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To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy

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Citation Edit

Federal Trade Commission, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (Oct. 2003) (full-text).

Overview Edit

This report looks at how to promote innovation by finding the proper balance of competition and patent law and policy. Although both competition in markets and patents for inventors can work together to foster innovation, the report states that each policy requires a proper balance with the other to do so.

This report — which makes recommendations for the patent system — is the first of two reports about how to maintain that balance. A forthcoming second report by the FTC and the Antitrust Division of the Department of Justice (DOJ) will make similar recommendations for antitrust law.

Among the ten recommendations of the report, the FTC proposes legislative and regulatory changes to improve patent quality. Patents of questionable validity can slow further innovation and raise costs to consumers. Specifically, the report recommends:

The report also recommends that Congress limit the award of treble damages for willful patent infringement. Some hearings participants explained that they do not read their competitorspatents because of concern that learning about others’ innovations will expose them to treble damages infringement liability. Failure to read competitorspatents, however, can harm innovation and competition. The FTC’s recommended legislative change would allow firms to read patents to learn about new innovations and to survey the patent landscape to assess potential infringement issues, yet would retain a viable willfulness doctrine that protects both wronged patentees and competition.

The FTC also outlines in the report several steps it will take to increase communication between the antitrust enforcement agencies such as the FTC and the PTO. In particular, the FTC will:

  • Continue to file amicus briefs in important patent cases that affect competition;
  • Ask the PTO Director in appropriate circumstances to reexamine questionable patents that raise competitive concerns; and
  • Urge the creation of a Liaison Panel between the FTC, the DOJ, and the PTO to permit the exchange of policy views on important issues as they arise.

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