Innovation is the lifeblood of a prosperous economy. Iowa’s recent economic performance, where improvements in agriculture and manufacturing have allowed us to weather the storm of a national recession and keep our overall unemployment rate below the national average, are the result of a culture of productivity and improvement fueled by innovation often protected by patents. Let’s continue this path to prosperity by rejecting H.R. 9, the Innovation Act, and S.1137, the PATENT Act.
Sound patent policy, which encourages the nexus between risk and ideas (especially for small entrepreneurs), makes invention profitable. In Iowa, many of our best ideas begin small and grow allowing us the opportunity to dream and then make those dreams a reality. The U.S. patent system enables that dream by protecting the market an invention creates long enough for the inventor to gain a toehold against competition, and by creating a property right capable of attracting critical investment to bring the invention to market and grow the business.
Many of the provisions in H.R. 9 and S.1137 skew the patent system towards big business, which will harm the ability of small entrepreneurs to take an idea and make it a reality, and importantly we all will miss the opportunity of creating new jobs. Think of all the successful businesses that have benefited Iowa, many started on a farm, in a garage or small shop with nothing but an idea combined with sweat and determination. Don’t let H.R. 9 or S.1137 kill this can do American spirit of innovation.
If enacted, H.R. 9 and S.1137 will harm small Iowa innovation companies and inventors. Loser-pay increases costs and risks disproportionately against small companies to the benefit of large multinational corporations. Joining the personal assets of investors to loser-pay and forcing bonding just to open the courthouse doors will mean that most small Iowa companies may never be able to access a court if a big company steals the invention. Heightened pleadings brings excessive and burdensome red tape that will significantly increase the cost and complexity of defending patent rights while creating opportunities for infringers to game the system. Customer stay will stop a patent defense suit against an infringer and push the case to the manufacturer, even if the infringer is a large, sophisticated retailer or device maker that earns the most profits from the invention. Unfortunately, many manufacturers are overseas in countries like China, so customer stay will greatly increase litigation costs, complexity and risks for small Iowa companies and inventors, which could potentially prevent defense of patent rights. Inter Partes Review (IPR) is a procedure created by the America Invents Act of 2011 (only a few short years ago) to challenge the validity of a patent before the USPTO. Patents are property rights but IPR’s extinguish those property rights via administrative procedures with an exceptionally low bar – as opposed to judicial procedures used by the courts to uphold other property rights. Thus, IPR’s are being abused by nefarious players and the next generation of life saving medications and other technologies have been put at risk. No provision in either H.R.9 or S.1137 goes far enough to curb this abuse and profiteering.
Patent rights are exceptionally weak due to the effects of the America Invents Act and several court decisions in recent years, perhaps the weakest in the 225 years of our patent system. Not surprisingly, we have more companies going out of business than we have starting up for the first time in our history. Now is not the time to degrade patent rights even further for the benefit of a few large multinationals and Chinese corporations. We should instead take a measured and targeted approach to frivolous litigation as the STRONG Patent Act (S.632) does, while strengthening patent rights to increase capital flow into small innovative companies that bring new ideas to market creating our next generation of industries, medicines and technologies.
It is for these reasons, among others, I urge Congress to consider not only Iowa’s future prosperity, but America’s future as well, and keep small entrepreneurs in mind before supporting the Innovation Act (H.R. 9) or the PATENT Act (S.1137) in its present form.