Erosion of Patent Rights Is a Threat to Innovation and American Prosperity

Scott Cooper World Erosion of Patent Rights

He American patent system was a bulwark of American prosperity throughout our nation’s history.

Unfortunately, recent judicial and executive branch blunders that weaken patent protections are a clear and present threat to economic innovation. The federal government should act quickly to restore the vitality of the patent system and thereby strengthen the American economy.

A patent is a time-limited property right granted to inventors under U.S. law for a novel, useful, and nonobvious invention. A patent confers “the right to exclude others from making, using, offering for sale or selling” the invention in the United States or “importing” the invention into the USA.

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The Patent and Trademark Office, an agency within the Commerce Department, reviews patent applications and issues patents for innovations that meet patentability standards.

Patents played a central role in supporting the Industrial Revolution in 19th-century America, and they were correlated with key U.S. innovative breakthroughs in the 20th and early 21st century as well.

Patent-enabled breakthroughs led to new products that fundamentally changed American industry–sewing machines in the 1800s; telephones, airplanes, antibiotics, and electric equipment in the 1900s; smartphones and new biologic medications in the 2000s, just to mention a few.

In short, patents have clearly been in the heart of successive waves of critically important American business innovation and continue to make great contributions to the American market.

But today, unfortunately, U.S. patent rights are under serious threat.

For starters, a series of Supreme Court decisions over the last 15 years have made it more difficult to obtain and defend a patent.

For instance, in its 2006 eBay v. MercExchange decision, the Supreme Court made it more challenging to get a patent holder to obtain a federal court injunction–an order preventing others from using patented technologies without consent.

And more recently, the Supreme Court has cut back significantly on which it deems “patent eligible,” particularly in such areas as biotechnology, computer-implemented inventions, and applications.

As Gene Quinn, a major patent attorney, explains, these changes mean that today “there are many other parts of the world that have more expansive views of what could be patented, such as Europe, Australia, as well as China.”

What’s worse, the America Invents Act of 2011 established a Patent Trial and Appeals Board within the Patent and Trademark Office to review already-issued patents at the request of third parties.

Patent experts note that this board has wreaked havoc, striking down the vast majority of patent claims it believes in a manner that undermines fundamental due process rights of patent holders.

By removing numerous statutorily protected patents, the board review makes patents less precious. Investors will be less willing to invest in new patents covering groundbreaking inventions if there’s a good chance that copycats seeking a “free ride” on these innovations can get the board to kill the patent rights.

But given the Supreme Court’s faulty track record, it is far from clear that the high court will overturn the machine.

That is not all. Until the past few decades, American antitrust policy respected the rights of inventors to receive full and fair returns on their patent rights. But that policy changed during the Obama administration, as antitrust enforcers focused on limiting patent licensing fees on patents that are important in high-tech industries that rely on technical standards.

Similarly, foreign antitrust agencies have chimed in, bringing their own enforcement activities against patent holders.

More broadly, the Obama government’s regulatory stance on patent antitrust policy created an environment which is less favorable to patents. These activities have undermined the incentives of patent owners to develop new technologies–and, in particular, to invest in technology related to standards, to the detriment of innovation.

The damaging consequences of the “anti-patent” improvements have become apparent. A 2017 U.S. Chamber of Commerce standing of national patent systems discovered that the United States has slipped to No. 10 in the world in strength of patent protection (tied with Hungary), after having been rated No. 1 in prior rankings.

That is bad because economic study “demonstrates that strong patent systems, which encourage research and development and investment, spur innovation and encourage robust economic development.”

In summary, American innovation and economic growth will suffer if something isn’t done. Fortunately, there are public policy cures for the anti-patent disease. Specifically (as I have explained previously in greater detail):

Federal legislation should remove (ideally) or at the very least strongly rein in the Patent Trial and Appeals Board.
Congress should also alter substantive patent law to overturn Supreme Court decisions which have harmfully restricted patent eligibility and remedies for patent owners.
President Donald Trump should take action to appoint “pro-patent” officials and set powerful “pro-patent” policies during his administration.
U.S. antitrust officials should undo the Obama administration’s misguided anti-patent policies.
The Trump administration should vigorously oppose foreign actions aimed at undermining American patent rights. It should also act on the international stage to promote greater respect and protection for patents.
While not a panacea, taken together, these proposals provide a b


Scott Cooper World

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