Lobbying strategies used by financial services Essay

General knowledge about patenting and the patent reform legislation. A patent can be said to be a se of exclusive rights given to an inventor or his assignee for a given period in exchange for the invention details. However in countries like us extras qualification utility patents is used to differentiate them from other types of patents, this should not be confused with utility models grants by other countries. (http://www.ipaustralia-gov.au/patents/what_index.sch.html)examples of these particular patents for invention includes biological patents, business method patents, chemical patents and software patents. In some other countries other types of intellectual property rights (IPR) are called patents while industrial design rights are referred to as design patents which protect the physical designs of objects which are not of great utility. As such therefore, patent should not be mistaken for a right to practice or use the inventor, it(patent) provides the authority to prevent other people from making, using, selling or offering for sale or importing the patented invention for as long as the term of the patent remains, which in most cases is usually 20years. In real sense a patent is a limited property right that the government leases to inventors in exchange of their (inventors) disclosure of the details leading to their invention. Patent therefore, like any other property rights can be leased, mortgaged, assigned, licensed, given away or even transfered.As briefly stated above the rights governing a patent varies from country to country. For instance in Australia, other people are allowed to build on top of already patented invention. This is possible by making use of exceptions from infringement procedures e.g. allowances for academic research (http. /paustralia- gov.au/patents/what_ index .sch.html). While on the other hand in US things are very different on patent rights governing research, whereby even developing of an existing invention amounts to infringement. The mystery of patents is exhibited when one wants to make an improvement of an already patented invention. This can only be done legally by seeking permission from the patent holder, assuming that the patent is still in force When the new improvement is made the owner of it can bar the original patent owner from using the improvement and hence denying him of the right to exploit the patent. However some countries require that the invention be exploited in the jurisdiction it covers. Again the penalties of not working an invention vary from country to country but the common penalties ranges from revocation of the patent rights to awarding of a license to any party in a position to exploit the invention. The patentee can seek legal redress and challenge the revocation or the issuance of the license. But there exists a big hurdle in offering of tangible evidence that, the requirement of the public have really been met by the working the invention. Generally patents can only be put in force through law suits (e.g. in US, patent infringements are handled in the US federal courts) in other countries like France and Australia criminal penalties for patent infringements are given. In case of an infringement the patent owner will demand to be compensated financially for past infringement and then also seek to bar the defendant (infringer)from engaging in any further acts of infringement. However it is not always easy for the patent owner to prove that infringement really took place. As such, he is required to establish that the accused practiced all that the patent was entitled to; again, the issue of independent jurisdictions patent rights tradition also arises. The above statements about the powers of a patent owner are enough evidence to show that there is a great limitation on the patent owner because the accused has a right to challenge the validity of a patent .It is common for civil courts hearing patent cases to declare patents invalid. The basis on which a patent can be declared invalid are stated on the patent agreement, and again this varies from one jurisdiction to another. However some countries like UK have laws discoursing infringers from challenging the validity of patents. In the UK this discouraged through the certificate of contested validity. Nevertheless not all patent rights disputes are settled through litigatation. Majority of these disputes are settled through private patent licensing agreements. These agreement are simply practical, effective contracts whereby the patent owner (also know as licensor) voluntarily decides not to sue an infringer in return of some payment .Research shows that this is common in companies which deals with complex products. These companies also issue patented licenses to other business rivals under what is known as cross licensing agreements. This in turn facilities the cross accessing of each other inventions (special problems in patent cases 66.FRD 529,197 by Howard T Markey) As seen above different jurisdictions have different traditions of approaching patenting, but it should be noted that in many nations both single entities (natural persons) and corporate entities can apply for a patent. On issuance of this patent then the entity (ies) becomes the owners of the patents. However, it is mandatory that the inventor (s) be named so that the public can get to know how the owner(s) of the patent acquired the rights. For example in US only the inventor(s) (natural person) can apply for a patent, in cases of multi inventors then each inventor is given a patent which s very independent from those given to other co- inventors . It is a normal practice also in US for inventors to assign their ownership rights to a corporate body, this is done in cases of multi-inventors so that only one single entity has the rights to grant a license. Another reason is to increase the liquidity of the patent as property, so that inventors can be in a position to sell them to a third party, who in turn owns the patent as though they were the real investors. From the above detailed