US takes one step forward, two steps back on innovation

The United States has long been viewed as a leader, especially in the innovation space. Through a system that values ambition, hard work and entrepreneurial spirit, this country has seen incredible technological advances and productivity.

However, as reported on Jan. 22 by Bloomberg, the United States has fallen out of the list of top 10 innovative economies for the first time. 

Part of the reason the U.S. innovation economy has flourished is because of our strong patent system. Lately, however, the strength of this patent system has been eroding, due to changes that have decreased the value of patents and made patent rights less certain.

Although there are some positive outcomes illustrating the power of the patent system, there have also been some significant missteps in the other direction. By moving one step forward, but two steps back, the United States is losing ground as an innovative leader.

A quick look at one recent case may help illustrate these ideas:

TiVo owns patents that cover an important technology that consumers like. Comcast (along with many other companies) wanted to use this technology in the products it provides and paid TiVo a licensing fee to do so. When one of these licensing agreements expired, rather than continue to pay the license or stop using the technology in its products, Comcast decided to simply use the technology for free.

TiVo then filed a complaint at the International Trade Commission (ITC), alleging that Comcast was infringing its patents.

A judge at the ITC determined that Comcast was indeed infringing TiVo’s patents and granted an exclusion order, preventing Comcast from importing into the United States products that incorporated TiVo’s patented technology.

This is a step forward and how a strong patent system should work. If a court finds a patent to be valid and infringed, the patent owner should be granted appropriate relief.

As is standard procedure at the ITC, the commission then assesses whether the exclusion order would have a negative effect on the public interest before finalizing the outcome.

During this period, many people submitted letters to the ITC, encouraging the commission to lift the exclusion order and allow the infringing products to be imported (or at least delay its effective date).

The fact that a number of people, including a United States senator, would ask the International Trade Commission to allow patent infringement to continue is a clear example of a step backward.

Over these letters, the ITC ultimately issued a limited exclusion order, prohibiting Comcast from importing products that included the patented technology. A 60-day review period where the administration could have overruled the order has now passed and the exclusion order will take effect.

Comcast can either remove the technology from its products or enter into another agreement with TiVo to license the technology. While this is a positive development, it is actually just the beginning of another cycle of forward and backward steps.

TiVo recently filed suit in U.S. district court against Comcast for infringement of other technology it also holds patents on. Comcast responded to the suit by alleging that TiVo is trying to make money from an “aging and increasingly obsolete patent portfolio.”

Of course, the basis of the suit is that Comcast is using this purportedly “obsolete” technology without paying for it.

Although this case may overall represent a step in the right direction, it also demonstrates how the patent system is falling backward.

When a company that used to pay a license to use a technology can stop paying a licensing fee but continue to use the technology and simply wait for the patent owner to sue it, that’s a sign of a weak patent system.

When, after a company is found to be infringing a valid patent on a technology developed by others, others step in on its behalf to argue that the infringer should be allowed to continue its behavior, that’s a sign of a patent system that is eroding.

When a country that used to be among the best in innovation and productivity falls out of the top 10, that’s a sign that we’ve taken too many steps backward.

For the U.S. to regain its place as a leader in today’s innovation economy, it needs to see more steps toward a strong patent system that adequately protects the rights of patent owners.

Kristen Jakobsen Osenga teaches and writes in the areas of intellectual property, patent law, law and language and legislation and regulation as a professor at the University of Richmond School of Law.