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Cisco believes deeply in protection for intellectual property. We hold over 2,500 issued US patents and have applied for over 4,000 more. The fact is that much
of the value of our company rests upon the intellectual property embodied in our networking products—both hardware and software. Cisco's patent program helps
ensure the company's freedom to improve and sell its products.
In a broader sense, the entire patent system exists to ensure that inventors have the incentive to invest in further innovation, while at the same time
promoting public access to new inventions. Unfortunately, the current patent system has created opportunities and incentives for abuses. The patent litigation
system today is unbalanced and patent speculators are exploiting the system??s unfairness to coerce high settlements from productive companies. The patent
litigation rules function less and less as a neutral system for resolving disputes, and instead encourage winner-take-all, jackpot-like strategies. These
lawsuits rob our economy of billions of dollars that would otherwise be invested in jobs, innovation, consumer savings and shareholder value.
One key solution to this issue is federal patent reform legislation to curb the litigation problem and improve the quality of patents. Cisco supports efforts
to pass common sense patent reform legislation to reduce the disruptions caused by litigation and improve the quality of patents. We are working with other
industry groups and legislators to address these issues. Among our priorities are the following:
- Improve patent quality--Dedicated patent examiners at the US Patent and Trademark Office (PTO) are being inundated with record numbers of patent
applications. Despite there hard work, outmoded procedures, insufficient training, and lack of resources result in a substantial number of problem patents
issued each year. Improving patent quality and making changes at the PTO are important parts of the patent reform effort.
- Allow a timely review of the patent to ensure it is valid before litigation--Cisco supports proposals to create a post-grant review process that would
allow a company being sued to get a fair and thorough review of the patent at the PTO before litigation begins.
- Ensure damages are proportionate in cases of complex devices--Damages should be based on common sense standards. In a world where a device can be made up
of thousands of patented components, patent infringement damages should be proportionate to the value of the component in question rather than the entire
product.
- Require punitive damages be justified, not automatic--The standard for assessing "willful infringement"—which triggers a tripling of ordinary damages
—must ensure "willful" damages are only assessed where there is truly egregious conduct.
- Stop forum shopping--The practice of patent case forum shopping should be ended, ensuring patent lawsuits are resolved in courts that have a reasonable
connection to the underlying claim.
- Limit damage claims in US courts to actions under US jurisdiction--Patent laws should be revised to ensure that companies are not held liable in U.S.
courts for worldwide damages from acts of infringement that are claimed to have occurred in other countries.
By fixing our broken patent litigation system, we can foster more innovation, increased investment in research and jobs, greater shareholder value and
enhanced global competitiveness for the U.S.
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