Blundering Toward the Demise of American Innovation
May 11, 2023 – ArticlesBrian O'Shaughnessy is an intellectual property partner at Dinsmore and board chair of the Bayh-Dole Coalition. He wrote this article for InsideSources.com.
The American inventor is under attack, and it’s coming from our government. Lawmakers harp about patents as “monopolies” that purportedly prop up prices; the executive supports a grand technology giveaway as pandemic relief; and the judiciary has confused the concept of a “patent-eligible” invention and whittled away at the inventor’s exclusive right.
The U.S. patent system affords an exclusive right to inventors who bring forth new and useful discoveries — things that did not exist, and, were it not for our patent system, might never exist.
This market-based incentive, revolutionary at its inception and devised to preclude a grant of monopoly, has given rise to innumerable useful inventions and made ours the most innovative nation on earth.
Destabilizing the property right that encourages discovery plays into the hands of unscrupulous actors — public and private — and promotes intellectual property theft, taking with it the incentive to innovate.
For example, China sees a strategic advantage in technological dominance. It considers the success of our IP system and professes to emulate it while omitting key components, such as trade secrets. To access its market, it compels disclosure of trade secrets and imposes onerous licensing terms. An IP system without the entire litany of IP rights is tilted toward theft, not innovation. Nonetheless, the façade of an IP protection regime is being used to lure investment to its shores. The appearance of a legitimate IP system affords both an economic bump and access to valuable technology.
At the same time, China and other IP skeptics encourage other countries to surrender IP rights by waiving carefully negotiated international treaties (TRIPS) weakening their IP systems, making IP theft easier and more lucrative.
Elements of the private sector are likewise calling for weakened IP rights. Some prefer to use the inventions of others without permission or payment, challenging the IP owner to sue them. Patent owners bear the burden of enforcing their IP; some just can’t afford it.
This diminishes innovation. Misappropriation of IP robs both the individual and the public. The individual is deprived of a livelihood. The public is robbed of inventions yet to be discovered.
Yet, inexplicably, our government is complicit in this scheme.
On Capitol Hill, lawmakers urge using an obscure provision of the Bayh Dole Act to “march-in” on IP rights in the name of drug price controls. Bayh Dole allows universities to own inventions derived in any part from federal funding and to license them for development. Before Bayh Dole, only the feds could do that, and very few inventions were licensed. Bayh Dole decentralized IP licensing. But the feds reserved a “march-in” power if a licensee failed to develop a useful product. Lawmakers now want to distort that power to make successfully developed products cheaper. But that’s not how the law reads, and former senators Birch Bayh of Indiana and Bob Dole of Kansas specifically said so.
With good reason. To do so would kill the virtuous cycle by which universities give birth to startups and develop basic research into useful products. This generates revenue for the university and supports its educational mission. It’s a win for the university, the startup and the public, but it rests, precariously, on the reliability of IP rights.
The NIH recently acknowledged this, refusing to march-in on the drug Xtandi for price control. Every prior administration faced with such a request, Democratic and Republican, did the same.
Meanwhile, our executive branch is undermining IP rights by supporting international waivers of IP rights on COVID technologies. IP rights made a rapid response to COVID possible. Innovators relied on IP to collaborate and produce enough COVID vaccine to inoculate everyone on earth and did so in record time. Despite a consistent tradition of advocating for IP rights, our executive now favors a reversal. This would be a huge giveaway of IP, much of which was invented in the United States.
Even the judiciary is chipping away at inventors’ rights. Because of judge-made law, inventors don’t have a reliable body of law defining patent-eligible inventions or an exclusive right to their inventions. This has created a patchwork of conflicting decisions compromising IP rights and diminishing innovation.
The U.S. patent system is a powerful economic engine. It promotes the progress of useful arts and has produced innumerable valuable inventions. Weakening that system, even for laudable short-term goals, will bring that engine sputtering to a halt.
