before Congress right now.  The Administration has weighed in heavily with their own proposal to curb the power of NPEs  that, in the president’s words, “don’t actually produce anything themselves.” Senators Patrick Leahy (D-VT) and Mike Lee (R-UT) outlined the argument against "patent trolls" in Politico.

One example is the SHIELD Act, introduced by Representatives DeFazio (D-OR) and Chaffetz (R-UT), which would insulate patent owners in some way if they could prove they had made a substantial investment in trying to bring the patent to market … exactly what the Founding Fathers were trying to avoid.