ITAA urges Congress to enact patent reform

The Information Technology Association of America warned Congress today that the U.S. patent system is broken and needs to be fixed because inefficiencies, poor quality patents and the inordinate risk of litigation are keeping America's small businesses from realizing their innovative potential.

"The current system, in my view, leaves small business in a position where we are afraid to innovate," said Mitchell Gross, chairman and CEO of Mobius Management Systems Inc., and a member of the board of ITAA's IT Services division.

He called for both additional scrutiny of patents and a more balanced approach to enforcement. Those "are the prices we have to pay to sustain a viable and useful patent system," he said.

Gross told the House Small Business Committee that the process for issuing patents is too expensive, too long and frequently results in questionable patents that lend themselves to challenges in court.

In court, he added, the system is so tilted to the plaintiff/patentee's advantage that defendants are forced to settle, regardless of the merits of their defense or the weakness of the patent underlying the plaintiff's claims.

In his written testimony, he said that if he had to characterize the problem in a few words, he might say "too much risk of losing a fight when a bad patent stands up against innovation."

He characterized a bad patent as one that is overly broad in its coverage and often covers a process that usually does not seem very novel. "I think the problem may be particularly acute in the software and IT services industry," he said.

Gross said it is important to have a viable, low cost administrative process for reviewing patents already issued, to see if the claims of validity hold up when challenged, without having to go to court.

"Of course, it is not the fact of overbroad patents that matters; it is the consequence of infringement that weighs most heavily in the equation," he said. "And right now, the risk of very high damages or of exorbitant settlement requests is, to my mind, very real."

ITAA has about 325 corporate members ranging in size from small IT start-ups to industry leaders throughout the United States. It is also secretariat of the World Information Technology and Services Alliance, a global network of 67 countries' IT associations.