Stronger patent rights would help promote US technological leadership

In late May, a group of bipartisan leaders from both houses of Congress introduced an important bill to restore American technological leadership. Called the Endless Frontier Act, it would boost government research and development spending by $100 billion per year in emerging technologies. This influx of funding is much needed, but the bill falls short in an important way. It does not fix a fundamental problem facing technology companies: a hobbled U.S. patent system. Fortunately, an easy solution is to combine the Endless Frontier Act with the pending bipartisan STRONGER Patents Act to ensure that U.S. innovation continues to lead the world.

In a recent USA Today opinion piece, the Endless Frontier Act’s sponsors — Sens. Chuck Schumer (D-N.Y.) and Todd Young (R-Ind.), and Reps. Ro Khanna (D-Calif.) and Mike Gallagher (R-Wis.) — explain that the goal of their bill is to improve “our ability to rapidly move groundbreaking ideas … to job-creating companies and, in turn, to the world’s consumers.” They correctly note that past technological advances “were spawned by public investment before the private sector brought them to consumers.” Indeed, universities and government laboratories play a vital role in early-stage innovation, which is then picked up by private-sector companies that make the necessary investments to turn the groundbreaking research into world-changing technology and consumer products.

It is that critical second stage in the innovation process that is missing from the Endless Frontier Act. In fact, most development, as well as manufacturing, is done not by government-sponsored researchers but by private companies. These companies spend many times more than government researchers could, and they convert basic science research into amazing consumer products and services.

Yet, private companies can turn research into consumer products only if their massive investments of time and money make financial sense, meaning they can expect at least a reasonable return on their investment. Without sufficient financial incentive, neither business executives nor venture capitalists can justify the investment risk. They will put their time and money elsewhere. That is where patents come into play. Reliable patent protection is almost always necessary to ensure a reasonable financial return for both the inventor and the investor. 

The Endless Frontier Act can solve the funding shortfall, but it misses the critical problem facing emerging and established technology companies. They are hamstrung by a diminished American patent system. A series of Supreme Court decisions, administrative actions and congressional legislation in recent years has dramatically weakened the ability of patent holders to defend their innovations against infringement. Without reliable patent protection, the risk is just too great that many companies will not be able to recoup their investment when bringing these great products to market. They cannot justify the risk to their investors — to whom they owe duties of stewardship.

The same concern about financial incentives applies in the case of life sciences companies now working to develop vaccines and treatments for COVID-19. The sponsors of the Endless Frontier Act correctly note that “America’s pharmaceutical scientists are working tirelessly to develop a COVID-19 vaccine.” But they fail to note the importance of patents in helping to fund that work. 

The best way to ensure this innovation continues would be to couple the Endless Frontier Act’s increase in federal investment with a reinvigoration of the U.S. patent system. And to address the patent system problems, all Congress needs to do is pass the STRONGER Patents Act, which is currently pending in Congress. 

Sponsored by Sen. Chris Coons (D-Del.) and Rep. Steve Stivers (R-Ohio), as well as others in both the Senate and House, the STRONGER Patents Act would strengthen patents while guarding against possible abuses. One of its most important improvements would be to restore the right to injunctive relief for inventors, allowing courts to step in to stop a proven infringer from violating the inventor’s patent rights. It also would restore balance to the administrative Patent Trial and Appeal Board, ensuring that solo inventors and small businesses have a fair playing field when it comes to defending their patents. These and other elements of the STRONGER Patents Act would go a long way towards restoring our patent system as an engine for innovation, including medical innovation, and job creation.

In the end, the goal of both bills is the same — to “strengthen our nation’s innovation ecosystem now and into the future.” If adopted together, we will have a winning combination, ensuring that the increase in federal investments actually results in life-changing technologies and consumer products — all flowing from American innovation.

The Hon. Paul R. Michel served on the U.S. Court of Appeals for the Federal Circuit for 22 years, the last six as chief judge, until retiring in 2010. He previously helped craft legislation as counsel to a U.S. senator, served in the Justice Department as associate deputy attorney general and was a Watergate special prosecutor.

Matthew J. Dowd is the founder and managing partner of Dowd Scheffel PLLC, a law firm focusing on intellectual property matters. He served as a clerk for Judge Michel.