America has always been a home for innovators, from Ben Franklin to Thomas Edison. Historically, their innovation has been key to job growth, rising wages and a better standard of living, and our patent system has always ensured that their investments would pay off. That’s how we created the strongest, most competitive economy in the world. It’s why, every year, the U.S. Chamber of Commerce has ranked our patent system first in the world — until this year, that is.
In 2017, the U.S. Chamber of Commerce ranked our patent system 10th in the world, tying our country with Hungary. Our patent system was deemed worse than that of the United Kingdom, Switzerland, Sweden, Germany, France, Japan, Spain, Singapore and Italy. These countries, along with China, have sought to improve their patent systems to attract investment and encourage homegrown innovators.
{mosads}If this trend continues, the U.S. risks losing out on venture capital and new technologies, which will move to nations where patent rights are enforced and innovators are rewarded for investing their time and resources into research and development.
How did we get here? Our patent system has steadily weakened over the past decade, due to Obama-era legislation like the 2011 America Invents Act, recent Supreme Court decisions in TC Heartland v. Kraft Foods Group Brands and Impression Products v. Lexmark International, and other past administrative decisions.
For inventors, it’s been death by a thousand paper cuts, and the data reflects this. In 2014, the rate of new U.S. startups entering the market was the second lowest on record. It’s troubling, because our robust patent system has always helped make America competitive. Intellectual property (IP) plays a unique, vital role our nation’s economy. Companies and individuals across the U.S. invest heavily in research and development to generate new technology, products and cures.
They then patent these ideas, with the expectation that other organizations will pay for the right to legally use what the inventor created. In this system, the inventor is adequately compensated for the time, money, and risk they put into creating their work, and they are incentivized to continue conducting research and fueling American innovation. It is our IP system that allows this process to function properly.
However, the steady weakening of our IP system threatens the vitality of the American economy. Patent-intensive industries that rely on strong IP protections are the engines that drive U.S. growth and competitiveness. Research shows that these industries create high-paying jobs that have a wage premium of 74 percent. Furthermore, the U.S. derives about $85 billion from licensing of intellectual property rights to other countries, improving our global balance of payments.
It’s also important to recognize that American innovation isn’t just taking place in Silicon Valley. Often, it is small startups and organizations across the U.S. fueling our competitiveness. Unfortunately, without a strong patent system these smaller organizations rightly fear that their innovations will be stolen by larger, richer competitors. This risk makes them less likely to launch new companies, and all Americans suffer when entrepreneurs and small business are deterred from innovating. Jobs aren’t created. Wages stagnate. Productivity and our quality of life decline.
The good news is there are still opportunities for us to strengthen our patent system and empower innovators. One opportunity is at the U.S. Patent and Trademark Office, where former Director Michelle Lee recently resigned. President Trump could select a successor with a strong record of protecting patent rights.
He could also vocally support the Stronger Patents Act of 2017, bipartisan legislation introduced by Sens. Chris Coons (D-Del.), Tom Cotton (R-Ark.) and Mazie Hirono (D-Hawaii), which seeks to “protect and support inventors and innovators and ensure that our patent system protects this essential property right.”
Ultimately, people and organizations innovate because they expect to reap the financial rewards associated with doing so. America thrives thanks to startups, creative ideas and novel technologies. Thankfully, we can still take steps to restore our patent system to protect patent owners and encourage invention. We need a system that will attract investment, generate jobs, and create a level playing field for companies across the United States. It’s vital for our future and, historically, what America has always done.
Evan Bayh served as U.S. senator from Indiana from 1999 to 2011 and as the 46th governor of Indiana from 1989 to 1997. He is now a senior advisor in federal public affairs at McGuireWoods Consulting in Washington, D.C.
The views expressed by contributors are their own and are not the views of The Hill.