information about the function ability of patents and patent rights it is evident that patents and patent rights need to be protected by relevant laws so that neither party i.e. patent owners, authorities, and infringers is vulnerable to mistreatment. Therefore nations and also internal communities have come up with laws that govern the enforcement of patents. Patents as such therefore, are governed by laws at a national level and at an international level through signing of treaties. It can be said that patents are therefore not national but territorial in nature. It is traditional that every nation forms a [patent office which carries out patenting responsibilities in regards of the laws of the country. However cases of infringements are left to be catered by national courts. On an international scale it is the work of the world Trade organization (WTO) to harmonize these patent laws. Agreement have been reached successfully in aligning these patent laws .Adherence to these agreements is a mandatory requirement for admission to the WTO, a factor leading to mass compliance by many nations .Even the developing countries are not left back although they have been known to enforce national laws protecting their local industries. A paramount international meting held in Paris relating to patent systems culminated in the signing of the above agreement. Although the agreement does not have a consequential legal effect in national jurisdictions its principles are largely inculcated in many current patent systems. For instance one such principle is the right to claim priority which allows an application filled in a member state of the Paris meeting to be valid for one year and also to be filled in any other member state and still receive its original filling date. This is a great achievement since patent ownership is entirely date oriented. Again the powers and dynamics of patents vary from sate to another. In US for example, the lands prime law (constitution), gives the congress the mandate to make laws, to promote, and uphold the progress of Science and useful Arts. These laws once passed, are then enshrined in Title 35 of the United States Code. The United States patent and trademark office (USPTO) was created under the above laws. (US patent activity, 1790 to present – http://www. Upstaged/web/ offices/ac/ido/oeip/taf/h-counts-html). In UR, patent laws are contained in the patents Act 1977 (amended). On international perspective, as mentioned above there exists international freely procedures e.g. procedures under European patent convention (EPC) which works under European patent organization (EPO) and patent cooperation Treaty (PCT) among many others. Similar treaties exist in African content countries. For a natural person or a corporate entity to be awarded a patent then an application requesting the same has to be filled at the relevant patent office. This application contains such information like how to make and put the invention into use and also the utility of the invention. Also contained in the application form is claims which explain more about the invention and the extend of patent rights in regards to applicants wishes. The above details together with a written description with drawings are part of the patent specification. In some nations like US, the applicant is also required to include the most effective way to make and practice the invention. The claim part acts as a disclosure to the public on the limits to which the patentee has over the invention. In other words a claim shows what the patent covers and what does not cover. It should be noted also that a single patent can have numerous claims, each regarded as an independent invention. Once the above requirements have been provided it is now the duty of the patent office to counter check whether the application is in order with the relevant legal provisions in relation to the particular specie of patents. Once it is approved the patent takes effect from the date issued and it is subject to yearly renewals so as to remain in force in relation to (Egbert vs. Lippmenn, 104 U.S. 333 (1881) â€Å"the corset case†) The US supreme court passed a decision that any inventor who has not applied for a patent for more than eleven years of using the invention, cannot be given one. Hence there is a need to seek for a patent once an invention has been made (http://www. Wolf Greenfield. Com/media/news. 9.pdf) In a summary of the above information about patent system four main aspects have clearly been discussed about, they include; i. Inventing: – Through intensive research and consulting Scientists and artists are able to come up with inventions. The desire to dig more and come up with inventions is catalyzed by the existence of patent rights. Which comes with much money as a result of selling patent licenses ii. Disclosing the invention made: – As per the meaning of patent, the disclosure of invention is for a common good. This is so because there are projections as to the rights of invention and hence inventors feel free to disclose their invention. This disclosure facilitates for exploitation of patent right when the current one expire or even improvements are made. iii. To invest in producing, experimenting, and marketing of the invention. This is done out the faith that infrequent cases are well protected against. iv. Designing and improving of earlier patents: – This can only be possible is details of already existing patents are disclosed to the public. All the above stuff concerning modern patent system allows for infant inventors to gain exclusive rights and therefore becoming licensors. They therefore gain financially and in the long run promoting more innovations. Due to loopholes the legal systems governing patents cases of double awarding of patents have been common. (According to R.Buck minster Fuller 1938). Due to the increasing number of inventions the patent filling systems are becoming more complex day and day and hence there is a likehood of awarding a patent to an invention already patented before. However with the introduction of reliable computing system