US is losing the innovation war — to China

Over the last decade, government policies and legal rulings are pushing U.S. investment money overseas to China, while here in the United States, key industries that have potential to spur economic growth are paying the price.

This may sound like the sentiments of President-elect Donald Trump, but it’s actually the verdict that former U.S. Patent and Trademark Office Director David Kappos delivered during his closing remarks at a recent Inventing America conference.

“The U.S. no longer provides the kind of patent incentives that are necessary to invest in key industries like biotech and software,” Kappos lamented. “When investment incentives are reduced, you can expect investment to move elsewhere.”

{mosads}Patent reform may not top the list of Americans’ greatest concerns about the direction of our country, but it deserves our attention because a huge portion of our economy hinges on intellectual property industries.

According to a recent report from the U.S. Department of Commerce, these industries support upward of 45 million jobs, which make up $6 trillion — more than 38 percent — of U.S. gross domestic product (GDP). With so many jobs on the line, it’s vital that our lawmakers and courts get intellectual property (IP) policy right and do as much as they can to strengthen patent protections to guard inventors from shoddy practices.

Unfortunately, the U.S. system has regressed in recent years. Due to changes in patent law and policy over the past decade, patent-holding companies have increasingly found their patents contested and invalidated. This has made the U.S. a chilling place for inventors and innovators, handicapping our economy and implicitly aiding foreign competitors that are all too happy to bring the next big idea to their shores.

China, for example, is chomping at the bit to change its reputation as an economy full of copycat innovations ripped off from the West to a world-class leader in cutting-edge technology. The United States’ education system and economic policies have historically provided exceptional opportunities for creative, innovative thinking, but there is reason to believe that this historic edge is eroding.

Scientists and developers follow the funding, and increasingly they’re finding a warmer climate for pursuing research and innovation on the other side of the Pacific. China’s research and development (R&D) spending relative to its GDP has more than doubled in the past 15 years, while the level of U.S. R&D expenditures has stayed relatively static.

In 2015, Kappos noted in his address, more patents were filed in China than the next 20 countries combined.

China may be a formidable economic competitor and geopolitical threat, but improving our patent laws is about much more than preserving a sense of national pride. It’s about the well-being and individual rights of every American.

“Historically, most of the new ideas, the really revolutionary ideas, the groundbreaking technologies don’t start in large companies with corporate directives that drive them,” says Bob Taylor, legal expert for the National Venture Capital Association. “Most of the really innovative new technologies start in small companies, and it’s these smaller companies that are shifting away from anything that requires longer development time.”

This shift has taken place over the past decade as a series of Supreme Court decisions significantly changed the standards for what qualifies as a patentable invention. These cases created a legal precedent that eschews rigorous analysis of what constitutes a valid patent claim in favor of an “I know it when I see it” approach.

According to George Mason University Law Professor Adam Mossoff, this has resulted in legal uncertainty and an excessive “kill rate” of valid patents that discourages innovators in the biotech and high-tech sectors from investing in long-term R&D.

The United States needs to rededicate itself to strong IP laws that encourage innovation and economically benefit the millions of jobs in IP-intensive industries. The money drain from the U.S. to more friendly climes in China and other countries around the world is having an effect now, and will only get worse in the future.

President James Madison quipped that just “as a man is said to have a right to his property, he may be equally said to have a property in his rights.” We would do well to hearken back to this principle.

Inventors should feel more freedom to pursue their ideas in the U.S. than anywhere else in the world, knowing that they will be protected both for their sake and the public good.

Nicole Neily is the president of the Franklin Center for Government and Public Integrity, a nonprofit that publishes public-interest journalism at Watchdog.org.

The views expressed by contributors are their own and not the views of The Hill.