As the coronavirus spread across the U.S., international supply chains were strained. Many commentators found themselves wondering why our country doesn’t make more things here in America.
Well, a key reason is patent abuse that makes it more expensive than it needs to be to manufacture in the U.S. After all, bad patents stifle innovation and impose enormous litigation costs on American businesses.
There is a big threat that China’s intellectual property theft poses. A report issued by The Commission of the Theft of American Intellectual Property estimated in 2017 that China accounts for between $225 and $600 billion a year. The Trump administration is working towards solving that problem with a new trade deal.
One American law that is working well is current protections for patents that have saved about $2 billion to the American manufacturing community, according to Patent Progress on September 14, 2017. It would be a mistake for Congress to weaken current law in a way that would weaken patents and give validity to bogus patent filings.
Simply by leaving the current patent system in place and preserve something called the Inter Partes Review or IPR would be a great protection for American manufacturing, in addition to progress being made on the trade front.
Let’s begin at the beginning. One of the reasons our federal government exists is to secure intellectual property rights. The federal patent is provided for in the Constitution: “Congress shall have power,” our founding document provides in Section 1, “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
That work is carried out by the U.S. Patent and Trademark Office. Every year, the USPTO’s 8,500 patent examiners must review 600,000 new patent applications, and that workload is just too much to handle. That introduces a potential for abuse.
To take advantage of the system, a handful of shell companies called “non-practicing entities” (NPEs) file for frivolous patents. These firms produce nothing, and don’t expect to be able to produce anything. They simply want to hold on to a patent to prevent an active manufacturer from using it, or force the manufacturer to pay to be able to use it.
Those few bad patents stifle innovation and impose litigations costs on American business. They are used to inflict great harm on job-creating American manufacturers. As Congress explained, “questionable patents are too easily obtained and are too difficult to challenge.” Luckily, Congress has given legitimate businesses a way to fight back.
The patent office provides a proceeding called the Inter Partes Review. IPR was created in 2011 as part of the “America Invents Act.” It allows patents to be reviewed to see whether they should have been granted in the first place. IPR was created to “improve patent quality and restore confidence in the presumption of validity that comes with issued patents.” And it is working, by providing a streamlined trial process in which all interested parties have an opportunity to be heard.
Even so, IPR isn’t used very often.
There have been fewer than 6,000 IPR petitions and 1,500 IPR final written decisions since 2013. That’s not many considering the 600,000 applications per year the patent office handles. The process costs money, but not nearly as much as litigation would cost. As expert Josh Landau writes on the blog Patent Progress, “I estimate that the implementation of inter partes review has helped plaintiffs and defendants avoid at least $2.31 billion in deadweight losses by providing an efficient system for challenging patents.”
Frivolous patents granted to NPEs have had a real impact on the American economy. But IPR is working to change that. As the New York Times reported in 2017, “Consumers no longer have to pay for bogus intellectual property covering, say, a method to take their pills. The appeal board has rejected questionable patent claims over technology to clean up polluted groundwater and wastewater, over podcasting, and over a system that Los Angeles wanted to introduce that looks a lot like E-ZPass.”
The problem is that, while we need IPR, some are pushing to “fix” it. Democratic Sen. Chris Coons, for example, sponsored the “STRONGER Patent Act,” which seeks to eliminate the IPR. Coons would roll back to the clock to a time when patent lawsuit abuse against productive American businesses including manufacturers were at historic highs. This is a mistake, and would harm American manufactures at a time when we really need them the most.
Inter Partes Review seems like a niche issue. But it’s an important one in the current climate. At this moment more than ever, Congress needs to support American manufacturing, not threaten to swamp it with silly lawsuits.
Dan Perkins is an author of both thrillers and children’s books. He appears on over 1,100 radio stations. Mr. Perkins appears regularly on international TV talk shows, he is current events commentator for seven blogs, and a philanthropist with his foundation for American veterans, Songs and Stories for Soldiers, Inc. More information about him, his writings, and other works are available on his website, DanPerkins.guru. To read more of his reports — Click Here Now.
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