The Register Citizen (Torrington, CT)
U.S manufacturers can compete if obstacles don’t get in their way
Raging inflation, the lingering effects of the pandemic and perhaps the most unsettled global political climate in decades all contribute to a challenging competitive environment for U.S. manufacturers. We need to do everything possible to minimize obstacles to their success, including ridding ourselves of destructive policies that subject manufacturers to unnecessary patent disputes.
American manufacturers have been fighting an uphill battle against foreign competitors for years. From 2007 to 2019, U.S. real manufacturing value added dropped by 13 percent of GDP. In 2001, the U.S. held a $4.5 billion trade surplus in advanced technology products; in 2020, we ran up a $192 billion trade deficit in that important sector.
That’s not to say American manufacturers can’t compete. American workers are among the most talented and productive in the world. The U.S. also has an excellent network of suppliers to keep parts and raw materials coming in so finished products can flow out. But that hasn’t stopped us from losing ground to overseas manufacturers who once only dreamed of competing with American-made goods.
There are multiple reasons behind this decline. Labor costs are lower in many other countries, for instance. And of course the same inflationary issues that are hitting consumers so hard hurt manufacturers too. But one obstacle to competitiveness is self-inflicted and needs to be addressed. Along with all their other problems, American manufacturing companies too often face time and resource-consuming patent litigation from shell companies commonly known as patent trolls.
Patent trolls, or non-practicing entities, take advantage of U.S. patent regulations to file flimsy patent infringement suits against legitimate companies. This is the NPE’s only line of business; they don’t make products or innovate the technologies their acquired patents involve. They are professional litigants who either pursue infringement claims in the federal courts or, increasingly, before the International Trade Commission in hopes of receiving undeserved royalty payments or forcing the targeted manufacturers into settling the suit, a frequent outcome due to the expense of litigating an infringement case. When they go the ITC route, the NPE’s desired outcome is an exclusion order banning imported products, which gives them a huge advantage in settlement negotiations.
Frivolous patent infringement claims cost manufacturers, and the U.S. economy, millions of dollars each year, and cases are on the rise. It’s become such a threat to U.S. competitiveness that Congress has proposed legislation to strengthen protections written into law a decade ago that have lost their punch due to some counterproductive policy decisions made by the ITC and courts.
The original law was the America Invents Act, which established a better way of handling infringement claims called inter partes review, or IPR. The IPR made it easier for companies to defend themselves without going to court and weed out the bad patents that NPEs so often use as basis for their suits. The current bipartisan legislation is called the Restoring the America Invents Act, or RAIA. It would eliminate loopholes that have weakened the AIA and overturn court decisions that limited access to IPR.
Bead Industries strongly supports passage of the RAIA. Our Connecticut company has been involved in patent development and the manufacture of products using patents for over 100 years. Bead understands the value patent protections provide and the damage that is done when patents are misused by profit-seeking NPEs. Bead Electronics director of engineering David Brenton, with over 40 years of manufacturing experience, shares the insiders perspective of the issue, “We constantly innovate to solve customer’s problems. Patents on our custom interconnect pins protect this innovation and ensure effective technology transfer and knowledge sharing.” We have joined with other manufacturers in the advocacy group US*MADE to urge members of the U.S. House and Senate to make the RAIA a high legislative priority.
In spite of setbacks suffered over the last few decades, U.S. manufacturers and the industries that support them accounted for almost one-fourth of entire U.S. GDP in 2020, while directly creating above-average-wage jobs for 15.7 million American workers. We have to protect this crucial economic engine, and we at Bead hope our Connecticut U.S. Sens. Richard Blumenthal and Chris Murphy will take leadership roles in passing the RAIA. Give our manufacturers a chance to continue competing in the global marketplace.
U.S. manufacturers and the industries that support them accounted for almost one-fourth of entire U.S. GDP in 2020, while directly creating above-average-wage jobs for 15.7 million American workers.