The Chilling Effect, Stfiling Innovation Through Patent Wars, the Need for a Globally Harmonized Patent Litigation System

Abstract

The main purpose of patents is to encourage creativity and innovation, which will trickle down and help boost the economy. According to the US Department of Commerce, more than a quarter of all jobs are with companies that rely on patents, copyrights and trademarks to protect products from competition and promote investment. Moreover, according to a study released by the Economics and Statistics Administration and U.S. Patent and Trademark Office, approximately 75 industries deemed “IP-intensive” accounted for $5.06 trillion or about 35 percent of the Gross Domestic Product in 2010. 1 Furthermore, some studies even proved that patents, along with other factors, could play either a positive or a negative role in fostering growth and development.2 Notwithstanding the above, escalating number of patent disputes referred to as “patent wars” is creating a “chilling effect”. In a legal context, a chilling effect is the inhibition or discouragement of the legitimate exercise of natural and legal rights by the threat of legal sanction. 3 In fact, the ongoing patent war is creating such an effect by misallocating valuable resources namely time and money spent on litigation instead of innovation, consequently discouraging small and medium size enterprises (SMEs) from investing their money in research and development “R&D”. Further, patent wars are no longer domestic in nature; as it can takes place anywhere around the world, which supports the need for a harmonized global patent litigation system to ensure that innovation does not become collateral damage in the vicious patent wars. It is the purpose of this study to examine the current patent litigation methods to determine which is best in terms of speed, avoiding jurisdictional conflict and cost effectiveness.