Pre­serv­ing Amer­i­can in­dus­trial com­pet­i­tive­ness It de­pends on strong and re­li­able patent rights

The Washington Times Weekly - - Commentary - By Jon Kyl and Joshua Wright

In­no­va­tion is the United States’ most valu­able eco­nomic ex­port and the cor­ner­stone of our in­ter­na­tional com­pet­i­tive ad­van­tage. We are not the world’s largest man­u­fac­tur­ing na­tion, but we are the world’s lead­ing cre­ator of tech­nol­ogy and in­no­va­tion, with in­no­va­tive en­ter­prises contributi­ng to more than a third of our en­tire econ­omy. The United States’ lead­er­ship in in­no­va­tion can be seen in mar­kets as di­verse as wire­less com­mu­ni­ca­tions, au­ton­o­mous ve­hi­cles, ar­ti­fi­cial in­tel­li­gence, vir­tual and aug­mented re­al­ity, med­i­cal de­vices and phar­ma­ceu­ti­cals. And that lead­er­ship pro­duces myr­iad ben­e­fits, fos­ter­ing eco­nomic growth, im­prov­ing qual­ity of life, and sup­port­ing jobs through­out the econ­omy.

Strong in­tel­lec­tual prop­erty rights are the key to that suc­cess. The Amer­i­can patent sys­tem has been, and re­mains, a crit­i­cal force for pro­mot­ing con­tin­ued in­no­va­tion and fos­ter­ing competitio­n.

Over the past decade, how­ever, our gov­ern­ment in­sti­tu­tions have shifted their sup­port for in­no­va­tion and, in some cases, have even at­tacked in­tel­lec­tual prop­erty rights. A decade of Supreme Court de­ci­sions have made it harder to ob­tain a patent, eas­ier to in­val­i­date a patent, and harder to de­fend a patent. Along with high in­val­i­da­tion rates in post-grant re­views at the U.S. Patent and Trade­mark Of­fice, and re­peated at­tempts in Congress to change the patent laws, strong patent rights are un­der as­sault.

The steady weak­en­ing of patent pro­tec­tions has en­cour­aged wide­spread in­fringe­ment of patents, as com­pa­nies that use patented tech­nol­ogy in their prod­ucts (“im­ple­menters”) feel em­bold­ened to take their chances in­fring­ing on a patent rather than ne­go­ti­ate a fair li­cense (a phe­nom­e­non called “ef­fi­cient in­fringe­ment”) for the tech­nol­ogy. Taken to­gether, these de­vel­op­ments have di­min­ished the value of patents, and have con­trib­uted to the U.S. fall to twelfth place in the world for IP strength, down from tenth last year (and first ev­ery year be­fore that) ac­cord­ing to the U.S. Cham­ber of Com­merce Global In­tel­lec­tual Prop­erty In­dex.

In ad­di­tion to Congress and the Patent Of­fice, our an­titrust reg­u­la­tors have also un­der­mined patent rights. The Obama ad­min­is­tra­tion An­titrust Divi­sion of the Depart­ment of Jus­tice (“DOJ”) and Fed­eral Trade Com­mis­sion (“FTC”) threat­ened law­suits against patent hold­ers merely for ex­er­cis­ing their Con­sti­tu­tional, statu­tory, and con­trac­tual rights to seek in­junc­tive re­lief against patent in­fringers. The Obama ad­min­is­tra­tion spent years ar­gu­ing that patent own­ers were rou­tinely able to use the threat of an in­junc­tion to com­mand un­rea­son­able prices for their tech­nol­ogy, de­spite ro­bust em­pir­i­cal ev­i­dence re­fut­ing that the­ory. The Obama DOJ and FTC re­lied upon specter of so-called “patent holdup” to ig­nore their prior com­mit­ments to treat in­tel­lec­tual prop­erty like any other prop­erty right, and to cre­ate spe­cial an­titrust rules hos­tile to in­tel­lec­tual prop­erty rights.

These ef­forts ig­nored the ba­sic truth that patent li­cens­ing is a pro-com­pet­i­tive ac­tiv­ity that en­cour­ages in­no­va­tion and tech­no­log­i­cal ad­vance­ment. The hos­til­ity to­wards patent rights and pre­sump­tion that a li­cen­sor is ex­er­cis­ing mo­nop­oly power (de­spite clear caselaw and eco­nomic ev­i­dence that this is un­true) is the type of short­sight­ed­ness that re­places in­cen­tives to in­no­vate with gov­ern­men­tal pro­tec­tion­ism.

