New coronavirus legislation shows flaws with patent policy in America

Senator Ben Sasse introduced a new coronavirus relief bill this week that would shield health providers from several forms of legal exposure as they fight the pandemic. This bill reveals an important flaw in innovation policy that hampers our ability to respond to crises. In a world where scientists must work together rapidly to save the public from a devastating illness, the default policy lever for innovation, United States patents, turns out to be less the fuel of innovation and more a ball and chain of ideas.

Innovation policy is about giving creative minds the tools and incentives to solve problems. Those tools and incentives come in many forms, such as research grants, tax subsidies, awards, and prizes. But for decades, our primary tool to promote innovation has been patents. Granting inventors an exclusive right to exploit their inventions for a term of about 20 years, patents offer their holders a substantial reward, encouraging them to put hard work and efforts into creating and improving technologies.

Although most of the bill focuses on regulatory liability, it would make a significant change by suspending the term of any new patents “used or intended for use in the treatment” of the coronavirus during the period of any national emergency declared by the president. As compensation for this suspension of patent term, the bill tacks on an additional decade at the tail end. This policy change would relieve health care workers and researchers of legal liability in the form of patent enforcement.

The bill is not perfect as written. One might ask why it does not suspend patents already in force that could create similar liability for health care workers. It is unclear that the decade extension strikes the right balance for a suspension of probably a few months. Patent lawyers also likely can cleverly draft new patent applications to appear “used or intended for use in the treatment” of the coronavirus during the national emergency to win an extra decade of patent term, even on irrelevant technology.

But the bill has a more important message. It shows that innovation policy, being so dependent on patents, is fundamentally unprepared for a crisis like a rapidly spreading pandemic. If patents encourage new inventions, why would Congress need to remove patents in response to a crisis? The answer is by giving inventors 20 years of monopoly use on an invention, patents eliminate the competition that reduces prices, cap the supply of the invention at the willingness of the patent holder to produce, and limit the ability of other bright minds to improve upon the invention.

This dark side of patents exacerbates the problems a pandemic creates, such as price gouging, insufficient supply of lifesaving technology, and hindrance of rapid iterative innovation. A worrying threat to the national response is the phenomenon known as a patent race. If two firms work on the same problem, the one who solves it first will receive the patent, while the other will not and may be blocked from exploiting the technology at all. This “winner take all” situation in patent races sets forth destructively competitive conditions between the firms, which end collaboration and could even try to sabotage each other in pursuit of the patent.

Such competitive isolationism in patent races clashes with the spirit of collaboration seen now in addressing the coronavirus. Scientific journals are opening up content typically hidden behind a paywall to spread the latest information quickly, researchers are sharing their work rather than hoarding credit for new discoveries, and engineers are facilitating online groups to design ventilators. The tendencies of patent races impede this important work. Indeed, at least one ventilator design project explicitly favors open source innovation, and scholars are calling on companies to voluntarily waive patent rights for the duration of this pandemic.

The new coronavirus relief bill is a first step toward relieving patents for speedy innovation in a time of crisis. But this pandemic must serve as an opportunity for a larger rethinking of innovation policy. Tax subsidies and research grants, all the incentives that have taken a backseat to patents over the last few decades, are already starting to make a comeback. They need to play a more integral role in innovation policy. If the United States wants to prepare itself for future national emergencies, it needs tools that encourage cooperation rather than raise prices and limit supply.

Charles Duan is director of technology and innovation at R Street Institute.