5 industries struggling with patent laws

by Staff Writer

BU recently released a study showing that “patent trolls”, companies that buy up patents only to sue others for infringement, have cost innovators $500 Billion in lost wealth over the past 20 years. Today's patent lawsuits are so many, that they're tough to keep track of and fears that the current climate of patent law is killing innovation. And while throwing out the entire patent system is probably a bit drastic, there's growing support for serious reform.

For some industries, the current use of patent laws is more serious than others. Blanket reform could be helpful, but each industry faces its own unique challenges. Below we've highlighted the 5 industries we feel have the most serious need for patent law reform:

 

Smart-phone/Tablet computer

 

If you own a smart-phone, the chances are at least one of the companies responsible for your device is being sued and/or suing another for patent infringement, likely both. By March of 2010, patent lawsuits in the smartphone arena started to seriously heat up. Add Android into the mix and little more than one year later and there's 37 more lawsuits against Google's smartphone OS alone.

In fact, smart-phone patent lawsuits are so many that they are starting to shape the way the industry innovates.

Whether these lawsuits are valid legal infringements or are simply a desperate attempts to gain advantage in the marketplace is for the courts to decide. Either way, their financial toll is well documented and the overall effect on the industry noticeable. A recent decision by German courts granted a ban on selling Samsung Galaxy 10.1 tablets in Europe's largest economy in favor of Apple's claim, one of the more controversial and public current patent disputes.

 

Software

 

With no formal definition, software patents are a widely debated and often referenced source of flaws in the current patent climate. Perhaps in no other industry is patent trolling so profitable. Failed software start-ups are an abundant and inexpensive source of patents. Meanwhile, successful innovations in software rarely come from scratch and instead rely on improvements making for the perfect storm of patent infringement debate.

Many have argued that software patents should be completely abolished, an idea that is really starting to pick up steam. The argument is that current reform solutions don't do enough to remove the broad scope of current patents that make it near impossible to create software without infringing upon one or more. It's a debate that is likely to continue until software patents are a thing of the past. And perhaps that's simply the nature of the beast.

 

Pharmaceutical (U.S)

 

Pharmaceutical patents might be the most damaging types of patents for the end consumer. The problem is that U.S. pharmaceutical patents are a primary cause of the high costs of certain medications. Few drugs would cost more than $5-$10 per prescription but instead cost hundreds and even thousands (yes plural) of dollars. Put another way: the U.S. spends almost $300 Billion on prescriptions per year, a number that would be roughly 1/10th the size if it weren't for pharma patents.

While proponents claim that without these patents, innovation would struggle due to a lack of financial incentive and that the cost of development is built into the price of the medication. This argument quickly breaks down when you take a deep look at the abuse of the system by the pharmaceutical industry.

This debate doesn't just effect the pharmaceutical industry, however. It has been widely cited as a major flaw of the U.S. health care policy. As a result, a number of reforms have been suggested in order to curb the costs of prescription medication and health care (in general) in the U.S.

 

Biotechnology

 

Until recently, biotechnology had been relatively free from patent litigation by patent trolls. But a recent court decision sets a disturbing an potentially damaging precedent in the field of biotechnology.

The court upheld a lawsuit filed by Classen Immunotherapies of Baltimore, Maryland, against four biotechnology companies and a medical group, for infringing on a patent that covered the idea of trying to link infant vaccination with later immune disorders.

The biggest issue, according to James Bessen, a lawyer at the Boston University School of Law, Massachusetts, is that the decision upholds a patent for something that is very broad. This type of decision could then lead to similar lawsuits restricting the use of techniques that lead to further innovations or potentially raising the costs associated with related treatments.

To this point biotechnology has not been susceptible to problems associated with patent laws because the patents tend to be very specific rather than broad. This decision has changed that and has now become a concern to many in the bio-tech field.

 

Financial Services

 

Wall street has recently joined the patent reform rhetoric as "business method patents” have begun to enter the picture. A common example is the “one-click checkout” patent claims by Amazon.com and a number of other companies that have similar checkout methods. These types of patents tend to be extremely broad and can seriously limit the ability of businesses to optimize their efficiency.

A big part of the recent controversy on business method patent reform, however, is the speed of which wall street was able to have the reform introduced. And while that's certainly a valid point of contention, it remains a mostly political matter as the reform certainly has merits as well.


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