Congress can fix America’s broken patent system with one reform

Imagine working for decades pioneering a new technology — a more energy-efficient lightbulb, say, or a new life-saving medical device — only to have your invention stolen and released on the market without your permission.

Luckily, you have patented your new idea. And so, you take the patent violator to court and win.

One would assume that such a victory would put an end to the theft. But that’s not how the legal system currently works. Thanks to a 2006 Supreme Court decision, eBay v. MercExchange, patent violators are allowed to keep selling a stolen product, even after their victims have prevailed in court.

This is akin to a person moving into your home without your permission and being found guilty of trespassing, but still being allowed to live there. In both cases, basic property rights are being violated.

The situation isn’t merely unjust — it poses a major threat to America’s position as a global technological leader. Thankfully, a bipartisan bill in Congress would rectify the damage caused by the Supreme Court’s decision. By passing the RESTORE Patent Rights Act without delay, lawmakers can bring common sense fairness back to our nation’s patent system.

All the way back to America’s founding era, if a person or company was found to have infringed a patent, it was standard practice for judges to issue injunctions — legal orders demanding that patent infringers stop selling products that incorporate the stolen technologies. 

In cases filed between 1790 and 1880 in which patents were found to be infringed, courts issued injunctions 91 percent of the time. Even the concurring opinion of three Supreme Court Justices in the 2006 eBay case acknowledged that “courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases” since at least the early 19th century.

But in their eBay decision, the Supreme Court put a stop to this centuries-old, tried-and-true practice. Now, such “stop” orders can only be issued in accordance with an elaborate four-factor test. 

In practice, that test has made it far harder for patent holders to obtain justice when their ideas are stolen. Instead of receiving injunctions, patent violators are allowed to keep using the stolen IP in exchange for paying royalties, the amount of which is decided by the court. 

Even for the clearest cases where injunctions should be granted — individuals and companies that manufacture their own patented products — the number of injunctions granted has fallen by more than 66 percent since the eBay decision. For patent holders not currently in the business of making or selling a patented product — for example, a university or a research lab — injunctions fell by more than 90 percent.

Aside from being blatantly unfair, this new reality contradicts one of the chief aims of America’s patent system. IP protections exist to provide inventors exclusive rights to their inventions. Among other things, this enables companies with breakthrough ideas or technologies to recoup their initial investment without facing copycats in the marketplace. 

But if another company can steal a patented idea whenever it pleases, that’s a complete violation of a patent holder’s market exclusivity, and the entire system breaks down — even if the violator pays royalties.

Not surprisingly, the weakening of patent rights brought about by the eBay decision has had a chilling effect on American innovation — particularly for small inventors. As noted in a recent Hudson Institute report, without some assurance that a patent grants exclusive rights, there’s far less financial incentive for an individual or startup to spend years working to create genuinely original technologies, processes, treatments and services. 

After all, why invest if a more powerful competitor can simply steal the invention for themselves? Again, even if that larger firm is one day ordered by a court to pay royalties, the money is no substitute for the loss of exclusivity.

The case’s impact on America’s global technological dominance is equally troubling. At a time when the United States is facing fierce tech competition from countries like China, we simply can’t afford to undermine our engine of innovation.

The RESTORE Patent Rights Act addresses the problems created by the eBay decision head-on, by making injunctive relief standard in cases where valid patents are violated. In doing so, the bill promises to restore confidence in the enforceability of patent rights and jumpstart innovation.

By passing this much-needed reform, lawmakers can protect the rights of inventors — instead of rewarding thieves who steal innovators’ ideas in disregard of America’s technological leadership.

Andrei Iancu served as the undersecretary of commerce for intellectual property and director of the U.S. Patent and Trademark Office from 2018 to 2021. David Kappos served in the same offices from 2009 to 2013. Both serve as board co-chairs of the Council for Innovation Promotion.