Patent Reform: Will Conservatives Allow Big Banks to Buy Congress?

Patent Reform legislation is being championed in Congress by liberal Pat Leahy (D-VT) in the Senate and Judiciary Committee Chairman Lamar Smith (R-TX) in the House. Its disturbing that Smith seems to have gone native – going so far as to write editorials with Leahy – the man who savaged Clarence Thomas and dozens of conservative judicial nominees before his committee.

There is nothing conservative about Patent Reform and Leahy knows it. Too bad Smith doesn’t. In fact, Smith is pushing the House to vote on Leahy’s bill this week.

The legislation is a direct affront to American constitutional values and precedents, violates the Constitution and contains massive giveaways to big banks and the other Wall Street finance companies – each of them TARP recipients.

The House Leadership – flush with corporate cash – appears willing to turn their back on Tea Party principles in order to reward their K-Street benefactors. The legislation has some stalwart conservative opponents but some Republican Study Committee members appear to be sitting on their hands – or worse.

Constitutional Values Current Law HR 1239
The American Constitution has Protected Inventors. Patents Issued to the “First to Invent” – American law. Patents Issued to the “First to File” – European law.
Constitution Protects Property Rights Patents are protected and violators pay fines Section 18 allows banks to void current patents without just compensation
200 Years of Patent Law American System Protecting Inventors European System Protecting lawyers and large corporations
Equal Treatment Under Law Patents issued and litigated are preserved Section 18 allows banks and Wall Street firms get special rights to void patents
Constitutional System Respects Separation of Powers Section 18 violates separation of powers

HR 1239 Turns American Patent Law into European Patent Law

American patent law has created an economic environment that fosters innovation and creativity because it protects inventors; not lawyers. Patents for nearly 200 years have been issued to the “First to Invent.” In Europe, patents are issued to the “First to File.” The proponents of the legislation admit their intent is to “harmonize” American patent law with their European counterparts. This is no different than efforts to “harmonize” the American health care system with the nationalized health care system of Europe. Do American inventors benefit from this change? Absolutely not. The benefactors are international and multi-national corporations with armies of lawyers – the members of PHRMA and the Chamber of Commerce. Turning 200 years of American patent law on its head is not a conservative principle.

HR 1239 Contains Giveaways to Big Banks and TARP Recipients – Section 18 was inserted into the legislation to help big banks and Wall Street firms and it does so by violating two core constitutional principles. The provision authored by Sen. Chuck Schumer and profiled in the New York Times under the title of “Schumer Helps Banks with a Patent Problem,” voids patents that were issued years ago and litigated. But under the provision, if you are a bank, Wall Street firm or financial services company, you get another bite at the apple. It’s clear that the provision is a violation of the Fifth Amendment to the Constitution as it takes property without just compensation. In addition, a conservative constitutional scholar notes the provision is a violation of the separation of powers:

Section 18 of H.R. 1249, operating in conjunction with Section 5 of the bill, authorizes parties who have been sued for infringement of, or accused of infringing, certain types of defined business method patents to seek the invalidation of those patents by the PTO in special “post-grant review” reexamination proceedings. Critically, even patents whose validity has been sustained in final judicial decisions can be reexamined by the PTO under Section 18. By allowing an accused infringer who has unsuccessfully challenged the validity of a covered patent in federal court to seek reexamination of that same patent, Section 18 contravenes fundamental principles of separation powers as well as the related principle that federal courts are not empowered to issue “advisory opinions.”

Rep. Aaron Schrock (R-IL) has drafted an amendment to strip this provision from the legislation when the bill comes to the floor. Word on the Hill is freshman Rep. Ben Quayle will do the banks bidding to fight for the Schumer provision. Who is one of Quayle’s big donors? TARP recipient Bank of America.

There is nothing conservative about Patent Reform and Section 18 adds insult to injury – giving special interests special privileges. Conservatives should oppose this attack on the American patent system and stand with the Constitution of the United States.

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