Why The U.S. Patent System is Losing its Luster

August 31, 2017

In case you missed it, earlier this year, the U.S. Chamber of Commerce released the 2017 edition of its annual International IP Index, rating the comparative strength of intellectual property protections in countries around the globe. In the report, titled “The Roots of Innovation,” one fact sent a startling ripple through the IP and innovation communities: The U.S. patent system is no longer ranked number one globally. It is now tied with Hungary for tenth place.

The Center for the Protection of Intellectual Property and other experts have warned that the current state of the patent system does not instill enough confidence for U.S. inventors to justify taking innovative risks. The result has been increased R&D investment overseas where patent systems are gaining strength and decreased innovation and economic prosperity in the U.S.

How Did We Get Here?

If you’ve been reading our blog you know that the United States built a strong patent system over the last 230 years that has allowed innovators to become our economy’s honeybee. However, that system has undergone a number of dramatic changes in recent years that threaten to damage our progress.

1 The Constant Threat of Overbroad Patent-Weakening Legislation

A barrage of overbroad patent-weakening legislation has been introduced in recent years. H.R.9 and S.1137, in particular, both threatened to drastically weaken IP rights, discouraging inventors from taking risks and reducing investor confidence. The result has been a movement of venture capital investment out of the U.S. In fact, the U.S. share of global venture capital dropped from 83% in 1996 to 54% in 201511.

2 Supreme Court Decisions Have Made it Harder to Enforce Patent Rights

Over the past decade, U.S. Supreme Court decisions have made it more difficult for patent holders to enforce their patent rights, and as a result, easier for others, including competitors in China, to copy American innovations. These decisions include making it easier for challengers to invalidate patents, making it harder for inventors to prove they have been infringed, and making it more difficult for patent holders to obtain an injunction to stop the continued use or sale of an invention when infringement is found.

3 China and Other Countries Are Making Moves to Strengthen Their Own Patent Systems

Recognizing the economic value the U.S. has derived from its patent system in the past, many of our competitors have been strengthening their own patent systems. China, in particular, has set aggressive goals in both the incentives offered to innovators and patents granted each year. VCs have taken notice, investing $31 billion in China in 2016 alone2.

What Can Be Done to Reverse this Trend?

One of the best ways to fight the decline of the U.S. patent system is to support legislation that protects inventor rights. The bipartisan STRONGER Patents Act, introduced by Senators Chris Coons (D-DE) and Tom Cotton (R-AR), aims to do just that by ensuring the USPTO has the funding needed to grant high-quality patents without delay, limiting repetitive and harassing challenges against inventors in Patent Office administrative proceedings, and enabling injunctions that prevent continued infringement.

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1 https://cpip.gmu.edu/2017/06/22/as-investment-moves-overseas-the-us-must...

2 http://www.scmp.com/business/china-business/article/2062011/venture-capi...