The ‘Innovation Act’ exposes American companies to foreign spies

FBI agents just arrested two Chinese professors for stealing an advanced mobile phone technology from their American employers. Federal officials caught the perpetrators, but not before they passed knowledge of the $1 billion technology — which has military applications — to the Chinese government.

Soon, the ruling Communist Party won’t have to engage in such espionage to steal American military and trade secrets. Congress has proposed a law that would make it easy for foreign companies and governments to rip off American designs. By weakening intellectual property protections and preventing firms from defending their inventions in court, the bill threatens the nation’s security and prosperity. Lawmakers should reject it.

{mosads}Intellectual property protections — specifically patents — provide American innovators with the incentives and safeguards they need to create new products. Patents give inventors the exclusive right to sell their inventions without competition. If a rival does steal an inventor’s design and creates a knockoff, the inventor can file a lawsuit to defend her patent in court. Without patent protections, firms wouldn’t spend millions or even billions creating new products, since others could simply freeload off their efforts.

With its new law — misleadingly named the “Innovation Act” — Congress would effectively gut these protections. Not intentionally, of course. Lawmakers intend to crack down on “patent trolls.” These companies and individuals collect broad patents and then sue businesses that supposedly infringe on the patented technology. The infringement might be imaginary, but the settlement and licensing fees patent trolls extort from these tactics are very real.

Patent trolling is a problem, but the Innovation Act isn’t the solution. The proposed law will make it more difficult to file a patent lawsuit — even for legitimate patent holders. As a result, it will be much easier for intellectual property thieves in China and elsewhere to snatch up valuable American inventions and never be held accountable in court.

Under the bill, patent holders would have to overcome a mountain of new administrative paperwork just to file a lawsuit in defense of their invention. That will greatly increase the cost of fending off intellectual property theft.

And if they successfully complete all this paperwork and make it to court, patent holders will find a new provision delays trials for months. That will further waste innovators’ time and money, which could be better spent creating and refining new products.

The Innovation Act’s heightened disclosure requirements could also force companies to break confidentiality agreements or reveal sensitive corporate information.

The long-term economic effects of the bill could devastate the American economy. By increasing the cost of protecting a patent in court, the legislation will drive investment away from research-intensive sectors that rely on strong patents. That will suppress job creation and technological progress.

This legislation will make it even easier for foreign firms to commit international intellectual property theft, which already costs U.S. businesses a staggering $300 billion annually. Chinese firms commit about 70 percent of those violations. So it’s no surprise that Chinese companies are openly pushing for weaker U.S. patent protections. ZTE — a Chinese telecommunications company that Congress previously flagged as a “security threat to the United States” — has even joined a coalition of groups lobbying in favor of the patent bill.

A wide variety of institutions that depend on fair intellectual property protections, including individual inventors, device manufacturers, venture capitalist firms, pharmaceutical companies, and research universities, all warn that the Innovation Act is too broad and could undermine research and development.

Some legislators have been seduced by the Innovation Act’s good intentions. They need to see this bill for what it is. In supporting this legislation, they’re siding with some of our economy’s most ruthless global competitors and pitting themselves against the very innovators they supposedly want to help.

The Innovation Act plays directly into the hands of foreign competitors looking to steal valuable American ideas. To defend the nation’s prosperity and security, Congress should scrap the bill or revise it so it only targets patent trolls — not American inventors.

Schlafly is the founder and CEO of Eagle Forum, the pro-family conservative organization. Martin is president of Eagle Forum and past chairman of the Missouri Republican Party.