In the first article of this series, I demonstrated that the U.S. has a technological crisis. In this article, I will show that the high patent quality standards have caused U.S. to quickly lose technological advantages.
U.S. patent standard is higher than those used in most foreign nations. While the AIA tries to further increase patent quality, its impacts have not been fully realized. I can use only historical data to show the past performance of the U.S. patent system which always use a high quality standard.
This table shows how the U.S. patent application filing numbers in comparison with several other countries from 2007 to 2016. The utility patent applications filed with the U.S. patent office comprise applications for domestic entities and foreign entities. It should be noted that the number of inventions should not be used to compare importance of different inventions.
Table 1. Patent Application Filing Numbers for Patent Offices of Several Countries for 2007-2016
The U.S. patent system uses higher legal standard than those nations. The impact from practicing patent quality extremism will not show up until several years later.
U.S. patent applications are predominately by foreign corporations, while for all other national patent offices above, domestic applications comprise a super majority (Data not shown). In 2016, the Chinese patent office received totally 3,465,000 applications for three kinds of patents, making an increase of 23.8% year on year. The number for invention, utility model and design are respectively 1,339,000 (increase by 21.5%), 1,476,000 (increase by 30.9%) and 650,000 (increase by 14.2%). China has a high share of domestic applications (which means that inventive activities take place inside the country). The total application number in 2016 is 1,339,000+1,476,000=2,815,000. Patent applications filed with China patent office in 2016 is almost ten times of the U.S.-originated applications filed with the U.S. patent office. The number of patent applications filed with Japanese patent office is close to the U.S.-origin applications filed with the U.S. patent office. South Korea will surpass the U.S. in application filing number.
The international filing number suggests that China has good inventions. In 2016, U.S.-based applicants filed 56,595 PCT applications, followed by applicants from Japan (45,239) and China (43,168), which has posted double-digit growth each year since 2002. U.S. is now close to Japan which is only equivalent to one big state, and China is a new comer in patent (its first patent law was enacted in 1985 and a good number of people still do not know its patent system), and PCT would be too expensive for most Chinese inventors. United States maintained their number one ranking for the 39th, but reduces the applications by 0.9%. China will overtake the U.S. in PCT within two years as the largest user of the PCT System. China is changing its brand from “made in China” to “created in China”.
What is really critically important is the disparity in growth rates of patent application numbers. The difference between 44% and -0.9% suggests the U.S. is in a very unfavorable position. The South Korean and North Korean patent application numbers reveal more than 20 times differences. This kind of difference would be seen for China before opening its door.
I found that those numbers reveal real problems in U.S. technologies. The U.S. patent application filing number will level off. Many U.S inventors, who cannot consume their inventions that they have made, have to file patent applications. The full adverse impacts of the AIA will be felt after those pipe line applications have been filed. Additional three factors are unfavorable to the U.S. First, I estimate that China has almost 400 million people who could be potential inventors (excluding those who are not within a technological climate for making inventions), but the U.S. inventor pool is now limited to corporate inventors and a small number of resilient professional inventors. The number of professional inventors will rapidly decrease with fewer and fewer of young people joining. The small inventor population significantly reduces the odds for capturing critical and disruptive inventions. Second, the U.S. is rapidly losing environments required for creative activities. Production art has long left the U.S. Now, research and development programs are shut down due to the inability to get patents or getting useless patents.
Finally, the high patent quality standard also destroys the special system essential for inventing and patenting activities. The system comprises many kinds of players working together. For example, patent litigation firms, patent litigation supporters, insurance companies for providing insurance for patent litigation, patent assertion companies, companies involving patent-related activities, patent brokerage firms, and companies providing patent-based start-up services etc. play their roles in this system. Each of the functions delivered by those companies requires staff having special expertise, skills, and relevant experience. It takes no time to force those companies to shut down their services. Bad law can force the system to come to a stop, and then forces the companies to dismantle or dismiss their staff for performing those functions. However, it would be hard to rebuild the system. It would take a much longer time to make the system work well. When the foundation for supporting technological progress has been shattered, it would be impossible for inventors to realize rewards contemplated in the U.S. Constitution. In contrast, most competing nations allow inventors to get various rewards. The adverse impacts of the high patent quality standard on inventing and patenting activities should be presumed.
The high patent quality standard is clearly responsible for the extremely low patent application numbers relative to the population. To meet patent eligibility requirements, an invention has to be the first one in the world. This single requirement alone would result in a very low probability for succeeding with a great invention idea. What is more absurd is that the patent office can combine prior art to “create” an invention to defeat the invention. This makes an invention’s success odds extremely small: it might be even smaller than the odds to win in a lottery. To get rewards from courts, the inventor would have to play the lottery once more. Playing lotteries is indeed a better mean for getting rewards. Naturally, far more people would play lotteries. This kind of patent quality extremism is explanatory of the extremely small number inventions made by U.S. individual inventors: 0.00004 or 4 inventions for 10,0000 individuals. One can easily see that this number is much higher in Japan and South Korean. Even in China, this number is much higher. However, real impacts of the high patent quality standard cannot be shown by any data because it is impossible. What is important is the number of inventive concepts entertained by people. While I cannot find data, I assume that the high patent quality standard make this number approach zero: Nearly nobody even wants to think about making an invention in the U.S. Who will make an invention? Everyone expects others to make inventions for taking care of problems in the world. The innovation culture cannot be more deader than it is now.
In the next installment of this series, I will show how a high patent quality standard is discouraging to all kinds of inventors.