By Grantland Drutchas --
The U.S. Chamber of Commerce's Global Innovation Policy Center released its 5th annual study that ranks intellectual property systems worldwide. In the Chamber of Commerce's latest study, the U.S. patent system has dropped to 13th in the world, well behind such diverse countries as Singapore, France, Ireland, Japan, South Korea, Spain, Sweden, Switzerland, and Italy. See "U.S. Chamber International IP Index" ("2018 Report") at p. 35 (Category 1: Patents, Related Rights, and Limitations). The U.S. Chamber International IP Index uses 40 discrete indicators covering policy, law, regulation, and enforcement. The Chamber's stated goal: to determine whether "a given economy's intellectual property system provide[s] a reliable basis for investment in the innovation and creativity lifecycle." 2018 Report at p. 1.
A review of the last several rankings by the U.S. Chamber of Commerce's studies shows that, although the U.S. had the unquestioned lead in patent protection in 2012-2014, its advantage has dropped each year thereafter, and continues its precipitous decline:
See "U.S. Chamber International IP Index," at "View Report".
The reason for this precipitous drop in 2017, and the U.S.'s continued decline in 2018, is directly tied to recent Supreme Court decisions and the perceived one-sided nature of IPRs under the AIA, particularly as implemented by the U.S. Patent and Trademark Office:
This change is primarily driven by relative weakness in patentability requirements and patent opposition (indicators 2 and 8). For the former, the patentability of basic biotech inventions was compromised by the Supreme Court decisions in the 2013 Molecular Pathology v. Myriad Genetics and 2012 Prometheus Laboratories, Inc v. Mayo Collaborative Services cases. The rulings raised uncertainties over the patentability of DNA molecules that mimic naturally occurring sequences as well as other patented products and technologies isolated from natural sources. In 2017, interpretation of the recent Supreme Court decisions in Myriad, Mayo, and Alice Corp vs. CLS Bank International by lower courts and guidance from the USPTO remained inconsistent and difficult to apply. There is considerable uncertainty for innovators and the legal community, as well as an overly cautious and restrictive approach to determining eligibility for patentable subject matter in areas such as biotech, business method, and computer-implemented inventions. This seriously undermines the longstanding world-class innovation environment in the U.S. and threatens the nation's global competitiveness.
2018 Report at p. 8; see also pp. 8-9 (citing the "disproportionate rate of rejections" in IPRs and "a lower burden of proof" than in litigation as "inject[ing] a great deal of cost and uncertainty for patent owners compared with other post-grant opposition systems").
Although the United States remains the leader in IP protection when looked at as a whole, with a very slim lead over the U.K. (one hundredth of a point, 37.98 vs. 38.97) (2018 Report at p. 6), the U.S. has barely maintained that overall lead thanks to the continued strength of protection of copyrights, trademarks, trade secrets, and IP commercialization.
The U.S. Chamber of Commerce, founded in 1912, is reportedly the world's largest business organization representing the interests of more than 3 million businesses in varying of all sizes, sectors, and regions and represents state and local chambers and industry associations. The Global Innovation Policy Center is a committee within the U.S. Chamber of Commerce that seeks to promote innovation and creativity globally by advocating for strong IP standards.
The UK patent judges are very fond of the mantra that "Business hates uncertainty". Here, looking at the Chamber of Commerce paragraph, it seems to me that the only thing that matters, when it comes to ranking countries, is the level of certainty.
What delivers the greatest degree of "certainty" though? Stasis perhaps? Stagnation? Zero rate of change? Is that what industry wants?
Posted by: MaxDrei | February 15, 2018 at 02:39 AM
The perspective that the US patent system has become less friendly to innovation and IP rights is, as the previous post mentions, largely due to it upsetting the status quo. The counter position is that taken by the Supreme Court, 2011 Patent reform act, and multiple lower court decisions: what these have in common is reigning in of grants of patents and more rigorous review outside of the district and appellate courts. The reforms have brought the US system closer to that of German, EU, Japan, and other leading PTOs. Although the systems have several remaining differences, the US system has joined the practice of providing a more extensive mechanism for patent review before the need to test claims in court.
One facet of the US system is that it is among the most expensive countries to pursue patent rights or defend against them in court. That almost always favors the entrenched companies rather than the sole innovator or small company. IPR review has upset the status quo. However, on balance it provides a means to test patent claims which are part of the 'Patent Quagmire' that work against the less funded innovators than it does against those who have deeper pockets.
I am an individual who has prepared and filed my own patents while striving to launch a startup. However, I view the US patent landscape as having grown far too lenient, allowing many patents to be granted with broad claims despite with apparently little review by the PTO.
There are a couple parts of the recently proposed 'Stronger Patents Act that I tend to favor. However, the brunt of proposed legislation aims to "fix" parts of the system that the Supreme Court and other court rulings and 2011 legislation have fixed. The backlash against the court and legislative reforms is a reaction to much-needed changes of a system that had grown out of control.
Among the issues, the Stronger Patent Act has been said to remedy is the SCODUS' ruling that a defendant in a patent case was granted attorneys fees and costs amounting to $4.1 million:
US Bar Association:
"The court analyzed the reasonableness of the requested amounts, ultimately reducing the fee claim by 15 percent, to approximately $4.1 million, and the expense claim by 45 percent, to approximately $478,000. Still, the court awarded what it admitted was “a relatively large number.” Among other things, the court based its finding that the case was “exceptional” on the facts that “this litigation was at least in part motivated by Plaintiff’s desire for ‘payback’ for Defendant’s successful competition in the marketplace, that Plaintiff failed to adequately review its own material concerning marking before filing suit, that it engaged in discovery gamesmanship to obscure such failing, and that Plaintiff engaged in ‘troubling’ conduct concerning a petition for correction of inventorship.”
However, a reading of the case and ruling shows that
the case was exceptional in the extent the plaintiff used obfuscation of prior art and other conduct. That beating down the ability of patent holders to pursue the legal strategies that worked in the past was a much-needed response of the court. It is a restricted set of the president that does not cripple 'good actors' IMO.
The issue I agree with in the Stronger Patent bill is that patent fees should not be diverted by Congress. The USPTO has become under-staffed and ill-equipped, such as upgrades to new computer systems. That can be directly attributed to the siphoning off of funds by Congress over the past 15 years. The USPTO needs to become the best equipped, most accessible and easiest to work within the world to befit the status that many say we have shrunk.
Posted by: Robert W Syputa | March 30, 2018 at 02:24 PM