Weakened patent system causes U.S. to slip as a global leader of IP protection

The U.S. Patent system has been under attack for over 12 years and the resultant damage is extensive. The U.S. patent system has fallen behind much of the world and the eroded value of patents has reached a point where corporate leaders are questioning the need to seek patent protection for new inventions.

The damage began with lobbying in the early 2000’s to address abusive patent litigation that was causing harm to U.S. companies. Congress, judges and the American public were told about unscrupulous litigants that were abusing what was characterized as a flawed patent system that did not issue perfect patents all the time.

{mosads}The anti-patent lobby believed that the U.S. patent system was too strong and needed to be weakened. But seeking to weaken the U.S. patent system, which is rooted in our Constitution, would be viewed as un-American. So, the anti-patent lobby instead dehumanized patent owners by labeled them “patent trolls” who contributed nothing to society.

They created a compelling narrative that these trolls were extorting huge sums of money from hard working U.S. companies, including main-street mom and pop businesses, and that their actions threatened the very fabric of the nation’s economy. This got Congress’ bipartisan attention to “save U.S. businesses from extortionists.”

In 2005 the list of desired patent litigation reforms seemed benign enough. Reform advocates argued that because patent trolls only wanted money there is no need for them to get injunctions against infringers. Likewise, patent trolls should not be able to extort companies in patent-owner favorable jurisdictions. Patent trolls always wanted damages based on a whole product’s revenue, not just the value of a “trivial patented invention,” so the lobbyists wanted to change patent damages laws to narrowly apportion damages. Finally, the cost of litigation should be shifted to the failed patent troll extortionist.

As the patent litigation reform movement gained traction it attracted other groups with complementary anti-patent goals. Software organizations, who view software as a community asset that needs to be freely shared for the benefit of all, joined the reform effort to advance their desire to eliminate all software patents. The well-connected Wall Street financial industries wanted to eliminate business method patents that frustrated their new business models. And when the USPTO was attacked in the media for issuing patents on crustless peanut butter sandwiches and a method of swinging on a swing, a push was made to create a post-issuance review process to address poor quality patents.

The U.S. patent system has experienced the most dramatic changes since the Patent Act of 1790 created our patent system and American innovators have paid the heavy price for shortsighted sweeping changes. The cumulative result of all the anti-patent changes led the U.S. Chamber of Commerce to rank the U.S. patent system 10th in the world. Eventually Congress will recognize that all the changes enacted to address the overblown patent troll issue has resulted in far more damage to U.S. competitiveness. This revelation, unfortunately, will take time as the old patent troll narrative is still cited on the Hill. 

There is hope. Senators Chris Coons (D-Del.), Tom Cotton (R-Ark.), Richard Durbin (D-Ill.) and Mazie Hirono (D-Hawaii) acknowledge the need for improvements and recently introduced the STRONGER Patents Act (S.1390) to make some much needed repairs to the U.S. patent system. A central part of S.1390 are improvements to the Inter Partes Reexamination (IPR) trials conducted at the United States Patent and Trademark Office where many inventors have been subjected to abusive IPR trial practice. The STRONGER Patents Act is not perfect but it contains many good ideas to begin healing the U.S. patent system.

In the interim, inventors and U.S. companies need to re-evaluate their IP protection strategy. With real improvements in the U.S. patent system years away, inventors need to consider foreign jurisdictions as a strategic alternative to U.S. protection. This is not a recommendation to stop seeking all U.S. patents but an acknowledgement that the U.S. has slipped as a global leader of IP protection. For example, software related inventions, that are necessary for every innovative company, currently enjoy stronger protection in China and Europe than the U.S.

Future changes in Europe, such as a unified patent court, also show promise for even stronger IP enforcement. China has made great strides in IP protection and over the next 10 years may lead the world in protecting patent rights as Chinese companies continue the migration from manufacturing to innovation. Chinese President Xi Jinping recently stated that IP infringers need to be punished more severely and pay a higher price. Unfortunately, the U.S. has moved in the opposite direction.

Russell Slifer is the former Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office.

The views expressed by this author are their own and are not the views of The Hill.