CHI Joins California Companies to Urge Caution on Patent Reform

Today, CHI joined with more than 100 California-based companies and organizations in submitting a letter to Senator Dianne Feinstein, expressing important concerns about recently reintroduced patent reform legislation. CHI represents more than 250 life sciences companies and academic research organizations whose inventions are the basis of California’s global leadership in the life sciences industry, representing more than 270,000 jobs across our state and improving the lives of millions around the world.

California’s innovative high-tech industries lead the world in biotechnology, electronics, green technology, medical technology, information technology and telecommunications, and more. The biomedical industry’s advanced research and development is extremely risky and expensive in nature, with the average biotech drug, for example, taking almost 15 years and a billion dollars to reach the market. Strong patent protections enable companies to attract the risk capital they need in order to continue to innovate new technologies that save lives. The hundreds of smaller, venture capital-backed firms in the state, many spun out of California’s world-class research universities and private research institutes, could not attract funding without strong intellectual property protection.

The letter submitted to Feinstein describes how these same provisions raised concerns and objections in the last Congress. In the current economic crisis, CHI believes the enactment of this legislation would cause even greater harm today—delaying promising research and development, reducing investment, diminishing innovation and slowing job growth.

CHI believes the proposed legislation fails to account for recent court decisions that have transformed the patent law landscape and corrected certain alleged failings of the current system in terms of excessive damages awards. While the full effects remain to be seen, decisions such as Ebay v. MercExchange (limiting the availability of injunctive relief), Seagate (limiting treble damages), KSR v. Teleflex (reinforcing the non-obviousness standard), and Microsoft v. AT&T (limiting offshore infringement liability) have clearly limited the legal options of patent holders. As for damage awards, the premier example of excessive damages raised in the past—the Alcatel-Lucent v. Microsoft decision—was overturned on the basis that the damages awarded were indeed excessive under the existing law. This suggests that the present system works and is not in need of fundamental overhaul in the form of mandatory apportionment.

CHI’s Web site is www.chi.org.

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