COVID-19 Crisis Highlights Need to Protect American Patents

 The current crisis surrounding COVID-19 won’t always be with us. However, the fight to beat back the virus is highlighting something important: the need to protect and promote American manufacturing.

The public health crisis is unlike any we’ve faced as a nation. The suffering and losses are overwhelming. Still, America’s biopharmaceutical industry will discover therapeutics, treatments, and our researchers will make a COVID-19 vaccine. We’ll beat back the virus. We must—doing our best is not good enough we must succeed.

As this is a national emergency, the president and Congress have declared war against the Coronavirus. What’s more, the Coronavirus pandemic is causing financial anxiety and enormous economic harm – 10 million Americans have filed for Unemployment Insurance over the last two weeks. Businesses and whole sectors of our economy are shuttered. The American economy is in a self-imposed lockdown. Despite the circumstances, American companies are scrambling to manufacture masks, gloves, respirators, and even ventilators, the federal government is easing its regulatory standards and making it simpler to make things here in the U.S. This is critical to the war effort.

After the emergency passes and the war is won, however, the government should promote domestic manufacturing by maintaining the sensible protections it has in place to support American manufacturers.

For example, the U.S. Patent and Trademark Office (USPTO) will be key to promoting manufacturing on our shores. USPTO conducts a trial-like proceeding called the Inter Partes Review (IPR) that is used to determine who is rightful owner of an issued patent. The IPR process needs to be preserved to protect manufacturers from litigation abuse by companies that don’t necessarily produce things but want to glean profits off the innovation of others.

A patent, of course, is the grant by the U.S. government of property rights to an invention. It allows entrepreneurs, researchers, and private enterprise to benefit financially from their inventions. Without strong patent protections America’s biopharmaceutical sector could not find new cures, therapies, or vaccines. To be clear, without patents there is no COVID-19 vaccine.

Almost all patents are genuine. But occasionally, a person or company will receive a patent for something that was actually invented or perfected by another company. This is where the IPR is most useful.

Inter Partes Review was created in 2011 to, as lawmakers wrote, “improve patent quality and restore confidence in the presumption of validity that comes with issued patents.” It has worked well. In 2018, nearly 3 million patents currently in force in the United States. Yet fewer than 1,500 were challenged via the IPR process. That’s a sign the system is working.

Many of those challenges were filed after a shell company, often one that is incorporated in a foreign jurisdiction, filed suit or sent a “demand letter” to dozens or even hundreds of productive U.S. businesses. These shell companies, which produce no goods or services and have no employees, have only one asset: a vague, low quality patent. IPR allows the company that needs the patent to prove it is using the asset to produce important goods; it’s not just sitting on a paper asset.

A New York Times report in 2017 took a deep dive into this problem. It cheered the IPR process, and found that: “The appeal board has rejected questionable patent claims over technology to clean up polluted groundwater and wastewater, over podcasting, and over a system that Los Angeles wanted to introduce that looks a lot like E-ZPass.”

IPR helps keep companies out of court, which is critical, because litigation is expensive. As Ira Blumberg noted in Tech Crunch, “A study from Boston University estimates that patent litigation destroys more than $60 billion in firm wealth each year, and that doesn’t even factor in ancillary effects, such as curbed innovation due to decreased amounts of venture investing.” He used to make a living filing questionable patents, so he knows what he’s talking about.

Despite the value of the IPR, there’s a move to eliminate it. Democratic Sen. Chris Coons’ “STRONGER Patent Act” would roll back the clock to a time when patent lawsuit abuse against productive American businesses, including manufacturers, were at historic highs.

We can’t afford to go backwards – not now, not after the COVID-19 crisis. IPR is rarely used, but when it is used, it does the important job of weeding out bad patents and bad actors – essentially what’s cleared from the field are ‘false patents’ that stifle innovation and impose enormous litigation costs on American businesses.

Americans are learning that we’ve allowed too much of our intellectual property (IP) to go overseas; and that both our national health and economic comeback depends on IP. Congress should preserve Inter Partes Review and promote American manufacturing—IPR protects American jobs and America’s job creators. Anything less will leave us ill prepared for the next national emergency.

Jerry Rogers is the founder of Capitol Allies and the host of “The Jerry Rogers Show” on WBAL NewsRadio. Twitter: @CapitolAllies.