The Patent System Needs Reform, but Not for the Reasons the NYT Suggests
By Ian McClure
AUTM Board Chair
The New York Times published an op-ed on April 16, “Save America’s Patent System,” that deserves response. The article, specifically the headline, caught my eye because patent reform is exactly what this country has needed for years. However, upon reading the piece, it became clear that this was simply another attempt to cut down a vital American institution – the U.S. patent system, which has grown and protected America’s status as a global innovation leader for more than two centuries. That status has, in fact, been under attack for the last decade - not by other global competitors but by the U.S.’ own uninformed participants, who advocate for policies that will weaken protections for American inventions.
Unfortunately, aside from a sprinkling of positions that most can agree on -- enforcing existing standards, giving patent examiners more time on each application and the important collaboration between the United States Patent and Trademark Office (USPTO) and other agencies, such as the Federal Drug Administration, National Institute of Standards and Technology and the Department of Justice -- the crux of the editorial focused on naive suggestions that will not improve the U.S. patent system. In fact, the passage of the Restoring the America Invents Act, as recommended by the NYT editorial board, will make it far worse.
Why would we need legislation that “restores” the worst of the policies created by the America Invents Act (AIA), which did nothing to help America’s innovators, its small businesses, its research universities, and its innovative companies protect their inventions against infringers? In fact, these policies (and the ones emphasized by the Restoring the America Invents Act) will further hamstring America’s ability to compete in the global innovation market.
Consider two facts: First, since the passing of AIA in 2011, the U.S. patent system went from first place in the world in patent protection, according to the U.S. Chamber of Commerce’s annual report, to all-time low rankings of 10th and 12th globally in 2017 and 2018, respectively. The U.S. was finally restored to second place from 2019-2021 under the adept leadership of USPTO Director Andrei Iancu, who helped to curtail some of the major missteps caused by AIA’s policies and a string of confusing rulings from the Supreme Court of the United States (SCOTUS). Additionally, America’s lead in global innovation has not lost as much ground to the rest of the world since World War II as it has since 2011. This rapid deterioration of American innovation is one of the very reasons that our federal government is currently pursuing a conference bill that would create the largest investment in U.S. innovation infrastructure in over half a century.
Meanwhile, China has made great strides in amending its intellectual property (IP) system, strengthening its protection of patents. China has introduced patent term restoration for biopharmaceuticals to protect against untimely and unfair generic competition and to recruit the more than 50% of global pharma research that the U.S. currently conducts. If you have heard that China is outcompeting the U.S. but you can’t find a tangible example, just look at the growth rate of Chinese patent filings relative to the United States. China was the biggest source of applications for international patents in the world in 2020 for the second consecutive year, with a 16.1% year-over-year increase compared with just 3% for the U.S. The Chinese should be ecstatic that we enacted AIA, and even more thrilled to see us double down on that misguided policy with the Restoring the America Invents Act.
Let us be clear: When we weaken patent protections, we disincentivize domestic innovation, forcing it overseas or killing it. The editorial argues that it should be harder to obtain patents – as if the three-year process and thousands of dollars in legal expenses are not sufficient barriers – and easier to take them away. That will send research and innovation further away from our country.
It’s been more than 15 years since the eBay decision that made wealthy companies feel entirely comfortable infringing on small business’ patents because they no longer need to fear injunction. It has been 10 years since the passage of the AIA with its unnecessary, duplicative USPTO show-trials that have done nothing but inject commercialization-killing unreliability into the patent system. It’s been nearly eight years since SCOTUS handed down the last of the four horsemen of the patent eligibility apocalypse (Bilski, Mayo, Myriad, and Alice), which have done nothing but inject innovation-slowing uncertainty into the system.
I tell my law and MBA students at the University of Kentucky—those who will one day be leaders of innovation-based ventures—that we’ve developed a patent system based on the probability that issued rights will one day be eliminated, either by the USPTO, a giant company that ignores them, or a court that won’t enforce them. Since eBay, AIA, and the other four referenced opinions, that probability has grown exponentially in the United States. It’s untenable.
The NYT claims the USPTO has “long since devolved into a backwater office that large corporation's game, politicians ignore, and average citizens are wholly excluded from.”
In fact, the USPTO is a well-intentioned agency with patent examiners that are, for the most part, capable professionals and technical subject matter experts who perform a difficult job with a sense of responsibility. Politicians should have shown deference to a USPTO that was doing its job well, but because they passed AIA, legislators have been forced to develop bills to fix a newly broken system, again and again. The issue is not the USPTO or those who use it. The issue is that patent eligibility rules are as clear as mud, and the patents USPTO issues are increasingly being scrutinized, challenged and invalidated because of a messy Patent Trial and Appeal Board process.
Imagine if we created a system where your startup could invest millions of its own dollars developing a product, faithfully relying on a patent to protect your exclusive right to prevent others from producing that product, as promised by the Constitution. That patent has been issued by the USPTO and bolstered by a promised presumption of validity, yet it can be challenged at minimal cost by any competitor – including foreign ones - that wants to copy the product and try its luck at doing so freely.
That’s exactly what the AIA created, what the Restoring the America Invents Act is going to make easier, what keeps small technology startups from competing fairly, and, along with recommendations like those in the Times’ editorial, what is killing our American innovation system.
There is a simple solution to patent reform. And that is the passage of the Restoring America’s Leadership in Innovation Act (H.R.5874), which was proposed in 2021 by Rep. Thomas Massie (R-KY). In one fell swoop, it reverses several harmful changes to patent law that arose from SCOTUS rulings and the enactment of the AIA, and it affirms that a patent secures private property rights that can be relied upon with the presumption of validity it deserves.
The Restoring America’s Leadership in Innovation Act is the most straightforward, comprehensive way to remedy all the problems that have resulted in a system the Times characterizes as “in dire need of reform.”
So yes, please, save our American patent system.
Ian McClure is the Associate Vice President for Research, Innovation and Economic Impact for UK Innovate at the University of Kentucky and Chair of AUTM, a global non-profit whose members work to commercialize academic research innovations.