Time to Stop America’s Innovation Decline

Ken Blackwell
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Posted: Apr 07, 2017 12:01 AM
Time to Stop America’s Innovation Decline

On Thursday, President Trump met with Chinese President Xi Jinping – a meeting many observers expected to be tense given the situation in North Korea, as well as each leaders’ commitment to strengthening their respective countries’ positions in the world. The President and his team are no doubt also aware of China’s moves to supplant the US as the leader of innovation and even patent protection. Unfortunately, this ambition coincides with our own actions to weaken patent protection in America.

Since our founding, America has led the world in invention and risk taking. This largely stems from the fact that our founders wrote patent rights into our Constitution and extended the idea of property rights to include ideas, not just physical property. It is one of the concepts that separates us from many other nations, particularly China, and made us the global leader in innovation.

Unfortunately, recent data shows that we are losing ground when it comes to the protection of IP and patents – consequently, we are falling behind in the innovation race. While China has long been seen as a nation which does not respect Intellectual Property and where piracy has been rampant, it appears they may have seen the error of their ways and are increasing their patent protections as we have started to undermine ours.

This past February, the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC), released the fifth edition of their International IP Index, which ranks nations according to their ability to foster innovation and economic success. The new edition shows that the United States is losing ground – especially when it comes to protecting our innovations through patents.

At first glance, the U.S. appears to in a strong position, once again taking the top overall spot in the index – although a number of countries are nipping at our heels. Most concerning is that the U.S. has dropped from number 1 to number 10 in the world on protection of “patents, related rights and limitations.” This is the first time that the United States has not held the top position.

Meanwhile, the nations of Western Europe, along with Japan and Singapore, have leaped forward in patent protections – we are tied with Hungary, which continues to recover and reform from its days as a Soviet Union puppet state.

Most significantly, China appears to be gaining major ground as they have started to implement smart policy changes. Gene Quinn at IPWatchDog.com notes, “China has introduced new enforcement mechanisms and specialized IP courts to better combat counterfeiting and piracy, and joining them in these efforts were Pakistan, the UAE and Sweden. And while not reflective in the 2017 rankings, China’s recent patent law changes, which make software and business method patent eligible, should result in a significant improvement in the patent landscape moving forward throughout 2017 and beyond.”

Additional data from the World Intellectual Property Organization (WIPO) indicates that these policies have paid off. Patent applications in China surged 45% in 2016, while in the US they declined .9%. CBS News has reported that in 2015, “China accounted for more than one in three of the total 2.9 million patent applications in 2015, followed by the U.S. and Japan with about a half-million each.”

It’s certainly heartening if China is indeed moving away from the model of piracy and IP theft towards greater property rights. It is clearly in their interest to foster an economic environment where the protection of ideas is encouraged. And while it makes sense that nations with economies in transition, like China, would have a higher growth rate, the disparity between its ascent and our decline is very concerning.

Other nations improving their protection of Intellectual Property is something that should be cheered. However, when that progress abroad coincides with the US undermining its own protections, we put ourselves at a dangerous disadvantage. America has led the world in those areas and we cannot allow ourselves to cede that global role, because it compromises our status as the world’s ec super-power

In recent years, the Obama administration’s Patent and Trademark Office has made it more difficult to defend patent property rights against administrative validity challenges and turned a blind eye to abusive attacks against patents. Additionally, some unfortunate Supreme Court decisions have rolled back patent protections, including for biopharma and software inventions – technology areas that are critical to America’s innovation economy. The Chamber’s IP index specifically points to the PTO’s opposition proceedings and these court decisions as reasons for the US dropping in the patent protection index.

Additionally, Congress has considered broad based “patent reform” that would make it harder to enforce patent rights. Targeted reforms and reigning in of abusive practices are good ideas, but the pendulum has gone too far and it’s beginning to show in the global data.

President Trump, through his appointees and policies, has the chance to ensure the United States will remain the world’s leading innovator and the standard-bearer in protecting U.S. intellectual property through a strong patent protection system. As the President continues his discussions with Chinese President Xi Jinping, he must make sure that China and all our global economic partners know that the U.S. intends to continue to lead on intellectual property.