an invention. Yet it was a setback for the pharmaceutical industry, which often seeks new patents for the combination of one drug with another.

enter Big Pharma

Because drugs typically contain only one or two patented compounds, and the pharmaceutical industry relies far more heavily on patents than any tech company does, the battle over patent reform is frequently depicted as pitting IT against Big Pharma. But the IT industry itself is far from unified. Companies like Qualcomm, Tessera, and Rambus are highly dependent on patent revenue, and are therefore deeply suspicious of the reforms proposed by their peers. Another source of disagreement is the apportionment of patent-related damages, which many IT heavyweights complain have recently ballooned in a manner that’s disproportionate to the value of infringed inventions.

“If you can’t cure the proliferation of questionable patents, you try to reduce their ramifications,” says Robert Barr, executive director of the Berkeley Center for Law & Technology.

 

photoGraph Courtesy of the maCarthur foundation

An injured patent holder is entitled to pursue several different remedies. Injunctive relief prohibits the defendant from continuing to use or sell the infringed invention. Once common, injunctions have become more difficult to obtain since 2006 when the Supreme Court ruled that they could not automatically be issued to non-practicing entities. Lost profits damages, which are difficult to prove and expensive to analyze, have also fallen out of favor. Most plaintiffs thus opt to seek “reasonable royalties” from the defendant. As a matter of convenience, these royalties are often calculated as a percentage of overall product sales. This angers many in the high tech arena, who claim the calculations don’t correspond to the specific value of an infringed patent. Consider the earlier example of a microchip, with its thousands of patented components. If a company were to sue for the infringement of a single component and win, it could ask for damages representing a percentage of the sales of the entire chip.

The Patent Reform Act seeks to redefine “reasonable royalties” to reflect

news

only the economic value of a patent’s “specific contribution over prior art” or, as Senator Leahy described it, “the truly new ‘thing’ that the patent reflects.” It was one of the bill’s most hotly contested provisions, drawing criticism from both the pharmaceutical industry and certain IT segments. Their chief complaint: the value of a product may not be separable from the value of an individual component.

“It suggests that the whole is divorced from its parts,” asserts Brad Ditty, associate general patent counsel at InterDigital Communications. “And it artificially lowers the value of a patent.” Ditty and his peers prefer the flexibility of the current system, and they see no need for reform. Nor do they believe an imbalance exists. “There’s this notion that we’re currently in the midst of a crisis as far as damage awards are concerned,” says Ditty. “We just don’t see it.”

One proposal that remains uncontroversial with the tech community is the Patent Reform Act’s third major provision, which would change the way patents are granted from a first-to-invent to a first-to-file system. (Although some individual inventors have complained that this would put them at a disadvantage relative to larger companies, studies have shown that the first person to file for a patent is almost always the first to invent.) Such a change would bring the U.S. system in line with the rest of the world, and would streamline the approval process by eliminating messy debates about who first had an idea. In fact, it is one of the bill’s few provisions that the pharmaceutical industry also supports, and industry insiders regret that IT companies have not been able to use it to greater advantage to score concessions on other points.

At press time, there was no schedule for the Patent Reform Act’s return. Senator Leahy has said he remains committed to patent reform, but a growing consensus surmises that supporters of the legislation may need to wait until 2009, when there is a new Congress, a new President, and a new head of the USPTO. In the meantime, the battle will continue to be waged, at great expense, in the courts.

 

Leah Hoffmann is a brooklyn, ny-based science and technology writer.

Quantum Computing
Alexei
Kitaev
Wins
MacArthur
“Genius”
Award

Alexei Kitaev,
a professor of
theoretical physics
and computer
science in the
departments of
physics and computer science
at the california institute
of technology, is one of 25
recipients of a MacArthur
Foundation $500,000 “genius”
award. As a 2008 MacArthur
Fellow, Kitaev will receive
$100,000 a year for five years,
with no strings attached.

Kitaev said in a statement that he was “very surprised” when he received a call from MacArthur Fellows Program director daniel socolow, informing him of his selection.

“i didn’t know what the award was at first,” said Kitaev. “But then i looked up the names of people who have previously received a MacArthur award and saw that they are very good scientists. i am excited and honored to be in the same group with them.”

A physicist, Kitaev was cited by the MacArthur Foundation for his work in the nature of quantum systems and their implications for creating practical uses, such as quantum computers. “though his work is focused mainly at the conceptual level, he also participates in efforts to develop working quantum computers,” the foundation noted. “through his deep insights into the fundamental nature of quantum physics, Kitaev reveals a rich picture of this unfamiliar world, bringing us closer to the realization of the full potential of quantum computing.”

Kitaev conducted his undergraduate and graduate work in russia, and came to caltech as a visiting associate and lecturer in 1998 and was named a professor of theoretical physics and computer science in 2002.