×

What Congress and the Trump admin must do to defend patent rights

American innovation is under attack. Across the country, it’s increasingly difficult for startups to protect their inventions from large companies that want to steal them.

It’s up to Congress and the new administration to fix the situation — which will go a long way to achieving the president’s stated goal of boosting America’s global competitiveness.

For small businesses, justice in court isn’t the norm. Pursuing a patent case can cost millions. Smaller companies often can’t afford the lengthy legal battle, leaving them with no choice but to accept their losses or settle for a fraction of what their patents are worth. The practice of “steal now, pay later” — often dubbed “efficient” infringement — has become common. But it’s not efficient, it’s predatory.

The crisis traces back to 2006, when the Supreme Court’s decision in eBay v. MercExchange drastically altered patent law. Before eBay, courts granted injunctions to stop patent infringement in 94%-100% of cases in which infringement was found. By 2013, that number had fallen to 72.5%.

Today, many patent holders don’t even request injunctions, knowing the courts will likely allow the theft to continue with the requirement that the violator pay royalties. It would be as though squatters broke into someone’s house and refused to leave — but instead of throwing them out, the courts allowed them to stay as long as they paid rent.

The impact falls heaviest on small businesses. These pioneers, who receive more patents per employee than large corporations, rarely have resources for drawn-out legal battles. Without the credible threat of an injunction to stop infringement, they struggle to negotiate fair terms with deeper-pocketed competitors.

As American courts have dismantled our patent system, innovation has, not surprisingly, fallen off. China has surpassed the United States in 37 out of 44 critical technologies, from artificial intelligence to quantum computing.

Some in Congress want to make it harder for small businesses. Representative Darrell Issa (R-CA) has introduced the misleadingly named Litigation Transparency Act, which would require patent holders to disclose detailed information about how they fund litigation.

The bill is a tactical weapon aimed at small inventors. Since litigation is expensive, startups rely on external funding arrangements to defend their rights against deep-pocketed infringers.

Disclosure requirements would severely compromise funding relationships. By forcing inventors to reveal information about their financial backing, the Act would expose patent holders and their funders to intimidation tactics. It would make the funders more reluctant to back patent cases, effectively closing the courthouse doors to many small companies.

President Trump wants to strengthen American innovation and global leadership, goals that can be achieved with better IP protections. As a first step, the White House should work with Congress to defeat misguided proposals like the Litigation Transparency Act which would disproportionately harm small businesses.

Second, lawmakers should pass the RESTORE Patent Rights Act. This bipartisan legislation would reestablish the presumption that injunctive relief will be granted in cases of proven infringement, while preserving judicial discretion for exceptional circumstances.

These changes align perfectly with the administration’s agenda. Strong patent rights help small businesses compete against large corporations. Perhaps most importantly, they’re essential to regaining America’s technological edge over China.

It’s time to restore the IP rights that drove two centuries of American innovation — and with them, our nation’s place as the world’s technological trailblazer.

Kristen Osenga, the chief policy counselor at the Inventors Defense Alliance, is the Austin E. Owen Research Scholar and Professor of Law at the University of Richmond School of Law.

Starting at $3.69/week.

Subscribe Today