The situation concerning the protection and the monetization of technological innovations in the US continues to deteriorate. Originally, the patent system was highly protective of intellectual property, but the recent paradigm shift has put the protection of future discoveries in danger.
It all dates back to dot-com bubble, when the market value of patents started gaining ground. After the bubble, some of the companies were left with nothing but their patents.
This led to a period of excessive patent protection. Companies were waging war on their competition by trying to get hold of as many patents as possible, their basic business model – widely known as patent trolling – built on gathering patents and litigating infringers. This situation forced the US Administration to adopt the 2011 American Innovation Act (“Act”), generally designed to bridge the gap between the US and EU patent model but not necessarily solve the prevalent issue of patent trolls.
The Act, which shifted the patent model from a First-to-Invent to a First-to-File system and introduced a number of changes in alignment with the EU model, has arguably weakened patent protection despite having accelerated the patent process and reduced costs. By changing the system, from a classical judicial structure to a non-adjudication court including patent trial and appeal board, the administration made it insecure.
The legal uncertainty and instability is naturally a direct result of the absence of being able to seek remedies, rely on precedent, and reference case law for guidance and legal trends.
The decision to make costly investments in many ways depends on potential future benefits, largely secured by using patents to protect innovation. Such decisions are inevitably rendered more complicated if investors have uncertainty as to the future protection of their investments.
And further on the downside, investors may look elsewhere for more stable legal systems in order to ensure protection. As such, research and development will shift towards these more stable jurisdictions.
Even though it is not certain that there is a correlation between a slow-down in innovation and increased unemployment in this sector, the projections are not optimistic. As the Financial Times recently put it some studies show up to a trillion-dollar leakage from the U.S. economy.
At first glance, the situation might seem dire, but there are at least two reasons to be optimistic. Firstly, USPTO has a newly appointed head, Andrei Lancu, who has more than a decade of experience in intellectual property litigation and knows the shortcomings of the existing system.
Secondly, the Supreme Court will get a chance to rule on whether the established system is legal, which may have significant repercussions on innovation and patent protection in the year to come.
Margaux Papy, Researcher, PhD student
Joseph Srouji, Avocat https://www.sroujiavocats.com/