American ingenuity and creativity, applied in the form of intellectual property, continues to drive our economic growth and global competitiveness. America’s IP is currently worth $5.8 trillion, more than the nominal gross domestic product of any other country in the world. It is our creators and innovators who give the United States this economic edge by providing solutions to global challenges through research and development, technological advancement, and medical breakthroughs. IP promotion and protection make this possible.
A vital element, which elevates America as an idea factory, is our long-standing patent system. America’s innovation framework is rooted in the Constitution as stated in Article I, Section 8: “To promote the Progress of Science and useful Arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” This clause has proven essential to job-creation and economic growth as America’s patent system is responsible for contributing over $800 billion to the U.S. economy, ownership of one-fourth of the 10.6 million patents worldwide, and a trade surplus of $85 billion due to licensing of IP rights.
However, in recent years, America’s patent system has faced significant challenges leading to a hostile environment for American inventors. Self-serving interests have manipulated the regulatory and judicial courts to attempt to tip Lady Justice in their favor. Increased red-tape, excessive procedural standards, and abusive patent challenges have all served to weaken the rule of patent law. In 2011, the America Invents Act was passed by Congress to attempt to address patent concerns. This federal law created a new governing body within the U.S. Patent and Trademark Office with the sole purpose of conducting review proceedings to attempt to assess patent validity, otherwise known as an Inter-Partes Review.
This new review proceeding body, known as the Patent and Trademark Appeals Board, was intended as a “patent reform” initiative to expedite the patent challenge process. Unfortunately, PTAB has created unintended consequences, placing further burden on the American innovation economy. Rather than defending and protecting inventors, PTAB has been devoted to invalidating patents, overturning four-fifths of patent claims nearly 80 percent of the time. In addition, this new administrative body has invigorated a flood of lawsuits from patent trolls, as challenges can be brought to PTAB by anyone, including shell companies with no direct interest in the patent.
The U.S. Chamber of Commerce’s ranking of National Patent Systems of 45 countries in its 2017 Global IP Index, reflects these unintended consequences of anti-patent policies from the past Administration. As detailed in the index, the U.S. has slipped from first to 10th place. With start-up entrepreneurship at a 40-year low, many entrepreneurs are seeking new locations outside of the United States to flee the PTAB “patent death squad” (as labeled by the former chief judge of the U.S. Court of Appeals for the Federal Circuit). This anti-innovation environment has the capability to cause a brain drain on the American economy. However, a pivotal court case could plug up the hole before it’s too late.
The Supreme Court is currently reviewing a case known as Oil States Energy Services v. Greene’s Energy Group. The court will evaluate if PTAB possesses the constitutional authority to overturn USPTO approved patents. At its core, this benchmark case will determine if this newly established board can independently interpret patent rights, potentially eroding the rights established by the Constitution. If the court adopts a ruling in favor of the patent invalidating body, America’s inventors will continue to be plagued by a costly and confusing regulatory bureaucracy. This could result in fewer opportunities for patentability, fewer opportunities for America’s knowledge economy, and fewer chances for job creation.
Congress is currently considering a bipartisan effort which has the potential to get the America’s patent system back on track. Sponsored by Sens. Chris Coons (D-Del.) and Tom Cotton (R-Ark.), S.1390, the STRONGER Patents Act of 2017, solidifies the foundation of patents as property rights, protects American inventors from patent trolls, and alleviates the potential damages inflicted by PTAB. It’s time we stood up in defense of the future of our workforce, American inventors and creators, with bill passage of S.1390, the STRONGER Patents Act of 2017.
Dee Stewart is the president for the Center for Innovation and Free Enterprise, a project of Americans for a Balanced Budget.
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