this has been kept at bay. According to Michael Heller, a law professor and Rebecca Sue Eisenberg in a 1998 in their 1998 science article, intellectual property Rights (IPR) have become so much fragmented that signing them will require an agreement with all the owners of fragments. Another big hurdle in patents is that they discourage innovations especially with corporate entities who may own many patents and enter into litigations incases of infringement although they are doing absolutely nothing to develop the invention. Other numerous problems also exist and as a result critisms have been common opposing the patents system and proposing for their abolition altogether. Lastly, it will be fair to put forth some historical information regarding the existence of patents. Reliable evidence suggests that the first stints of patents can be traced to ancient Greek cities whereby any one who came up with a new recipe was allowed to make the food for one year. On the other hand, modern patents can be traced to the republic of Venice whereby new inventions were publicly communicated to prevent undue infringement. Other countries followed suit e.g. U.K, US and therefore the idea of patents spread through other parts of the World. The above detailed account about patents gives a reader of this paper a sound basis to now tackle the issue of financial services industry, lobbying strategies in the addressing of the patent reform bill (legislation) before the 110th congress. As already explained above the patents system in united states are under the body known as United States patent and Trade mark organization (USPTO).This body is therefore incharge of issuance of patents to inventors. According to a 2004 report by National Agency of a sciences and another report of 2003 report by Federal Trade Commissioner a bill (patent Reform Act 2005) was proposed. The main aim of this bill was to try and bring a theme of modernity in the USA patent system. Although it was not until 2007 when this bill was introduced to the bicameral US parliament (Senate and House of representatives). This bill now known as â€Å"The patent Reform Act of 2007† was introduced as a proposal in the 110th US congress for discussion and eventual change of the United States Patent Laws. The bills main objective was to bring the American patent laws to the same level with other countries patent laws. (According to a patent system for the 21st century, by Stephen. A. Merrill Richard L. Levin and mark B. Myers, 2004- (http://www ton.nap.eds/catalog//76.html) The main changes brought by this legislation were – I). Converting US from a first- to- invent system to a first- inventor- to -file system. This bill will bring US to conformity with other countries of world. This system will also reduce legal costs, simplify the patent process, improve fairness and also facilitate a movement towards harmonized international patent system. It is also agreed that this change will reduce the complexity associated with the current USPTO interference proceedings. This will therefore make inventors to focus more on inventing. Since this change would make US to be in harmony with other countries it will help US inventors to pursue their innovative dreams in more consisted manner. On the hand, critics have agreed that this system of first to file will encourage unnecessary USPTO with unharmonized disclosure information; therefore quality of patents is compromised. Again the small scale inventors will be at a disadvantage when competing with large co operations in the race to the pattern office. The next major change was apportionment of damages. The bill will seek to bring sanity in the award of damages due from infringements of patents. The bill allows a court of law to ensure that the damages are paid according to the prevailing economic conditions pertaining to the patented invention. This was seen a measure to cut excessive royalty payment infringed patented. Large technological companies and financial services industries supported this change because they lie on features which are in most cases in patented. Critics of this system argued that, the congress should not attempt to prioritize the factors that a court may apply when determining reasonable damage rights. This system may also undermine the existing licenses and therefore leads to the rise of litigation. Those critics included USPTO, the biotechnology among many others. Other charges embedded in the bill included; Allowing a third party assignee to file a patent application, Revising procedures for patent interference disputes; Allowing financial institutions to infringe patents on the check collection system, Allowing a person who is not the patent owner to file a petition with the board cancel a patent as invalid among many other changes. These changes sought to facilitate a general overhaul of the US patent system. Which according to the coalition for 21st century patent Return was in dire need for periodic examination and foundational changes (http://www.ipfrolmer.com/depts/artic.asp?id=14890&deptid=4) This reform bill on patents was introduced to the House of Representatives by a democrat, MR. Howard Berman and in the senate by another Democrat, MR. Patrick Leahy. It was passed in the House of Representatives but put under more scrutiny pending voting in the senate following its introduction in the 110th United States Congress. The bill has been faced with positive and negative critisms from different organizations. Those organizations lobbying for its subsequent adoption argue that, the bill is necessary to bringing in the much needed changes and consequently reduce the number of soaring ills which are killing innovation. Some of these organizations include coalition for patent fairness, Business software alliance intellectual property owners association and lastly American institute of certified public accounts. Those according to them are weakening the rights of patent owners innovations included the following national small business organization, innovatiove alliance, Biotechnology industry organization among others (http://www.napp, org/resources/nap opp to 2007 senate Bill. pdf) According to the US department of commerce the only part which need some revision is section 4 which they argue may harm the nation’s intellectual property system. The bill also attracted critisms from international community with a Chinese expert calling the bill hypocritical; since it is weakening the rights of patent owners in US when US has been urging the Chinese government to strengthen the rights of their patent owners. An observation also comes from India pharmaceutical Alliance who argued the bills provision allows for the validity of a US patent to be challenged immediately after issuance. They also predict that the bill may favour Indian manufacturers since it reduces legal costs and risks. (Http.economictrimes.com/article show/mst 22256,pr+page – 1.cms1) The lobbying strategies The first question one should ask himself when tackling this debate is very simple, how is the proposed patent reform bill going to affect the performance of the financial institutions? Secondly has the current patent laws been in â€Å"favor† of the financial institutions? With these two questions in mind then it is very easy to the financial institutions stand in respect to these reforms. Consequently, therefore, the lobbying strategies they employ will be directly related to these effects. This issue of patent reforms may seem to a nonprofessional to be of no consequential impact and therefore does not deserve much thought but to the business community things are very different. The above detailed account of the pros and cons of the patent reform bill, it is very clear that there exists a tug-of war between some of the corporate US citizens. On one side of the war are much dreaded patent trolls or better known as patent sharks-small firms or individuals who wit fully trap large manufacturers in patent infringement suits in order to benefit from damage awards. On the other side of this war are financial institutions, which, includes banks and insurance firms who have joined hands with large tech-companies. It is understood that these two sectors have been faced with regular lawsuits coming from the much-dreaded patent sharks. At the center of the dispute is the current Americas patent system that is suffering from lack of a major policy overhaul for along period of time and struggling to stay in level with innovation in thev21st century. Therefore, financial institutions have always found themselves in a hot spot under the current patent laws. It is in this light that any reforms that seeks to address their plight is seen as a relieve to them. The first strategy therefore employed by these financial institutions was the formation of a bargaining platform in the form of â€Å"the coalition of patent fairness†. This group lobbied the senate to help curb the weak patents and bourgeois lawsuits from patent sharks. The group also lobbied against a ruling made by the federal appeals court that opened doors for patents on business methods, including different types of banking, investments and insurance techniques. It is through this lobbying that, the senate judiciary committee included a provision that grants banks immunity against lawsuits from patent holders like Texas Company Data Treasury, which holds patent on a method of digitally scanning, sending and storing checks. Another strategy used by financial firms is by applying for patents. These patents unlike those of other industries are not primarily for financial gains but for defensive purposes against the escalating number of patent infringement cases from the much-dreaded patent sharks. Financial institutions in US are also exploiting the fact that US is the only nation in the world to have been left back using the first-to-invent system of patenting to lobby the international organizations (WTO).this seems to have borne fruits because the USPTO seems to have yielded to the pressure and therefore agreed to bring some changes. This has worked through the harmonization of the US patenting system with the rest of the world. After the House of Representatives passed its version of the bill, many AUTM members frantically contacted their congressional members a move that enabled many parts of the bill to be amended. However the senate bill remained to be harmonized. Following great concern from the university community and other bodies, a number of changes were made. One lobbying strategy, which financial services institution used was voicing their concerns through the AUTM, an organization of many universities and other bodies that induces closeness to industries. It should be noted that the AUTM and the university community were not in anyway against the improvement of US patent system. Their main concern was to see that before the bill was finally voted for in the senate, the contentious parts should be first fine-tuned. As a show of great support to the improvement of the US patent system, the university group therefore put fourth the following suggestions (i) a one-year grace period for first inventor and strong inventor oath should be included. ii)Removal of the previous user rights expansion in favour of study of issue university patent can be in a risk of expanding prior user rights iii) Venue reform provision that exempt universities and technology transfer foundations that offer patent services to universities. The bill as it were had many provisions that were of great concern to US universities chiefly because it undermined the ability of the universities to transfer technology to local industries. This was due to the making of patents difficult to protect decreasing the amount of damages patent holder can get from an infringer and opening new avenues for infringers to put to task the validity of issued patents. This change of USPTO rules and the issue of Supreme Court in mind made it more burdensome, and expensive to get, maintain and even enforce patents. It also poses difficulties for Universities when starting companies, which attract venture funding. Other areas, which concerned Universities and financial institutions