“The U.S. share of global venture capital fell from 66% in 2010 to 40% in 2018, while China’s share increased from 12% to 38% in the same time period…. The STRONGER Patents Act would help reverse this alarming trend by taking critical steps to shore up our patent system.”
Brian Pomper is Executive Director of the Innovation Alliance.
The bipartisan STRONGER Patents Act of 2019 took an important step forward last week, as the Senate Judiciary Subcommittee on Intellectual Property held a hearing on the proposed legislation. Senators Tillis and Coons, the Subcommittee’s Chairman and Ranking Member, should be commended for holding the hearing and focusing attention on our patent system’s role in promoting American innovation and job creation.
As several of the hearing witnesses made clear in their testimony, our patent system has been dangerously weakened in recent years through a series of judicial, legislative, and administrative changes. These changes have undermined patent rights and made it difficult for inventors to protect their innovations from infringement. Meanwhile, our foreign competitors, including China and Europe, have strengthened their patent rights.
This has put us at a competitive disadvantage and helped contribute to a trend of both innovation and venture capital increasingly moving overseas. For example, the U.S. share of global venture capital fell from 66% in 2010 to 40% in 2018, while China’s share increased from 12% to 38% in the same time period. And despite more than a decade of economic growth following the Great Recession of 2007-2009, startup formation has failed to return to its pre-recession levels.
In yet another disturbing sign, the 2019 Bloomberg Innovation Index ranked the United States as 8th in the world for innovation. While this marked a small improvement over our 11th place ranking in 2018, it is still well below our previous #1 ranking, which we held until last year.
The STRONGER Patents Act would help reverse this alarming trend by taking critical steps to shore up our patent system. Perhaps most importantly, it would restore the ability of inventors to obtain an injunction—a judicial order stopping a proven infringer from continuing to use or sell an invention. Since the Supreme Court’s 2006 eBay decision, the rate of injunctions granted has dropped by over 85% in the United States. The eBay decision has been misapplied by many lower courts as a categorical rule against injunctions for inventors who license their patents. This inability to obtain injunctions has left many individual inventors and small businesses with little recourse in the face of infringement by large corporations. It has also contributed to American innovation moving abroad, as courts in major Asian and European countries continue to grant injunctions in such cases, providing real protection for their patent holders.
The STRONGER Patents Act would also ensure a better balance between patent holders’ and challengers’ interests in administrative proceedings of the USPTO’s Patent Trial and Appeal Board (PTAB) by limiting repetitive and harassing challenges against inventors. The PTAB was intended to be a quicker and cheaper venue to challenge the validity of questionable patents, not an easier venue. In practice, it has been easier to invalidate patents in the PTAB than in district court, and the PTAB process has been abused by large corporations who have initiated repeated PTAB challenges against valid patents in ways not intended by Congress or tolerated in district court.
In fact, a recent study found that for the top filer of patent challenges at the PTAB—Apple—56% of its challenges were duplicative (i.e. Apple filed multiple petitions challenging the same claims). Furthermore, patent infringers have begun to institute proceedings attempting to invalidate patents by filing with both the PTAB and in federal court simultaneously, directly contrary to the America Invents Act’s goal of providing an alternative to resolving validity challenges in expensive district court litigation. These duplicative proceedings only add expense and uncertainty for patent holders, rather than providing the promised alternative to prolonged, resource-intensive litigation.
The STRONGER Patents Act is urgently needed to maintain our patent system’s role as an engine for U.S. economic growth and job creation, as it has been for more than 200 years. Thankfully, the bill has growing bipartisan support in Congress, with Senators Chris Coons (D-DE.), Tom Cotton (R-AR.), Dick Durbin (D-IL.), Mazie Hirono (D-HI), John Kennedy (R-LA.), and Kevin Cramer (R-ND) co-sponsoring in the Senate, and Representatives Steve Stivers (R-OH) and Bill Foster (D-IL) serving as the lead co-sponsors in the House.
The Senate Judiciary Subcommittee on Intellectual Property took an important step by holding a hearing on the STRONGER Patents Act. Now we need the full Committee and the rest of Congress to take up and pass this legislation as soon as possible.
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