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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is a former US ambassador to China and was US secretary of commerce and governor of Washington
Most Americans never give a passing thought to patent laws — intellectual property policies hardly make for riveting dinner table conversations. But they are very much a kitchen table issue. When I led the Department of Commerce, I saw first hand the impact of patent policies on our economy — and ordinary American workers.
Take, for example, the more than 4mn workers in the US automotive industry. Their livelihoods stem largely from a single patent: the motor carriage patented by Henry Ford in 1901, which paved the way for the famed Model T automobile in 1908 and the explosion of affordable consumer cars shortly afterward. Without the ability to protect his future inventions from theft or copying without fair compensation, Ford may never have taken the risk of moving from a small farm in Michigan to Detroit aged 16 to learn mechanical engineering.
Patents are as important for today’s transformative companies as they were for Ford. Entrepreneurs and start-ups in budding industries ranging from artificial intelligence to genetic medicine are toiling away on the technologies of tomorrow — and they need reliable protection for their intellectual property.
But many of our patent laws are in dire need of an update. Well-intentioned attempts to modernise the patent system have in some cases thrown it into further disarray. A series of landmark Supreme Court decisions have muddied the waters over what kinds of inventions are even eligible for patents. And other actions from Congress and the courts have made it harder for small inventors to defend their IP.
Without a patent system that can keep pace with technological progress, we risk ceding the innovation high ground to China, the EU and other rivals. Fortunately, three bipartisan bills — the Patent Eligibility Restoration Act (Pera), the Promoting and Respecting Economically Vital American Innovation Leadership (Prevail) Act and the Restore Patent Rights Act — winding their way through Congress offer much-needed improvements.
Pera tackles the foundational issue of eligibility for patenting head-on, clarifying the criteria for 21st-century inventions. It would restore eligibility for certain categories — such as medical diagnostics, AI and quantum computing — that have been ruled out due to misinterpretations of patent statutes. It would also specify other categories — like laws of nature and mere ideas — that are ineligible.
The Prevail Act takes aim at the staggering imbalance between small inventors and big companies in disputes. Thanks to legislation passed by Congress in 2011, corporations increasingly abuse patent validity proceedings to bleed competitors dry and void patents that have already been upheld by courts. Prevail would make common sense reforms such as barring duplicative patent trials.
Finally, the Restore Patent Rights Act would support US inventors and start-ups by making court orders known as injunctions the standard legal remedy in cases of proven patent infringement. A 2006 Supreme Court decision made it much more difficult for innovators to secure injunctions, which has emboldened infringers around the world. Restore would in effect overrule this misguided decision.
Our chief rivals are strengthening their own research fields and IP regimes. A recent study from the Australian Strategic Policy Institute found China’s research expertise exceeds that of the US in 37 of 44 advanced fields. Beijing has been revising its patent laws to better accommodate novel technologies, while expediting the review process for new patents.
It’s not just our global competitiveness that’s at risk, but the societal gains that flow from it. If other nations succeed in making their patent systems stronger than our own, Americans could lose out on many of these benefits.
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