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This article is contributed by Paul R. Michel.
America can’t outcompete low-wage countries when it comes to manufacturing cheap, mass-produced widgets. Our labor and regulatory costs are simply too high.
Unfortunately, this advantage is disappearing. Competitor nations have greatly improved their regulatory policies, which enable technological breakthroughs.
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America, meanwhile, is heading in the opposite direction. Our leaders are neglecting, or even actively weakening, the patents, trademarks, copyrights and other intellectual property (IP) protections that incentivize companies to make massive investments in new technologies.
Until recently, the U.S. patent system was — and was recognized as — the best in the world, the global “gold standard.” Unsurprisingly, it was imitated by other nations, particularly, arch rival China. Over the past few years, China has upgraded its system to the point that in many respects, it now surpasses our own. Patents are more rapidly granted, infringement trials are far faster and cheaper, remedies like injunctions to prevent further IP theft are much more common, eligibility standards are broader, specialized courts are more numerous and the laws are revised and modernized almost annually. The list goes on.
Meanwhile, for more than a decade, the United States has been weakening its patent system. In 2011, Congress over-reacted to exaggerated complaints by Big Tech companies about “patent trolls,” — predatory firms that buy up overly vague patents and then sue reputable companies for infringement, in the hopes of getting a quick settlement — and instituted a powerful new tribunal inside the U.S. Patent and Trademark Office that reviews, and usually invalidates, patents challenged there, even if courts have previously upheld those patents’ validity.
The Supreme Court has also made successfully challenging patents in courts easier, made injunctions to stop infringement generally unavailable, and shrank the scope of inventions even eligible for patenting. Today, many important inventions held ineligible for patenting here are found eligible throughout Europe and in leading Asian countries, including China. Even when the ill effects of congressional reforms and the Supreme Court decisions became clear in practice, no corrective actions were taken.
In fact, for almost a decade, the Supreme Court has declined dozens of requests to revisit and revise or clarify its rulings, and Congress has failed to correct or ameliorate the harms from the defects it unintentionally injected into in its 2011 America Invents Act. This represents a huge failure of U.S. leadership.
Fortunately, leaders are emerging in the U.S. Senate who are focused on reviving patents to invigorate economic growth and job creation: Senators Coons, Tillis, Hirono and Cotton. They are leading efforts to make more inventions eligible for patenting.
Separately, Senator Schumer, the majority leader, and Senator Young are proposing to increase federal funding for technology by sponsoring the American Innovation and Competition Act, which was passed in the Senate and is now awaiting action in the House of Representatives.
This effort is also vital to U.S. recovery in economy and technology because public funding, which helps spur private sector innovation, has been shrinking for decades as a percentage of GDP — as has private investment, in part because of the recent anti-patent “reforms.” Venture capital firms typically insist on their clients obtaining ownership rights before committing the needed funds. So, prospects for our future prosperity rise or fall in line with the strength of IP protections, which incentivize the investments that lead to technological breakthroughs.
So far, however, Big Tech has convinced many of its colleagues to leave matters alone. Their legions of lobbyists swarm Capitol Hill constantly, suggesting to members that patent revival is not necessary and, in any event, too controversial for them to safely address. Patent revival is wrongly declared to be “the third rail”, politically. In reality, only a few members, such as those named above, understand the link between robust patents and a robust economic revival.
Their less-informed colleagues can take it from recent USPTO Directors Kappos and Iancu. Although from different administrations of different parties, they agree with me, now retired from the nation’s “patent court,” that economic progress requires fixing our ailing patent system. And we must do so soon— before China replaces us as the world’s leader in advanced technologies like artificial intelligence that will dominate the 21st Century.
As technology goes, so goes not only our prosperity, but national security as well.
Paul R. Michel served on the United States Court of Appeals for the Federal Circuit for 22 years, and as its chief judge from 2004 until his retirement in 2010.
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