Stronger patents — better innovation — bigger economy

Congress should be working to grow the economy instead of weakening it. And, with the introduction of the STRONGER Patents Act, they might just be doing that.

{mosads}What does it take to grow the economy? In some ways that question can be almost insurmountable, but in others it is just common sense. For instance, does the economy grow faster by taxing success or by rewarding it? Does the economy grow faster by creating more paperwork for businesses or less? How about increasing the barrier to enter a market or lowering the barriers? In that case, the answer is lowering barriers. Creating economic growth can be fairly simple.

However, a question that seems just as easy — does the economy grow faster by supporting innovators or making it harder on them? Congress seems to have been hung up on that question over the last several decades. Congress should, of course, support innovators.

In 2011, Congress passed what was called the America Invents Act. At that time I put together a rag-tag group of inventors, innovators, and investors and visited with as many congressional offices as we could to warn them of the consequences of their approach. In the years since, our little band of inventors have been proven right. In fact, in just the past few years, the U.S. has fallen from 1st place to 12th place in a report from the Chamber of Commerce that ranks intellectual property protections.

Intellectual property protection in the U.S. has gotten so bad that I know U.S. inventors who have been counseled into not filing for their patents in the U.S. I know U.S. inventors who have forced to enforce their patents in China because their patents have been severely weakened or nullified altogether by a new administrative court that was created in that law. Worse yet I know inventors who are ready to give up attempting to commercialize their products.

So, while I might think that the best solution would be to repeal the America Invents Act altogether, that isn’t what Congress is going to do. So, what is the right approach to improve our patent system? Reps. Steve Stivers (R-Ohio) and Bill Foster (D-Ill.) recently introduced a great start to fixing the system – The STRONGER Patents Act. Their bill is a companion to the bipartisan legislation of the same name in the Senate.

First, they fix some issues with a runaway administrative court — the Patent Trial and Appeal Board — that was created by AIA. They also include a fix to a part of the patent system that can be abused by spammers: demand letters.

The Patent Trial and Appeals Board was created by Congress in an attempt to provide an expedited system to address patent issues. But, leading judges have called it a patent “death squad” and the United States Patent and Trademark Office has admitted in court to stacking the panels. The STRONGER Act attempts to correct some of these oversights and effectively restore confidence in the patent system.

As Stivers and Foster wrote in an op-ed for The Hill:

“The PTAB now routinely throws out patents that have been duly awarded by the U.S. Patent and Trademark Office using loopholes and weaker disparate standards. Worse yet, it has canceled patents after district courts upheld the patent. Patent owners are forced to frequently battle both in court and at the PTAB with conflicting decisions. Opportunists know how to game the system and can file a challenge that can cause the value of a patent (or a company’s stock) to plummet.”

The lawmakers also included language from the TROL Act, which would help put a stop to people who send out demand letters in bad faith, such as when the sender has no basis to accuse the inventor or infringing on another patent. These demand letters are more like Nigerian prince spam emails than actual legal communications.  

The STRONGER Patents Act doesn’t address all of my concerns but it is a great first step and America’s inventors couldn’t welcome it more warmly. It could jump start the American innovation engine again. And, if it passes, it might also prove that Congress does have some common sense.

Charles Sauer is president of the Market Institute, an organization that advocates on behalf of small business and limited government intervention. Previously, Sauer worked for Gov. Jeb Bush (R-Fla.) on federal labor, tax and immigration policy. He is the author of the forthcoming book, “Profit Motive: What Drives the Things We Do.”