Why encourage patents and patenting systems and how strong should the patent regime be, these questions continue to attract serious attention in the US among its policy researchers, legal pundits and lately even among certain sectors of the industry. All the same, though, most agree that it has certainly a unique and crucially positive role in enhancing research-technology driven industrial and economic development. A summary of the contemporary situation by the three following major schools of analysis is given below:

(A) CHI Research Inc., a well-known IP consulting company, has been using its proprietory Tech-Line methodology to evaluate and rank all major US corporations and universities and this methodology has lately been accepted by the US National Science Foundation as well. This uses three standard patent indicators and six advanced citation indicators invented by itself to analyse corporate technological strength. They are Basic Indicators (number of US patents, patent growth per cent in area and per cent of company patents in area), Patent Citation Indicators (cites per patent, current impact index, technology strength and technology cycle time) and Science Linkage Indicators (science linkage and science strength). The methodology, in turn, highlights the fact that high-level scientific research only results in high quality patents and eventually path-breaking new technologies, irrespective of the field of activity. Over the years, the CHI methodology has assumed great value in evaluating the corporate strengths of major companies as well! In other words, the Corporate R&D Cards and the IP portfolios form inevitable components of corporate strengths even in the stock markets.

(B) In an exhaustive recent research study on ’Protecting Their Intellectual Assets: Appropriability Conditions and Why US Manufacturing Firms Patent (or Not),’ Wesley M Cohen and co-workers have summarised their findings as follows:

’Based on a survey questionnaire administered to 1478 R&D labs in the US manufacturing sector in 1994, we find that firms typically protect the profits due to invention with a range of mechanisms, including patents, secrecy, lead time advantages and the use of complementary marketing and manufacturing capabilities. Of these mechanisms, however, patents tend to be the least emphasised by firms in the majority of manufacturing industries, and secrecy and lead time tend to be emphasised most heavily. A comparison of our results with the earlier survey findings of Levin et al. [1987] suggest that patents may be relied upon somewhat more heavily by larger firms now than in the early 1980s. For the protection of product innovations, secrecy now appears to be much more heavily employed across most industries than previously. Our results on the motives to patent indicate that firms patent for reasons that often extend beyond directly profiting from a patented innovation through either its commercialisation or licensing. In addition to the prevention of copying, the most prominent motives for patenting include the prevention of rivals from patenting related inventions (i.e., patent blocking’), the use of patents in negotiations and the prevention of suits. We find that firms commonly patent for different reasons in discrete product industries, such as chemicals, versus complex product industries, such as telecommunications equipment or semiconductors. In the former, firms appear to use their patents commonly to block the development of substitutes by rivals, and in the latter, firms are much more likely to use patents to force rivals into negotiations.’

In other words, patents and patent portfolios are used under a strong regime as effective tools to protect the overall corporate interests depending upon the specific areas of technology.

(C) Interestingly enough, the US Federal Trade Commission (FTC) in its October 2003 Report ’To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy’, is also looking at a fresh review of US patents and patenting practices as summarised:

To examine the current balance of competition and patent law and policy, the FTC and DOJ (department of justice) held hearings from February through November 2002. The hearings took place over 24 days, and involved more than 300 panelists, including business representatives from large and small firms, and the independent inventor community; leading patent and antitrust organisations; leading patent and antitrust practitioners; and leading scholars in economics and antitrust and patent law. In addition, the FTC received about 100 written submissions. Business representatives were mostly from high-tech industries, pharmaceuticals, biotechnology, computer hardware and software and the Internet. This report discusses hearings testimony and independent research, and explains the Commission’s conclusions about and recommendations for the patent system.

Conclusions And Recommendations
* Although most of the patent system works well, some modifications are needed to maintain a proper balance of competition and patent law and policy (examples given in the report).

* Questionable patents are a significant competitive concern and can harm innovation (examples are given in the report).

* Questionable patents can deter or raise the costs of innovation (examples are given in the report).

* In industries with incremental innovation, questionable patents can increase ’defensive patenting’ and licensing complications. Examples abound in the software sector where there is a tendency to create a ’patent thicket’.

* Recommendation to improve patent quality and minimise anti-competitive costs of the patent system (ten issues are identified).

Emphasising that the FTC will pursue steps to increase communication between antitrust agencies and patent institutions to bring these about, the report further said:

“Both patents and competition make significant contributions to innovation, consumer welfare and our nation’s prosperity. We recognise the importance of the patent system; the recommendations in this report are designed to increase the likelihood that the valid patents are issued and upheld. There is broad consensus on the significant role that these patents can play to spur innovation and to encourage the disclosure and commercial development of inventions. The importance of competition as a spur to innovation should be recognised. More patents in more industries and with greater depth are not always the best ways to maximise consumer welfare.

A questionable patent can raise costs and prevent competition and innovation that otherwise would benefit consumers. The FTC looks forward to working closely with Patent and Trademark Office and other patent organisations to increase communication and include all parties in discussion and implementation of the FTC’s recommendations.’

Undoubtedly US has a very unique history as far its IPR policies and practices are concerned, though the system itself was originally conceived and strengthened in Europe. If the US continues to be the only country to grant a patent only to its inventor and NOT to one who files first, it stands first in national high quality patent portfolio as well, with its website www.uspto.gov as a shining example of how it could serve as a beacon on patents literature. Not surprisingly enough, it is also the country which encourages active discussions on how strong should the patent regime be for its continued (capitalist) development.