We are midway through the first year of the Biden administration and the 117th Congress, and when it comes to intellectual property, each branch of government is off to a good start.
They are striking balances that favor innovation, competition and public interests. A Senate subcommittee is thinking about how to make the patent system more inclusive, and improve the quality of U.S. patents. This administration has supported a limited waiver of IP protections for COVID vaccines, and in an executive order earlier this month, it set out to fix how the government treats the licensing of standard patents found in everyday technology.
But the work isn’t finished. President Biden still needs to nominate a U.S. Patent and Trademark Office (PTO) director — someone who will play a vital role in shaping IP policy. And while congressional hearings are a necessary first step toward inclusive and quality-oriented legislation, hundreds of other members need to agree before we see anything across the finish line.
While patent policy is highly significant to the economy — especially as the U.S. emerges from the pandemic — and to the pace and direction of innovation, it can feel very complex and opaque. Patent policy sits at the intersection of new technology, economic policy, innovation incentives, consumer access, and hyper-technical legal regimes. And patent quality is a central piece of this intricate puzzle. With the challenges and opportunities currently facing the country, now is a critical time for policymakers — and everyday Americans — to reflect on how important patent quality is across the board.
That is why on July 19, Engine launched the inaugural Patent Quality Week. We want to make patent policy more accessible — not just for policymakers, but for innovators, small businesses and the public. Throughout the week, we will be hosting discussions with experts, inventors and companies — rooted in data and personal experiences — about the essential role of quality in our patent system.
For startups, the patent quality story starts from the point of many high-tech, high-growth startups that choose to apply for patents. A high-quality patent can help to establish a place in the market, prevent direct copying, attract investors, and create confidence for business partners.
On the other hand, every startup faces risks from low-quality patents — those that use vague language that is difficult to understand, or merely recite things that are obvious. Even though they should not have been granted in the first place, low-quality patents are an unfortunate reality. These low-quality patents block innovation and competition, and are too easily weaponized against small businesses. They can stop a startup from pursuing research in an area an invalid patent improperly covers, and the high-costs and imbalances in litigation make it easy for patent assertion entities (PAEs), or so-called “patent trolls,” to threaten lawsuits and coerce startups to pay nuisance value settlements for low-quality patents.
While the PTO has an enormous task of reviewing over 600,000 applications each year, studies indicate 30% to 50% of issued patents would be invalid if challenged in court. And things have gotten worse, with our global patent quality ratings dropping last year and PAE litigation on the rise for the first time since 2014.
Indeed, startups are particularly vulnerable and quality-oriented policy is urgently needed. We are seeing vague patents asserted against websites just because they have customer login pages, or startups that allowed many of us to stay home this year, from telemedicine to music streaming and ecommerce, being forced to waste time and money on frivolous litigation.
But we know startups are not alone here — patent quality is essential to main street businesses, financial services, domestic manufacturers, generic drug makers, doctors and patients and more. Companies, innovators and consumers in all of these industries know the value of good patents, but also have first-hand experience with the downside of low-quality patents. In the restaurant industry, for example, numerous restaurants (and even websites like WebMD) found themselves in patent disputes over a now-invalidated patent merely because they posted menus and nutrition information online. And a low-quality pharma patent can stand in the way of generic competition, contributing to steep drug costs.
Now is a key time for patent policy, and the Biden administration and Congress must continue to see patent quality within this context. That’s what we plan to highlight throughout Patent Quality Week, and we invite you to join.
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