Throughout my time in Congress, I was proud to bring together Democrats and Republicans to craft and pass legislation that was foundational in building the nation’s innovation economy. As the founder of the House Internet Caucus, and author of the 1992 law that allowed for the first commercial use of the internet, I wanted to ensure that America’s innovators and entrepreneurs had the tools they needed to outwork and outperform their competitors around the world.
During my years of service, fixing core problems in our patent system remained an important but unfulfilled goal. Constituents and stakeholders would raise concerns about the ways bad actors commonly known as patent trolls were gaming the system – buying up old, outdated patents for the sole purpose of suing companies that were actually developing new products and growing our economy. Yet, building consensus between Democrats and Republicans on how best to tackle the problem remained elusive.
That finally changed in 2011 when an overwhelming bipartisan majority in Congress passed the America Invents Act, which President Obama signed into law. The law was a landmark and the most significant reform to our patent system in more than a half century. It created inter partes review (IPR) – a new, streamlined process at the U.S. Patent and Trademark Office (USPTO) that allowed American inventors and companies, small and large, to petition expert judges to assess the validity of the patents being wielded against them. It gave our country’s innovators and entrepreneurs a much-needed lifeline at a time when we were still trying to rebuild our economy in the wake of the Great Recession.
The America Invents Act worked. From 2011 until 2018, abusive patent litigation dropped by more than half as the new protections were utilized. Analysis in recent years has estimated that between 2014 and 2019 the cost savings associated with the AIA led to an increase in U.S. business activity of $2.95 billion in gross product, with the largest gains in manufacturing, and nearly 13,500 job-years of employment. Unfortunately, this progress ground to a halt when the previous USPTO Director implemented rule changes that undermined the AIA’s intent and hobbled inter partes review, making the USPTO’s expert review far more difficult for innovators to access. In the years since, abusive patent litigation has risen by 25%.
The resurgence of patent trolling has massive consequences. Research has shown that abusive patent litigation costs U.S. companies an estimated $29 billion per year in out-of-pocket costs. If they settle or lose in court, companies are forced to reduce their investments in research and development by $160 million, on average, in the two years that follow. Start-ups are especially at risk because they simply do not have the deep pockets it takes to fight the patent challenges in court. That’s why it’s no surprise that “at least 55% of unique defendants in troll suits make $10M per year or less.”
Just as it did a decade ago, Congress needs to step in to protect productive American businesses and manufacturers and restore the previously robust inter partes review so that innovators and entrepreneurs have the ability to challenge low-quality patents when they are weaponized against them. Passing legislation to fix our broken patent system is just commonsense. In the near term, President Biden’s new Patent Director, Kathi Vidal, has taken some initial steps towards reversing the harmful changes that were implemented by her predecessor. It’s critical that this work continue so that we ensure that our patent system works as it is supposed to for our country’s innovators.
At a time of rising inflation and vexing supply chain challenges, we should be doing everything we can to ensure that the legal system serves the needs of the people who are actually creating jobs and growing our economy, not patent trolls who are just out to get a quick paycheck. Our economy should reward innovation, not gamesmanship.
It’s critical that policymakers act quickly to ensure that our innovation economy thrives and that entrepreneurs are aided by rather than held back by the patent system.
Rick Boucher was a Democratic member of the US House from 1983 until 2011. He was Chairman of the Energy and Commerce Committee’s Subcommittee on Communications and the Internet and was deeply involved in the drafting of intellectual property legislation as a longtime member of the House Judiciary Committee.