OPINION: Make Patents Great Again

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James Edwards Executive director of Conservatives for Property Rights
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The Smithsonian’s National Portrait Gallery, housed in the building that formerly was the U.S. Patent Office, displays an 1862 painting titled “Men of Progress.”

It depicts some of the great American inventors of the 19th century: Cyrus McCormick, Samuel Morse, Charles Goodyear, Elias Howe among 19 stellar minds from the era when American invention was well underway earning its reputation.

They’re shown together in a stately room, seated at and standing around a red-clothed table. The distinguished inventors are looking at and discussing a patent model of an invention. Around them are sketches, models and other works of discovery.

This remarkable painting displays charter members of the iconic patent system that sparked the iconic inventions that changed the United States from a horse-and-buggy society into a modern, industrialized powerhouse.

Yet, America’s storied patent system has lost much strength. It’s taken hits from misguided court rulings, harmful legislation and an aggressive antipatent lobby. The gold standard patent system has become badly tarnished.

Our patent system has fallen in the U.S. Chamber of Commerce Global Innovation Policy Center’s annual rankings. The formerly number one U.S. patent system slid to 10th place in 2017 and 12th in 2018.

GIPC says American inventors “face a challenging environment for protecting their IP under current U.S. law … U.S. patentability standards and patent opposition procedures continue to create uncertainty for rightsholders.”

Specifically, GIPC points to uncertainty the courts have caused over what’s patentable and a biased patent opposition scheme. “[R]ecent Supreme Court decisions in MyriadMayo, and Alice by lower courts and guidance from the United States Patent and Trademark Office (USPTO) remained inconsistent and difficult to apply” concerning patentable subject matter.

Those cases relate to biotechnology and software inventions. Discoveries other countries will patent and that were formerly patentable here can’t count on getting a U.S. patent.

Patent validity challenges in U.S. Patent and Trademark Office venues have reached “a disproportionately high rate of trials and rejections of issued patents.” Inter partes review cases invalidate eight out of 10 patent claims brought before PTO.

The standards, procedures and practices in these administrative tribunals lack the due process, fairness and equal justice — let alone affording the statutory presumption of patent validity — of a real court.

Other court rulings make it profoundly harder to enforce patent rights and to stop patent infringers from continuing to produce and sell knockoffs. In short, this isn’t your grandparents’ pro-property-rights patent system.

No wonder that the United States this year dropped out of the Bloomberg Innovation Index’s top 10. We ranked No. 1 in 2013 but slid to No. 9 by 2017. Now, we’re 11th.

The 2011 America Invents Act set up the administrative forum at the PTO for challenging patent validity. Intellectual Asset Management reports that these administrative patent cancellations have “significantly depressed the transaction prices of patent assets.” IAM says patent values have fallen 60 percent since the AIA became law.

In 2017,  patent applications filed in China outnumbered applications filed in the United States, the EU, Japan and South Korea combined.

Venture capital has shifted away from the United States. In 2006, four-fifths of venture funds were invested here. By 2017, the United States’ share of venture funds stood at 54 percent.

Angel and seed funding — lifeblood for startups seeking to commercialize a patented invention — has dropped 46 percent in the past three years.

But there’s an emerging bipartisan consensus that’s alarmed by these warning signals.

Delaware Democrat Chris Coons and Arkansas Republican Tom Cotton in the U.S. Senate and Ohio Republican Steve Stivers and Illinois Democrat Bill Foster in the House have sponsored the STRONGER Patents Act.

This bill requires PTO patent challenges to employ the same rules and standards of fairness that real courts use. It also restores the ability to get injunctions against patent infringers and evenhandedly addresses the abuse of vague demand letters by “patent trolls.”

In the U.S. House, Kentucky Republican Thomas Massie (an inventor with 30 patents) and Ohio Democrat Marcy Kaptur have introduced the Restoring America’s Leadership in Innovation Act. This legislation fixes the errors of the major harmful court rulings and repeals the AIA’s worst offenses.

PTO Director Andrei Iancu has proposed requiring post-grant patent validity proceedings to apply the same interpretation standard that federal courts use. Iancu’s PTO has also instructed patent examiners on properly determining patent eligibility.

These are promising signs. But we have a long way to go to get our patent system back on track. If these seeds flourish and bloom, we’ll see certainty, predictability and secure private property rights restored for inventors and patent owners — and reap the benefits of their useful progress.

James Edwards, executive director of Conservatives for Property Rights, is the patent policy advisor to Eagle Forum Education & Legal Defense Fund. The views expressed are his own.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.