Celebrating American ingenuity to the 7th power

From mainframe computers to mobile devices, from vaccines to cures, American ingenuity underwritten by the U.S. patent system has compounded over time to make our lives longer, more productive and more fulfilling.

Modern technology pays the legacy forward: Apple founder Steve Jobs is named on 458 U.S. patents; Sergey Brin, president of Google parent Alphabet, is named on numerous patents related to data extraction, search query and voice interface, to name a few.

{mosads}Last week, the United States Patent and Trademark Office (USPTO) issued U.S. Patent Number 10,000,000. This milestone gives us reason to pause, both to honor the accomplishments of the system and to ensure it remains positioned to support American ingenuity for generations to come. 

Right now, America ranks No. 1 in the world overall with respect to intellectual property (IP) protection, such as copyrights for the creative arts and trademarks for brand owners, according to the U.S. Chamber of Commerce’s International IP Index.

But the index raises questions when it comes to patents specifically, where the U.S. ranked 12th in 2018. The lower rank in patents is due to new administrative reviews implemented in the last decade, which made it easier to invalidate patents after they were granted by the USPTO, as well as a series of Supreme Court rulings restricting the patentability of inventions in certain cutting-edge technology areas. 

Supporters of the administrative reviews, including the U.S. Chamber of Commerce, point out that the rapid acceleration of technological change has led the field to become flooded with patents.

From the beginning of the current patent numbering system in 1836, it took 75 years to reach one million patents; 80 more years to reach 5 million in 1991; and only 27 more years for the number to double to 10 million. 

This rapid acceleration in patent grants, combined with the emergence of abusive enforcement practices (colloquially referred to as “patent trolling”), have led to justified concerns that patents could become obstacles to innovation instead of stepping stones.

As the examination system became inundated with applications, administrative review proceedings were intended to address what was perceived to be a proliferation of “bad” or low-quality patents.

Areas of emerging technology — such as software, bio-technology and business processes, which involves new modes of industrial application — proved especially challenging sectors for patent examiners to determine patentability. 

Faced with an abundance of patents of untested application, administrative reviews offered a cheap, streamlined dispute resolution alternative to the courts. Yet arguably, in implementation, the reviews became an over-correction.

The easier it became to invalidate a patent, the more likely strong patents were to be challenged as well as weak ones. The unintended consequence was to create considerable uncertainty regarding the reliability — and hence, the value — of all patent grants. 

In many cutting-edge areas, innovation requires long-term, capital-intensive, high-risk investments. These investments don’t take place without an opportunity for a commensurate return on investment.

Businesses embrace market risks every day, but the perceived political and legal risks in the new patent opposition system are much more difficult for innovators to justify. 

Fortunately, the news is not all bad. Already, there are indications that subsequent court jurisprudence on patent eligibility and the rate at which patents are being invalidated may mitigate these two challenges. If that proves to be the case, we expect the U.S. score on the index’s patent category to improve. 

Small course corrections can also help ensure that a productive rebalancing doesn’t become a damaging pendulum swing. Newly confirmed USPTO Director Andrei Iancu appears to be a steady hand at the helm of the U.S. patent system.

His challenge will be to address root causes of friction, such as getting patent examination right on the front end and working with Congress to prevent abusive behaviors on the back end, thus improving the predictability and reliability of patent rights for examiners, innovators and technology adopters alike. 

Meanwhile, innovation itself offers important opportunities to optimize the system. Advances in artificial intelligence and machine learning have the potential to revolutionize patent search and examination, helping both innovators and technology-adopters see patent lanes clearly and avoid surprises.

Most of all, we must not take innovation for granted. The American free enterprise system was built on strong private property rights, backed up by the rule of law.

The U.S. patent system applied these same principles to the knowledge economy, making American ingenuity the envy of the world for the last two centuries.

Beginning anew with patent number 10 million and one, let’s re-chart the course for American innovation leadership in today’s competitive, global economy, guided by a strong commitment to predictability and reliability in the U.S. patent system.

Patrick Kilbride is senior vice president of the Global Innovation Policy Center (GIPC) at the U.S.Chamber of Commerce.