Average legal costs

3. institutional forces lead to lowered standards from genius test to entitlement expansion of subject matter life forms, software, business methods �stronger� patents heightened presumption of validity routine injunctions portfolio races trolls

5. 1999 WIPO Medium-Term Plan 2. The main objectives of WIPO, as expressed in the Medium Term Plan 1996-1999, remained constant in the past: "maintenance and further development of the respect of intellectual property throughout the world. It means that any erosion of the existing protection should be prevented," and "that both, the acquisition of the protection and, once acquired, its enforcement, should be simpler, cheaper and more secure." 7. Given its increasing global relevance, the intellectual property system cannot continue to evolve as an issue limited in scope and focused mainly on maintaining and developing intellectual property rights protection. The more intellectual property becomes central to economic growth and wealth creation, the greater will be the challenge of developing the international intellectual property system in a way that it be instrumental to social and economic development.

6. 2003 WIPO Medium-Term Plan 3. The main objectives of the Medium-term Plan, as expressed in the past remain constant: maintenance and further development of the respect for intellectual property throughout the world. This means that any erosion of the existing protection should be prevented, and that both the acquisition of the protection and, once acquired, its enforcement, should be simpler, cheaper and more secure. 4. The objectives mentioned above are mandated by the Convention Establishing the World Intellectual Property Organization, Article 3 of which clearly states: (i) to promote the protection of intellectual property throughout the world�.

7. evolution of USPTO Mission 2000: �to help customers get patents� 2001: �to promote industrial and technological progress in the United States and strengthen the economy� 2002: �to ensure that the intellectual property system contributes to a strong global economy, encourages investment in innovation, fosters entrepreneurial spirit, and enhances the quality of life for everyone�

8. recent economic approaches FTC report

10. sector-specific issues pharmaceuticals ethics, access to essential medicines parallel importation biotechnology anticommons, royalty-stacking access to scientific knowledge, research tools, useful information

11. sector-specific issues II computers and semiconductors complex technology, centered on cross-licensing strategic behavior, portfolio effects information failure, hold-up software and Internet extreme strategic behavior, information failure, and hold-up market access impact on open source user exposure to liability nontechnical patents (business methods)

12. business method problem activities, not technology one �broad� patent covers many products/implementations software problem extreme complexity one product encompasses many �trivial� patents

13. business method problem ��[W]ith the advent of business method patenting it is possible to obtain exclusive rights over a general business model, which can include ALL solutions to a business problem, simply by articulating the problem.� IBM, Comments on the International Effort to Harmonize the Substantive Requirements of Patent Laws [USPTO consultation, May 2001] On the other hand, when some of IPO�s members speak for themselvesOn the other hand, when some of IPO�s members speak for themselves

15. �[T]here are too many patents to be able to even locate which ones are problematic. I used to say only IBM does clearance � but IBM tells me even they don't do clearance searches anymore.� Robert Barr, Vice President, Worldwide Patent Counsel, Cisco Systems, Inc., FTC Roundtable, October 2002

16. I speak with my fellow in-house counsel in the software industry frequently. There is an amazing degree of unanimity about software patents. We all hate them. Martin Konopken, Autodesk As I'm sure this committee is aware, there is a general animosity to pure software patents within and outside of the industry�. Bradford Friedman, Cadence Design

17. recent economic approaches FTC report OECD project EPO hires chief economist EC solicitations value of the patent system (DG Internal Market, July 2004) longitudinal study of effects on software (DG Information Society, August 2004)

18. insights from Mansfield/Levin/Cohen surveys patents are one of many means of �appropriating returns from innovation� secrecy, first-mover advantages, complements, etc. mix from industry to industry patents are of minor importance in most industries, with some exceptions, notably pharmaceuticals

19. factors favoring control well-defined development path need for capital to further develop and market product substantial barriers to entry / high sunk costs high market value relative to transaction costs limited but sustainable market readily usable in commerce

20. factors favoring openness opportunities are difficult to identify a broad set of potential applications diversity of development approaches and perspectives very large potential market (competition drives innovation) very limited potential market (insufficient to attract investment, dependent on volunteers) strong network effects (avoid danger of centralized control) availability of complementary business models application in research (unpredictable payoff, limited market)

21. recommendations clearinghouse collaboration capacity principles economic accountability transparency understanding participation

22. economic principles Patent standards should be sufficiently high that independent invention and inadvertent infringement rarely occur. Patents should be granted only to induce invention that would not otherwise be made. (�but-for� principle) Patents should optimize competition among producers of technology. Patents should not be asserted against downstream users and consumers.

23. economic principles II Patent policy should be results-oriented. A regime that is optimized for certain industries and works poorly in others is both inefficient and discriminatory. Like other forms of market intervention, any �strengthening� of patents, lowering of standards, or expansion of subject matter must be justified in terms of overall costs and benefits. Patents should be of sufficient quality to ensure that patents are read for their technical content and that patent information is efficiently cited and diffused. The practice of innovation should not require regular consultation with lawyers.

24. accountability Governments should monitor and evaluate the impact of the patent system on an ongoing basis Patent quality should be evaluated by scientifically derived criteria. Governments should collect information on scope, form, and nature of licensing transactions. Publicly held companies should be required to report on patenting and licensing practices, including liabilities and contingencies. Information about patent assertions, discoveries of prior art, and settlements should be a matter of public record.

25. recommendation:get a process going clearinghouse collaboration capacity principles