American innovation depends on strengthening patents

The American patent system is the lifeblood of the U.S. innovation economy. Businesses that secure patents innovate at higher rates than those that lack intellectual property; startups and new businesses that hold patents attract capital more easily than those that do not; and startups that obtain a patent are more likely to go public. According to the Department of Commerce, intellectual property intensive industries account for 38.2 percent of the U.S. economy, and support over 45.5 million good, high-paying jobs — about 30 percent of all U.S. employment.

Yet, despite the clear benefits of strong patents, the U.S. patent system is in decline. According to this year’s U.S. Chamber of Commerce International IP Index, the strength of the U.S. patent system has fallen to tenth in the world, tied with Hungary, and lagging behind Italy and Spain. This is not the leadership in global innovation our country needs.

Indeed, in a recent speech in Texas, Acting Federal Trade Commission Chair Maureen Ohlhausen warned that “there is a movement underway to undermine U.S. patent rights.” Special interests erroneously claim that patent rights “erode their R&D budgets and bottom lines,” and call for restricting or abolishing the patent system. This movement is dangerous, and threatens U.S. leadership in an innovation system that depends on strong patents to drive our economy. 

{mosads}For a variety of reasons, including the goal of curbing abuse in the patent system, the Supreme Court has handed down many decisions that make it harder to obtain patents, harder to enforce them, and easier for infringers to avoid liability. And as a result of the 2006 Supreme Court decision in the so-called eBay case, which sharply curtailed the ability of patent owners to obtain injunctive relief against infringers, even courts which find a patent valid and infringed rarely can stop the continued infringement of the patent.

In an effort to streamline and modernize the US patent system, Congress, in 2011, passed the American Invents Act (AIA). I was an early supporter of the Act because I believed it would result in stronger patent protection. Unfortunately, the new administrative proceedings authorized before the Patent Trial and Appeal Board (PTAB) have been used to more easily and quickly invalidate patents, with some abusing the system and bringing repeated petitions. The resulting high patent invalidation rate has led the former chief judge of the U.S. Court of Appeals for the Federal Circuit Randall Rader, in remarks to the American Intellectual Property Law Association, to describe them as patent “death squads . . . killing property rights.” 

I am confident that the United States can regain its place as the leading innovation economy in the world. As a first step, Senators Chris Coons (D-Delaware) and Tom Cotton (R-Ark.) have introduced bipartisan legislation to reverse the damage our courts have wrought on the patent system and to restore the original intent of the AIA in creating PTAB proceedings: to allow a faster, cheaper alternative to litigation for challenging weak patents, without unfairly disadvantaging inventors and patent owners. The Support Technology and Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act of 2017, S. 1390, would begin to reverse the anti-patent movement in the United States. The bill will preserve the AIA’s reforms to the patent system, while repairing areas where it has fallen short, and strengthening the patent system as a whole.

The STRONGER Patents Act would strengthen the ability of inventors to enforce their patent rights in court, bring additional procedural safeguards to proceedings before the PTAB, and end the so-called “inventors’ tax” — the diversion of over $1 billion in patent applicants’ fees from their rightful use by USPTO to general government spending.

These changes require Congress to act, as they are not likely to be remedied by the courts. The Oil States case recently argued before the Supreme Court, for example, focuses only on the constitutionality of the PTAB. As a result, if the Court upholds the PTAB, the case would not include any of the fixes offered by the STRONGER Patents Act, to say nothing of the affirmative protections for patent rights and improvements to the Patent Office contained in the bill. 

America should never settle for being tenth best. The STRONGER Patents Act will bring important fixes to the patent system that prevent abuse, protect legitimate patent rights, and improve our patent examination process. U.S. growth, jobs, and technological innovation depend on strong patents, what Chairwoman Ohlhausen called the “important cornerstones” of “everything that American innovation policy has achieved.” Enacting the STRONGER Patents Act is a key first step Congress can take now to restore America’s rightful place as the undisputed leader of the global innovation economy. 

Jon Kyl served Arizona in the United States Senate from 1995-2013. He is currently senior of counsel at Covington & Burling LLP.