were, are as follows:- i. A compulsory search report and analyses, which reflect heavily on the financial aspects of Universities on technology, transfer offices. ii. Absence of meaningful inadequate contact reform iii. An open-ended, post-grant administrative review of patent quality. iv. Venue reform policy that forces patentee to file suits in the infringer home district court and v. Apportionment of damages in patent infringement suits. Another strategic lobbying device at the disposal of financial institutions and other concerned organizations was through approaching federal relations officer near them. These federal relations officers are discharged with the main duty of acting as the intermediaries between the people and senate (legislators). Due to the bill, having so many controversial sections, there was an urgent need for the stakeholders to harmonize their divergent views and come up with a consensus. This was achieved through the congressional research service (CRS) an arm of United State Congress that provides policy and legal advices to committees and members of both the house and the Senate regardless of party affiliations. The CRS committee collects views from the public and then they act accordingly. Again, this CRS also carries out civic education concerning the interpretation of bills and their effect to the lives of the common person. Holding of workshops and seminars with the other stakeholders was another worthwhile strategy used to help bring every concerned party on board so that when the legislation is adopted no one would feel shortchanged. Workshops are known to bring warring parties together on a mutual agreement. These workshops therefore lobbied the opposing bodies into ceding some of their unrealistic demands. Financial services institutions through their attorneys lobbied the senate judiciary committee into making provisions that gave them more power in the using of technologies made by other inventors. These technologies are necessary in the improvement of banking services offered to customers. The bill therefore needed to be lobbied and subsequently harmonized. Conclusion The AUTM through their technology transfer managers evaluated impact of the long legislation on its general operations and therefore come up with a strategy, educate the university management and also other interested and the work with the federal relations officer, who in turn contacts the lawmakers. This technology transfer managers advice the legislators on the need to go the dialogue way so that at end of it all no constituency feels as being shortchanged by the passing of the patent reform legislation. In general, the current state of the bill would weaken the entire American patent system by making patented under to protect. The damages entitled to a patent owner after an infringement has been reduced adding salt to the wound. New avenues for infringers to challenge an already issued patent have also been opened. Although the bill continues to be harmonized bit by bit, the university technology transfer system still view some areas as not fully catered for. The legislation also provides for a patent trial and appeal bond, which is charged with the responsibilities of reviewing decisions of examiners upon applications and reexamination proceedings. Financial services institution therefore can utilize this avenue in addressing and subsequent challenging of the patent reforms legislations. This board comes as an indicator on how this reform legislation has deliberately been drafted and therefore only needs to be harmonized on the small areas. However, it is fair to say that America need this bill to at least bring some uniformity with rest of the world because it has been the only country adopting the first-invent system of patenting. Two, according to Senator Leahy, America needs an efficient and streamlined patent system if it is to remain in the forefront of the world economy. This patent will bring quality and at the same time discourage counter productive litigations. Senator Berman on his side argued that, there should be no doubt, as to whether the US system of patenting produces high quality patents, and therefore changing the existing patenting practices through the congress is the only way out. The bill also, should not be viewed with suspicion since it was founded and introduced in the two houses on a bipartisan basis. It is also the bedrock of American innovation, and therefore there is great need to protect innovation and creativity, according to Senator Hatch. Financial services industry being one of the major economic players of the United State of America, needs also to standup on its own and voice out their grievances. In addition, financial services institutions like banks and insurance companies have a duty to challenge the patent reforms legislation because they have started to seek protection from infringement lawsuits from patent sharks. This was facilitated through the introduction of financial patents. References; More about patent reforms, available at, 1) http://www.ipfrolmer.com/depts/artic.asp?id=14890&deptid=4, accessed on april30 2008 Effects of patent reforms, available at, 2)Http.economictrimes.com/article show/mst 22256,pr+page – 1.cms1) , accessed on april30 2008 Patent reforms for 21st cen. available at, 3) http://www ton.nap.eds/catalog//76.html) accessed on april30 2008 US patent and trademark office, available at, 4) http://www. Upstaged/web/ offices/ac/ido/oeip/taf/h-counts-html accessed on april30 2008 Regulations governing patent application, available at, 5) http://www. Wolf Greenfield. Com/media/news. 9.pdf) accessed on april30 2008 More about patenting, available at, 6)http://www.ipaustralia-gov.au/patents/what_index.sch.html) accessed on april30 2008 Patenting and innovations, available at, 7) Heller, M.A., & Eisenberg, R.S. (1998). Can Patents Deter Innovation? The Ant commons in Biomedical Research. Science. Different organizations response towards the patent reform bill, available at; 8) http://dev.bsa.org/country/public%20policy/patents.aspx, accessed on april30 2008