Thank­fully, the Trump ad­min­is­tra­tion has be­gun to re­verse the pre­vi­ous, mis­guided ap­proach to in­tel­lec­tual prop­erty and an­titrust and pur­sued poli­cies that again pro­mote in­no­va­tion, in­crease competitio­n, and re­spect prop­erty rights. To start, U.S. Patent and Trade­mark Of­fice Di­rec­tor An­drei Iancu has called for a new “pro-patent, pro-in­no­va­tion di­a­logue,” and has taken steps to “in­crease the clar­ity and pre­dictabil­ity” of patent rights.

He has called for a top-to-bot­tom re­view of the post-grant re­view pro­ce­dures, and, de­spite his short ten­ure, has al­ready ini­ti­ated a USPTO rule­mak­ing to har­mo­nize some of the rules used in post-grant re­view pro­ceed­ings with those used in fed­eral courts. These mea­sures will pre­serve the right of pe­ti­tion­ers to chal­lenge patents, while en­sur­ing patent own­ers’ rights are pre­sumed valid.

Like­wise, As­sis­tant At­tor­ney Gen­eral Makan Del­rahim has called for an ap­proach to an­titrust that bal­ances the in­ter­est of in­no­va­tors and im­ple­menters “through the free mar­ket” and “in the form of freely ne­go­ti­ated li­cens­ing agree­ments.” Mr. Del­rahim em­pha­sized that the ex­er­cise of patent rights may not, by it­self, con­sti­tute a vi­o­la­tion of the an­titrust laws.

Those wish­ing to use patented tech­nol­ogy are free to ne­go­ti­ate a li­cense from the owner of that tech­nol­ogy, but the patent owner has no obli­ga­tion un­der competitio­n laws to grant that li­cense, or to ar­ti­fi­cially de­crease the price of that tech­nol­ogy. Mr. Del­rahim’s ra­tio­nale is sim­ple and cor­rect: the best way to achieve the an­titrust goal of pro­tect­ing con­sumer wel­fare is to treat patent rights just like other prop­erty rights.

The steps taken by Mr. Iancu and Mr. Del­rahim have be­gun the process of restor­ing the value of patents to both the econ­omy and in coun­try’s abil­ity to com­pete in­ter­na­tion­ally. We are leav­ing be­hind the days where merely ex­er­cis­ing a patent right in­vited an­titrust scru­tiny. By rec­og­niz­ing the pri­vate own­er­ship of in­no­va­tive ideas and the abil­ity to ex­change those ideas on an open and free mar­ket, these po­si­tions have started to re­cal­i­brate U.S. an­titrust and in­tel­lec­tual prop­erty pol­icy toward a more bal­anced po­si­tion that is pro-patent, pro-in­no­va­tion, and pro-competitio­n. This re­cal­i­bra­tion can only ben­e­fit Amer­i­can in­no­va­tion, con­sumers, and the econ­omy as a whole.

Rather than pun­ish in­no­va­tors for ex­er­cis­ing their patent rights, the United States should con­tinue to pro­mote strong IP rights at home and abroad, pro­tect the rights of in­ven­tors, and en­sure that Amer­i­can in­no­va­tion re­mains the cor­ner­stone of Amer­i­can com­pet­i­tive­ness.

Those wish­ing to use patented tech­nol­ogy are free to ne­go­ti­ate a li­cense from the owner of that tech­nol­ogy, but the patent owner has no obli­ga­tion un­der competitio­n laws to grant that li­cense, or to ar­ti­fi­cially de­crease the price of that tech­nol­ogy.

Jon Kyl, a former Repub­li­can U.S. sen­a­tor from Ari­zona, is se­nior of coun­sel at Cov­ing­ton & Burl­ing. Joshua D. Wright, a pro­fes­sor and ex­ec­u­tive di­rec­tor of the Global An­titrust In­sti­tute at Scalia Law School, is the former com­mis­sioner of the U.S. Fed­eral Trade Com­mis­sion.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.