IP Law Bulletin

The Federal Trade Commission (FTC) recently released a report detailing its recommendations for improving the patent system to enhance consumer welfare and encourage competitive innovation. In 2008, the FTC held eight days of hearings with business representatives, independent inventors, patent practitioners, scholars, and economists on the interplay of notice, remedies, innovation, and competition in the patent system. The culmination of these hearings is a report entitled “The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition” that summarizes the FTC’s findings and suggestions for improvement. As the title suggests, the report highlights two aspects of the patent system that the FTC feels are key to encouraging competitive innovation. First, the report recommends that the patent notice function be improved. Without clear notice of what a patent covers, businesses become hesitant about investing in or designing around a patent, and technology transfer is stalled. Second, the report notes that patent remedies should seek to replicate the market reward that the patent holder would have earned absent infringement. Under-compensation discourages investment in research and development while over-compensation encourages speculation in patent rights and litigation. The report concludes that improvement in these two realms should provide a more suitable and fertile environment for sustained competitive innovation, and thereby enhance overall consumer welfare.

To read the FTC’s report “The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition,” click here.