Why the Health Care Industry Should Pay Attention to Tech’s Patent Battle

Over the past decade, Congress has engaged in a series of debates around the U.S. patent system. Most recently, the debate primarily focused on the need to inject greater clarity and specificity into the existing litigation system. However, despite a steady increase in the number of patent cases filed against an increasingly diverse cross-section of American businesses and job creators, attempts to rebalance the system have begun to stall. Why? Because of the purportedly disparate impact that the reforms will have on the technology industry versus the life sciences industry. Much of this is made in a manner that would make one think that these are two warring sides, each out for the life blood of the other. Not surprisingly, this is all Washington hyperbole. The fact of the matter is, that these two worlds are increasingly intertwined.

Technology companies are increasingly partnering or selling services to otherwise traditional healthcare focused companies to find modern and innovative solutions to some of our most important problems. Doctors use Cisco’s telepresence to communicate with their colleagues and patients across the country. Salesforce has partnered with Philips to deliver health care information technology. And health care providers across the country are using Splunk’s Operational Intelligence to protect patient privacy and improve patient care.

Why do I note these? Because there are just a sampling of the evolving relationship between technology and healthcare industries and the very reason why the life science and health care industry should care about the detrimental impact patent trolls have on technology companies. As abusive patent litigation continues to drain the technology industry, so will it to the healthcare industry as resources are diverted from innovation to litigation.

The technology industry was once the sole focus of frivolous patent lawsuits. It is an industry where patents abound. Any given product could contain thousands, if not more, patentable inventions. However, due to the complexity of the industry, a significant number of the patents floating around in the space are vague, ambiguous, and very likely at the end of the day not actually inventive. It is an industry that was ripe for the litigation picking. A person could take an overly vague patent, file an infringement claim without having to provide any level of specificity as to what the patent covered — let alone how it was being infringed — and many companies would engage in nuisance settlements in the six, if not more, figures in the name of certainty rather than potentially drain their resources for significantly more to seek vindication.

However, as technological innovations have become increasingly the backbone of our everyday life in the form of free wi-fi at your local coffee shop to instantly sending payments to your friends, abusive lawsuits have crept their way into almost every industry that makes up the American economy. Until recently, the life sciences community has remained relatively immune to these suits, but it appears that that time is coming to an end as suits are beginning to be filed against small and large health care providers alike. The problems recently encountered by the life sciences communities with “trollish” behavior is not symptomatic of a new game, but reflective of how far the old one has permeated.

Listening to opponents of rebalancing the current litigation system, you would think that any reform effort would completely undermine the value of the U.S. patent system as we know it and dry up all venture funding for startups. The intended purpose is quite the opposite. Almost all of the problems in the current patent litigation system can be tracked down to two core truths: it does not require enough specificity from parties, either in the nature of the alleged infringement or in the scope of discovery, resulting in a lack of clarity that drives people to settle rather than pursue the merits of cases.

Proposed reforms would make moderate changes to existing procedures to require greater disclosure at the outset of a case to allow litigants and judges alike to determine whether the facts of a case warrant proceeding. This is an area that was left untouched by the America Invents Act and has resulted in the nearly two-fold rise in litigation since that bill was signed into law.

Every day Congress fails to enact meaningful changes to how the current litigation system operates is another day that resources are drained and diverted from innovation across all industries. And while this may benefit special interests and help line the coffers of trial lawyers, it will be at the expense of consumers and patients.

Longtime Washingtonian turned expat in Paris working CET->PST on international policy trends in a tech dependent world — canaryglobalstrategic.com

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